Downstream Petroleum Industry

Downstream From Refinery to client The downstream sector encompasses the am supplant, computer reposition, dispersal and merchandise of oil color merchandises refining Process Crude oil is touch on and refined into more useful overlaps Storage The products from the refining process ar stored at depots via pipe extraction, land (trucks & rail) and ocean (barge/vessel). These entrepot facilities be as wellhead as c exclusivelyed tank farms or terminals statistical distribution and Marketing crude oil products ar distributed from storage locations to the end-user directly or through with(predicate) retail outletsThe major products produced by a refinery atomic number 18, Kerosene, Premium Motor meat (PMS bodgeoline), Automotive muff Oil (Diesel), fire Oils, liquefy vegetable oil Gas (LPG), Lubricating Oils, Naphtha and Tar gauge 1. Schematic Representation of the Downstream Business ? The Nigerian Downstream Sector The Federal G everyplacenment of Nigeria (FGN) participates in the activities of the oil application ( upriver and downstream) as surface as actively supervising it due to its strategic enormousness to the economy.In the downstream industry, FGN regulates and participates through the following agencies / bodies Nigerian National Petroleum Corporation (NNPC) NNPC has powers and usable bear on in refining, petrochemicals, product transportation and trade. NNPC has nine wholly- have subsidiaries, devil partly owned subsidiaries and nineteen associated companies that lot the upstream and downstream activities.Those relevant to the downstream business are the Pipeline & Products Marketing phoner (PPMC), Kaduna Refining & Petrochemicals Comp any check (KRPC), Warri Refining & Petrochemicals Limited (WRPC) and Port Harcourt Refining & Petrochemicals Limited. Department of Petroleum Resources (DPR) DPR is an arm of the Federal Ministry of Petroleum Resources and has responsibilities for the following Issuing of permit s and licenses for all activities connected with crude oil exploration, return, refining, storage, trade, transportation and distribution Acting as an dominance for the enforcement of the provisions of the rock oil Act, NNPC Art or any other enactment. Petroleum Products Pricing Regulatory theatrical (PPPRA) The PPPRA came to be from a Special Committee that was con go up to review Petroleum Products Supply and Distribution (SCRPPSD) drawn from various stakeholders and other interest groups to face into the problems of the downstream petroleum sector. The functions of PPPA are To determine the price policy of petroleum products To regulate the show and distribution of petroleum products To create an information databank through connexion with all relevant agencies to facilitate the making of apprised and realistic decisions on pricing policies To moderate volatilities in petroleum products prices, composition ensuring reasonable returns to operators To establish param eters and codes of get by for all operators in the downstream sector. Petroleum equalisation Fund (PEF) The PEF fund board was established to get even the transport damage arising from the distribution of petroleum products to all parts of the country i. . the cost of transporting products from source to halt of bargains. This is to ensure that petroleum products are made operable in all retail outlets at consistent prices in Nigeria, and to avoid shortage of petroleum products. Petroleum Subsidy Fund (PSF) is a pool of cash budgeted by FGN to stabilise the domestic prices of petroleum products against the unpredictability in international crude and products prices. CBN is the custodian of the fund, while PPPRA administers it.Claims from / payment into the fund is subjected to duly verified mickle of products lifted out of the approved depot and interchange in-line with recommended open market prices. ? Marketing Companies The Nigerian downstream industry is comprised o f two groups of marketing companies Major Marketers The companies in this group include AP Plc, Conoil Plc, Mobil Oil Plc, OANDO Plc, Total Nigeria Plc and bar Oil Nigeria Plc and accounted for 71% of good petroleum products sold. They live on to trade association called Major Oil Marketers tie beam of Nigeria (MOMAN).Independent Marketers The Independent marketers, comprises largely indigenous petroleum marketing companies. The FGN introduced the Independent Marketing scheme in 1978 because of petroleum products shortage of the 1970s and the lack of decent investment by major marketing companies in the rural areas. This led to the establishment of the Independent Marketers rail pathway tie of Nigeria (IPMAN) in 1982. Membership is open to every self-directed marketer duly licensed and authorised to melt by the NNPC or other appropriate physical composition in charge of this function.The trade group of these companies is referred to as the independent Marketers Associati on of Nigeria (IPMAN). Examples of Independent marketers are Zenon Petroleum, big(p) Oil & Gas and Ascon Oil & Gas. OANDO Marketing Limited (OML) Oando Marketing Limited one of the companies within the Oando Plc group, is a leading oil and blow marketing confederacy with over 500 retail outlets and a technicalised clientele base that cuts crosswise all industry sectors such(prenominal) as manufacturing, expression, oil & gas and telecommunications in Nigeria and the West Africa sub region.OML has been in the business of marketing and affix of petroleum products since 1956. OML markets a wide throw up of products including Premium Motor Spirit (PMS), Automotive Gas Oil (AGO also known as Diesel), duple Purpose Kerosene (DPK), air Turbine Kerosene(ATK), Low sprout Fuel Oil (LPFO), Lubricating Oils and Greases, Insecticides, Bitumen, Chemicals, Liquefied Petroleum Gas (LPG, also known as Cooking gas) and Oando insect powder Products and Uses AGO fuel for some vehicles and m arine vessels as well as for powering generatorsPMS fuel for close vehicles DPK fuel for cooking stove and used as a solvent to produce specialized products for road construction ATK fuel for aircraft LPFO fuel for power coevals and for heating Lubricants lubricating oil for vehicles and equipments Bitumen used in the construction industry for paving roads LPG used as cooking and heating gas. Departments The divisions in OML can be classified under the following Core retail, Commercial, Marketing, trading operations & Logistics and applied science & Terminal. concur finance, Corporate helpers (HR, HCM, good and Procurement & function), ICA, EHSQ, Service Standards and Corporate & Marketing Communications. ? Retail Business focusing and gross revenue of Oando products to customers via sales outlets (over 500) countrywide is the function of the retail division. The sales centre is centred on the Total White Products (PMS, AGO and HHK), while Lubricants, Liquefied P etroleum Gas (LPG) and Insecticide sales leave a diversified revenue source for the group. expression gross sales is managed by Branch Managers located across the country, with each having obligation over specific territories referred to as branches. Their activities are coordinated by Branch Coordination Managers and the department is led by the Chief Sales ships officer Retail, with overall responsibility for all activities. Retail Outlets association Owned Service Station (COSS) The move under this category are owned by OML and dealers are appointed to escape the move on OMLs behalf. Third Party Owned These are outlets owned by trio parties, which carry OMLs colour and brand.OMLs main responsibility is to supply these outlets with petroleum products and on their part the owners of the outlets agree to operate in accordance to standards agreed by two parties. in that respect are two types of third company outlets oGallonage The stations and equipment under this ca tegory are richly owned by the third parties, while OML brands the outlets and supply products to it. oLoan Delivery and Equipment (LDE) Here, OML provides equipments such as pumps, generators and canopies, as well as branding and supply of products.The retail outlets also serve as business opport unit of measurementies via Non-Fuel Revenue (NFR) activities (such as Quick Service Restaurants) that maximize the returns on shareholders investments, cleanse asset utilisation and maximize our medium-long term chapiter gains. Commercial Department The nub function of the commercial department is the sale of products (AGO, PMS, DPK, ATK, LPFO, Lubricants, Bitumen and LPG) to large volume end users hinged on utile relationship management. Sales are usually made in bulk to clients most often on pre-determined trade terms basis. social organisation Sales is managed by Branch Managers located across the country, with each having responsibility over specific territories referred to as br anches. Their activities are coordinated by Commercial Service Managers, based in the head office in Lagos. The department is led by the Chief Sales Officer, with overall responsibility for the activities above as well as for the below-mentioned specialized units Marine unit sale of petroleum products to (and management of relationship) upstream oil & gas companies as well as their service providers Aviation Unit sale of ATK and management of relationship with airlines. run The commercial department offer a erect of services in conjunction to the products it markets as it recognize that customers want much more than just the products. Examples of such services include Vendor Managed enrolment (VMI) Scheme The Oando In-Support scheme (our in-house model of the VMI) is a means of optimizing customers supply chain, whereby Oando becomes responsible for(p) for maintaining the line of descent level of petroleum products at its customers location.The major benefit of this to the customer is that it can focus on its core function while Oando manages petroleum products inventory. For Oando, the VMI scheme allows it to secure Oando Sea Station This is a Ship-to-Shore and Shore-to-Ship service station that provides fuels and lubricants for shipping companies, marine logistics companies operate in the Niger-Delta coastline as well as heartiness services physical compositions providing birth to the upstream exploration and production companies operating in deep water coastal shores of Nigeria.Supply Contract This service allows customers the opportunity to enjoy a fairly stable price politics at a committed volume over a period of time. It is a modified form of In-support suitable for customers whose operations cannot permit full inventory take over. Marketing The core function of the marketing department is to initiate business deals and provide platforms to change the sales departments (retail & commercial) effectively achieve their goals and objecti ves. Structure The department is led by the Head, Marketing with overall responsibility for the following unitsLubricants Unit The Lubricants unit is responsible for marketing Oandos lubricants by creating product awareness through marketing promotions and supporting sales drive of lubricants in line with Oandos goals and objectives. The unit also develops a high calibre technical sales support function while ensuring product prize assurance, cost management and service delivery to customers. A core responsibility of this unit is constantly identifying and initiating new/ additional product lines for various target consumer markets.LPG Unit The LPG Unit is primarily aimed at sourcing for product, providing support and devising ripe selling methods to the sales team to ensure they amass their volume and margin targets as well as satisfying their customers needs. The team also provides the sales team with market intelligence to ensure that they strategically positioned to vex sal es. The unit, in addition, serves as an interface between the sales team and other support units within the organization i. e. Logistics, CCU, Engineering and EHSQ.Non-Fuel Revenue (NFR) Unit The Non-Fuels Revenue (NFR) unit is a strategic initiative developed to equilibrise the shrinking margins on sales of fuel products and romance into the emerging opportunities of Non-fuel business from Retail outlets. Non-fuel offerings in retail outlets can also serve as a customer pull to increase fuel sales. few NFR offerings include Quick Service Restaurants (QSR), Automatic bank clerk Machines, Rent contribution from dormant assets (warehouses and offices), Income from Telecom Mast sites, regenerate and increase lube bay rentals & lubes contribution to stations and car wash operation. pop Products Unit The Bulk unit is responsible for developing and executing marketing plans to support the sales team in achieving their objectives in the sales of Bitumen and LPFO. The unit provides us eful information to the highest degree the construction sector of the economy, market trends, competitors activities and consumer preferences that helps in pickings business decisions. It also provides back-end support for improving the quality of service delivery in our Vendor Managed Inventory (VMI) concept. ? Operations & Logistics DepartmentThe Operations & Logistics (O&L) department is primarily responsible for product sourcing and distribution to customers. O&L is also responsible for product storage via warehouses and LPG Plants, and Lubricants amalgamate via the Kaduna Lubricants Plant (KLP). Management of products at the terminals is traveling bagd by Engineering & Terminals department. Structure The department is organize into four units, each with a head responsible for activities in the unit. Overall departmental responsibility is with the ecumenic Manager, Operations & Logistics. Logistics oInbound supply planning and product communicate oTrade Procurement & Prod ucts product sourcing oOutbound handles product received from NNPC depots oFleet Management of relationship with transporters. Customer Care Unit oScheduling handle delivery request and schedule the trucks oDispatch prepare the trucks for trips oFleet run low with the transporters oCall Center handle inquiries and complaints. Warehouse & LPG Plant oWarehouse storage locations for Lubricants and Oando Insecticide before final distribution to customers.Lubricants are received at the warehouses from KLP, while with Oando Insecticide (currently being imported), product is received into Apapa for distribution other warehouses. Currently, OML has 14 warehouses across the county. oLPG Filing Plants storage locations for LPG. Currently OML has 7 plants across the country. Kaduna Lube Plant consists of two blending plants both located in Kaduna with combined potentiality of 55 million litres per annum producing various range of lubricant products for commercial and retail custome rs. Terminals & Engineering DepartmentThe Engineering & Terminals department is responsible for managing infrastructural assets across board inclusive of the operations at storage terminals. Structure There are two main units Terminals are storage locations (exclusive of warehouses and LPG Plants) where products are received, stored and eventually distributed. The following are the terminals owned by OML oApapa Terminal 1 oApapa Terminal 2 oApapa Joint Venture (with Total Nigeria Plc) oOnne Terminal, Port Harcourt oPort Harcourt Terminal. each of these locations is headed by a Terminal Manager TM who reports to the Head of Terminals & Engineering.OML also stores product at third party locations such as Lister. Currently, Oando Terminals has capacity for belongings various products as follows oPMS 80 billion Litres oAGO 33 Million Litres oLPFO 5. 67 Million Litres oHHK 5 Million Litres oBitumen 10,000 Metric Tonnes. Engineering execution of capital projects and support of e quipments and facilities. The activities in this unit are grouped as shown below oProject oversees capital projects less than N100M oRetail Network precaution oversees maintenance and deployment of retail outlet equipment Retail set Maintenance oversees maintenance of retail outlet substructure oTerminal & Depot Maintenance oversees maintenance of facilities and equipments at terminals and depots Support Departments Environment, Health, Safety, Security and Quality Assurance (EHSSQ) reduce operational and accident cost, eliminate down time, ensure total compliance with regulatory and statutory requirements, deliver arena class quality products and services to enhance customer satisfaction, while guarantying sustainable development in line with the Oando vision.Internal Control & Audit (ICA) safeguarding OMLs assets, ensuring operational efficiency, ensuring compliance with applicable laws and regulations and ensuring the accuracy and reliability of monetary reporting. Ser vice Standards ensures and monitors service standards across various locations. Finance provide OML with financial support for business and operational planning. OML Finance (head office) is divided into three main units to wit oTreasury oManagement Information System Financial Control. Corporate Services supports OML business via the following services oLegal provide OML with cost-efficient and efficient legal services support to and manage the inherent risks in OMLs businesses oProcurement assist OML in the acquisition of goods and services oHuman Resource provide OML with effective people management solutions. Marketing Communications publicise OMLs marketing initiatives through strategic product promotion and sales promotion.