Description

Nigeria has for long been a major producer of crude oil ever since the first commercial well was drilled in Oloibiri in present day Bayelsa state. The country presently has an estimated thirty-five billion, three hundred million (35,300,000,000) barrels of hydrocarbon both onshore and offshore assets mostly domiciled in the Niger Delta basin.

Crude oil reserves of Nigeria increased from 16 billion barrels in 1997 to thirty-seven billion (37,000,000,000) barrels in 2016 growing at an average annual rate of five point zero four percent (5.04 %).

Nigeria’s hydrocarbon is classified mostly as “light” and “sweet”, as the oil is largely free of sulphur. Nigeria is the largest producer of sweet oil in The Organization of the Petroleum Exporting Countries (OPEC), the organization for petroleum exporting countries.

This sweet oil is similar in composition to petroleum extracted from the North Sea. This crude oil is known as “Bonny light”. Names of other Nigerian crudes, all of which are named according to export terminal, are Qua Ibo, Escravos blend, Brass rivers, Forcados, and Pennington Anfan.

Nigeria presently ranks tenth in the most petroleum-rich nation, and by the far the most affluent in Africa producing about two and half million (2,500,000) barrels per day.

Petroleum is an important source of energy in the world. Every aspect of human’s daily life activities are somehow influenced by the use of petroleum. Transportation, defense, technology, industrialization, commerce, research and development and many other facets of human activities are directly or indirectly linked with the use of petroleum or its sub-products.

It provides fuel for transportation, power generation (electricity), heat and lighting, lubricants for machinery and raw materials for Petro-chemical industries.

Nigeria is one of the largest Petroleum (oil) producing countries in the world and has deposits across the southern regions of Nigeria which consists of both tapped and untapped resources. Beginning from the exploration to exportation and to the marketing of products, money is involved.

Nigeria, with a population of over one hundred and eighty million (180,000,000) people, is among the largest consumers of oil products in Africa with over sixty million (60,000,000) liters consumed daily.

This is due to the pool of industries, vehicles, machines, numerous power generating set and households that use the Products. This heavy consumption has created a lucrative opportunity for Nigerians to invest in petrol station business.

Petrol station is an outlet or depot that procures refined petroleum products (Premium Motor Spirit (PMS), also called petrol; Automated Gas Oil (AGO) known as diesel; kerosene; Liquefied Petroleum Gas (LPG) and Lubricant) in bulk, stores it, and re-sales them to customers.

The demand for refined petroleum products is very high as with little promotion or commercials. Sales is guaranteed provided the location is right. There are big dealers in the market like AP, Mobil, Texaco, MRS, Total, Oando, Conoil yet the supply isn’t enough to meet the growing demand, this makes entry into the market favorable.

There are two (2) ways of running a petrol station business in Nigeria. It can be as dependent and independent (also known as autonomous) marketers.

Autonomous gas station or independent oil marketer – is a filling station that is run under the business name or brand as desired by the owner of the filling station and runs independently, thereby creating a niche for the business with the desired brand. This filling station gets its oil directly from Nigerian National Petroleum Corporation, having purchase representative at the petroleum product marketing company (PPMC).

Dependent oil marketer – this is a filing station that holds the product of another marketer (usually a bigger brand, like AP, Mobil oil, Total, Oando etc.). The station serves as a sales point for the product of the major marketer. It markets under its own business name, facilities and premises for an already established major oil business using franchise.

Petroleum products are among the most valuable natural resources abundantly available in our country. Nigerians and people everywhere use petroleum products as a fuel in their automobiles, generating sets, industrial plants and for cooking purposes, thus making petroleum products an essential commodity that is needed for the daily operations of individual, industrial and national activities.

Due to increasing level of standard of living, more Nigerians are increasing the number of cars on the road, the need for constant power supply to aid uninterrupted production of goods and services and also for domestic use more Nigerians are increasing the demand for fuel in order to enjoy the usage of their generating sets and industrial plants.

This report seeks to highlights the financial viability or otherwise of leasing an existing petrol filling station in Lagos, Nigeria.

The investor plans to lease the facility for two (2) years at four million (₦ 4,000,000) per anuum and the filling station has the following facilities – two (2) existing underground storage tanks of sixty thousand (60,000) litres capacity for premium motor spirit (PMS) and thirty thousand (30,000) litres for dual purpose kerosene.

The investor’s plan to install a five (5) ton capacity liquefied petroleum gas (LPG) skid mounted tank at the site.

The filling station has no existing truck, so products would be sourced from tank farms in Apapa, Lagos and transported to the petrol by haulage companies.