TIME SERIES ANALYSIS OF SALES OF PETROLEUM PRODUCTS IN NIGERIA (1988-2011)

TIME SERIES ANALYSIS OF SALES OF PETROLEUM PRODUCTS IN NIGERIA (1988-2011)

ABSTRACT

This project is based on time series analysis of yearly sales of petroleum at Balewa fuel station Nigeria limited, Oshogbo, Osun State from 1988-2011. Various trend models of time series analysis were discussed with a view of showing understanding to the appropriate method to be used for forecasts. The time plot of yearly sales of petroleum shows that, there is low sales of petroleum within year 1994 and higher sales of petroleum occur during year 2011. Moreover, evidence from trend analysis shows that the quadratic model trend gives the best model out of all the models considered. This is due to the model which has the least Mean Absolute Deviation. The study adopted quadratic trend model, which was concluded that quadratic model was the best model that best fit the data and was used to forecast yearly sales of petroleum from year 1998 to 2023.

TABLE OF CONTENTS

TITLE                                                                                                                          PAGE

Title Page                                                                                                                          i

Certification                                                                                                                      ii

Dedication                                                                                                                        iii

Acknowledgement                                                                                                            iv

Abstract                                                                                                                             v

Table of Contents                                                                                                             vi-vii

List of Tables                                                                                                                       ix

List of Figures                                                                                                                     x

CHAPTER ONE

1.0    Introduction                                                                                                               1

1.1    Discovery of crude oil in Nigeria                                                                             1-3

1.2    The performance of oil sector in Nigeria                                                                 3- 5

1.3    Role in sales of petroleum product                                                                          6

1.4    Aim and Objective                                                                                                   6

1.5    Description of Data                                                                                                  6

Conclusion of chapter                                                                                              6

CHAPTER TWO: LITERATURE REVIEV

• Introduction                                                                                                            7

2.1     Definition of time series                                                                                          7

2.1.1  Type of time series                                                                                                  7

2.1.2  Component of time series                                                                                        8

2.1.3  Time series Trend                                                                                                    8

2.1.4  Objective of time series                                                                                          9

2.1.5  Importance of time series                                                                                        9

• Time Plot                                                                                                                 9
•  Estimation of Trend                                                                                                9-10

2.3.1  Estimation of Seasonal Variation                                                                           10

2.4    Deseasonalisation of Data                                                                                      11

2.5   Estimation of Cyclical Variation                                                                             11

2.5.1 Forecasting Accuracy                                                                                              11

2.6    Stationary Time Series                                                                                            12

2.6.1 Strict Stationary                                                                                                      12

2.6.2 Weak Stationary                                                                                                     12

2.6.3 Causes of Stationary                                                                                               12

• Non Stationary                                                                                                        13

2.8    Test of Stationarity                                                                                                13

2.8.1 Graphical Analysis                                                                                                 13

2.8.2 Correlogram                                                                                                           14

2.8.3 The unit Root Test                                                                                                 14

2.8.4 Models of Time Series                                                                                           15

2.8.4 The Augmented Dickey-Fuller (ADF) Test                                                           16

CHAPTER THREE

3.0 Introduction                                                                                                               17

3.1 Time series plot and Component of Time series                                                       17-20

3.2   Forecast                                                                                                                    21

CHAPTER FOUR: CONCLUSIONS AND RECOMMENDATIONS

4.0  Introduction                                                                                                              23

4.1  Summary and Conclusions                                                                                       23

4.2  Recommendations                                                                                                    23

References                                                                                                                24

Appendix                                                                                                                  25

LIST OF TABLES

Table 1: Summary for Trend Analysis                                                                            19

Table 2: Forecast Value of Quadratic                                                                              21

Table 3: Appendix                                                                                                           25

LIST OF FIGURES

Fig 1: Time series plot of petroleum                                                                                17

Fig 2: Linear Trend Analysis                                                                                           18

Fig 3: Quadratic Trend Analysis                                                                                      19

Fig 4: Exponential Trend Analysis                                                                                  20

Fig 5: Forecast plot                                                                                                          22

CHAPTER ONE

INTRODUCTION

1.0    YEARLY SALES OF PETROLEUM

The search of oil in Nigeria started as early as 1937, but the discovery was not until 1956. The sole of petroleum products began in December 1957, managed by a consortium of Royal Dutch Shell and British Petroleum BP Now known as Shell Petroleum Development Company SPDC. G.A, Aga (1993) stated that Nigeria was the second oil producing nation in Africa after Libya and sixth in the world.

In May 1971, the Nigeria National Oil Company was established under the company and Allied matter Act of 1958 as applicable then. NNOC was the government Agency Mandated by law to engage in all phases of oil production and sales, NNOC was later in 1977 amalgamated into a full flex ministry of petroleum to form the Nigeria National Petroleum Corporation (NNPC), which is in partnership with several oil company from different countries operating in Nigeria. Before October 1965, Nigeria Crude Oil was refined overseas and all the processed oil needs were imported. The first refinery plant came into operation in 1965 located at Alesa Eleme near Port-Harcourt. Later Warri and Kaduna Petro-chemical refineries were established in 1978 and 1980 respectively. Similarly, Pipeline and Products Marketing Company Ltd (PPMC) Enugu Depot was commissioned in 25 August 1975 by the then military Governor of the old Anambra State; Colonel D.S. Abubakar. The last was the second refinery in Port-Harcourt. It is however worthy to note that NNPC has several subsidiary company e.g. Pipeline and Product Marketing Company (PPMC).

TIME SERIES ANALYSIS OF SALES OF PETROLEUM PRODUCTS IN NIGERIA (1988-2011)