Modelling the Development of the Downstream Petrochemical Industry in Nigeria

Author: Akinlade, Monsuru Olatunji

Supervisor: Olagoke Olabisi

Nigeria has ample oil resources, coal reserve and natural gas, but it depends largely on imported petrochemicals. Nigeria has recently taken a decisive step towards self-sufficiency in petrochemicals' production. In recognition of this development, it is deemed appropriate to develop a systematic method to assist government in its decision-making to effect an orderly growth of the industry. This is the primary aim of the present research work. Nigerian petrochemical industry is classified into two broad categories, namely, the upstream and the downstream petrochemical industry. Three developed models are used to predict the structure of the downstream petrochemical industry in Nigeria. The models are linear programming model, mixed integer programming model and goal programming model. Goal programming model is shown to be superior to linear programming model due to its ability to incorporate multiple objectives and goals that are invariable incompatible. The interaction of the technological and socio-politico-economic forces in Nigeria dictates a number of objectives that must be incorporated in a realistic model of the Nigerian industry. The goal programming model is applied to different priority structures to predict the structure of Nigerian downstream industry. The primary aim is to be self-sufficient in petrochemicals through the selection of technologies that will minimize the total production cost and feedstock consumption. Therefore, the pre-emptive priority factors (P1i for i = I....,m,P2,P3,P4) in the multi-dimensional objective function of the G.P. are chosen to be in accordance with the long terms objective of satisfying the demand locally. The minima and maxima of the goal targets are determined. G.P. model rectifies the shortcoming of the L.P.model by substantially reducing the over production of petrochemicals. On the tested priory structures, it is deduced that maximum goal target is a function of cost coefficient and demand while minimum goal target is a function of cost coefficient, demand and priority factor. It is noted that for the same goal target, most of the selected technologies are identical except for a few chemicals, it is preferable either to shift to another process or to simply import the chemicals. Process selections are also determined under limited investment which is an evitable constraint for a developing country like Nigeria. Sensitivity analyses are carried out to probe the perturbation of the petrochemical industry under different scenarios brought about by the supply/demand patterns, fluctuations in chemical prices and changes in technology capacity. The industry is shown to be highly sensitive to environmental disturbances, and this is reflected in the model's process selection. The capacity limitation test is advanced as a good substitute to feedstock conservation index to test the impact of the removal of a process from the technology catalogue.