Evaluating Critical Issues

For

Nigeria’s Strategic Roadmap Input

Nigerian Existing Downstream Infrastructure Revamp Strategy

2013 Regional Distribution of Refined Products in Nigeria

Existing Refined Petroleum Product Pipeline Overview

Existing Refined Petroleum Pipeline Revamp Strategy

Existing NNPC Refined Petroleum Depot Revamp Strategy

Existing Petroleum Pipelines Proposed Ownership Structure

Existing NNPC Petroleum Depot Proposed Ownership Structure

Volume 18-23| Mar 2015

Usman Suleman MBA (Oil & Gas ); B.Eng (Civil)

Proverbs 4:7_Wisdom is the Principal Thing

Going by the reported distribution of PMS,HHK,AGO and LPFO in 2013; the South and North accounted for 61%

and 39% of the national demand respectively.

Thus in revamping the existing downstream infrastructure, to guarantee the effective distribution of refined

petroleum products in Nigeria; the regional consumption indices will be used to prioritized the “Revamp

Strategy”.

South

Accounted for 61% of PMS,HHK,AGO & LPFO distribution in Nigeria for 2013

Source: NNPC Statistical Report (1997-2013)Authors Analysis

North

Accounted for 39% of PMS,HHK,AGO & LPFO distribution in Nigeria for 2013

Nigeria Strategic Roadmap Input| Vol_18: Mar 2015

2013 Regional Distribution of Refined Products in Nigeria

Nearly over 5000km of refined petroleum products and Crude-Oil pipelines crisscross through various communities in

Nigeria. These pipelines are integral to Nigeria’s energy supply and connect the local refineries and the refined

products import facilities with the various Depots in Nigeria; which serves as logistic hubs-to maintain substantial

storage facilities and serve as gateways for regional distribution by truck, or other means.

The existing refined petroleum pipeline has been subject of continued vandalization and rupture incidence over the

years. This is evident from the reported cases of vandalization and rupture cases over the same period; therefore

calling into question both the integrity of the pipelines and the existing monitoring systems in place to avert re-

occurrence.

The vandalisation and rupture of existing refined petroleum pipelines had resulted in huge losses in the past as

indicated in the evaluated indices in the Table below; with the Mosimi System 2B recording the highest weighted

pipeline incidence index of about 40.33 out of the five major segments. The Mosimi System 2B recorded an average

loss of 181.25 million Naira per kilometer of pipeline length in just 15-years; which is equivalent to about 60-100% of the

cost of constructing a new pipelinewith a design life of 30years, without considering the repair costs incurred.

From these evaluation it is clear that PPMC , will have to consider these critical indices for the purpose of developing a

“Pipeline Network Revamp Strategy” by prioritizing the portion of the pipelines for the five(5) categorized systems

to provide a tamper proof system to the nearest depot(s) in the Short andMid-term.

Key Indice-1 Key Indice-2

Loss per Pipeline length (litres per km)

Loss per Pipeline length (Naira per

km)

Pipeline Vandalism

Incidence per Pipeline length

(nos per km)

Pipeline Rupture

Incidence per Pipeline length

(nos per km)

Weighted Pipeline

Incidence IndexPORT-HARCOURT SYSTEMS 2,026,787 73,756,600 8.1 0.14 25.44WARRI (SYSTEMS 2A,2C,2CX) 553,657 26,358,650 4.5 0.08 10.46

MOSIMI (SYSTEM 2B) 3,136,106 181,347,812 6.7 0.20 40.33KADUNA (SYSTEM 2D) 190,821 14,216,037 4.0 0.22 12.93GOMBE (SYSTEM 2D) 148,862 5,309,192 11.8 0.04 10.85

6,056,233 300,988,291 35.0 0.68 100.00

Source: NNPC Statistical Report (1997-2013)Authors Analysis

Nigeria Strategic Roadmap Input| Vol_19: Mar 2015

Existing Refined Petroleum Product Pipeline Overview

In order to guarantee refined petroleum products supply reliability of the existing pipelines; whilst reducing the Short and

Mid-term cost of revamping the same; PPMC could employ the “Isolation Development Strategy”. This Strategy will seek to

provide for the evacuation of refined products to the nearest in-land depots located within a radial distance of 150 to 210km

distance to any of the existing and new Refining Centers; while revamping or constructing new depots to serve as new In-

land Regional Supply Hub to other regionalmarkets by road or railwayas illustrated in the figure hereunder.

The revamped pipelines will be upgraded to provide a vandalism proof system with fencing and CCTV network, together

with a state of the art SCADA system to monitor the ROW with sub-control and security posts mounted for every 25km

interval. These measures will be premised on a Risk Assessment study to identify the existing NNPC pipelines that are at the

highest Risk Level of vandalization, product loss and frequency of effecting repairs . These factors will culminate into a

“Weighted Pipeline Incidence Index” to classify the “Risk Profile” of the existing segments of the pipelines for the

purpose of initiating a proactive “Revamp and vandalism proof Strategy”.

Nigeria Strategic Roadmap Input| Vol_20: Mar 2015

Existing Refined Petroleum Pipeline Revamp Strategy

Source: The Nigeria Transportation Master PlanAuthors Analysis

165Km

197km

128Km

210km

140Km

Kaduna System

Warri System

Mosimi System

Port-Harcourt System

Nigeria Strategic Roadmap Input| Vol_21: Mar 2015

Existing NNPC Refined Petroleum Depot Revamp Strategy

Increase Existing Depot Holding Capacity

New Depot

To provide for an effective supply-chain a synergy between the planned revamp strategy for the existing pipelines and the,

the existingNNPC depotsand proposedNew depotswill be initiated.

The planned enhancement of the supply chain reliability to meet national demand taken into consideration the “Isolation

Strategy” proposed in the Short and Mid-term for the refined petroleum product pipelines, will provide avenues for new

depots to be constructed to serve as both strategic reserve and regional supply hubs . While some of the existing depots

that will be used as regional supply hubs will be revamped by increasing their holding capacity to meet the demand of the

catchment States and Regions.

This major Short and Mid-term upgrade and expansion project for the downstream sector, is expected to enable it handle

forecast demand of petroleum products for the nearest future at a more cost-effective delivery cost with near zero

vandlizationand product loss.

Prior to the upgrade, a re-assessment survey of the existing depots will be carried out , in order to identify the currents

status and thus the upgrade measures; whilst also evaluating the new holding capacities fro both the new and upgraded

existing depots.

Source: The Nigeria Transportation Master PlanNNPC Statistical Report (1997-2013)Authors Analysis

Nigeria Strategic Roadmap Input| Vol_22: Mar 2015

Existing Petroleum Pipelines Proposed Ownership Structure

Kaduna System

Warri System

Mosimi System

Port-Harcourt System

Existing Pipelines SPV

Indigenous Partners

PPMC (40%) IPMAN (15%)

FGN/Host States (10%) NUPENG (15%)

Foreign Technical Partner

(20%)

Source: The Nigeria Transportation Master PlanNNPC Statistical Report (1997-2013)Authors Analysis

Nigeria Strategic Roadmap Input| Vol_23: Mar 2015

Existing NNPC Petroleum Depot Proposed Ownership Structure

Increase Existing Depot Holding Capacity

New Depot

Existing NNPC Depots SPV

Indigenous Partners

PPMC (40%) IPMAN (15%)

FGN/Host States (10%) NUPENG (15%)

Foreign Technical Partner

(20%)

Source: The Nigeria Transportation Master PlanNNPC Statistical Report (1997-2013)Authors Analysis