The Conundrums of Illicit Crude Oil Refineries in Nigeria and Its Debilitating Effects on Nigeria’s Economy: A Legal Approach

Abstract

Nigeria’s oil industry encounters crude oil theft in commercial quantities, which is often exported to neighbouring countries. This has occasioned a loss of revenue and has caused environmental pollution due to oil spillages. There is a need for a stringent legal framework to combat the menace caused by incessant crude oil thefts, pipeline vandalisation by militants, and inadequate maintenance of existing crude oil refineries. The study adopts doctrinal legal research methods and a conceptual approach with the consideration of primary and secondary sources of law, for instance, the Petroleum Industry Act 2021, the Nigeria Extractive Industry Transparency Initiative (NEITI Act 2007, International Conventions, law textbooks and peer-reviewed journals. The justification for using the method was to establish the trustworthiness of the findings on illicit crude oil refineries. The findings reveal that the Nigerian government has lost more than 150,000 barrels of crude oil daily valued at USD six billion as a result of crude oil theft. This has reduced oil revenues, which ought to have added to the national treasury. The Petroleum Production and Distribution (Anti-Sabotage Act) 2007, which proscribes disruption of petroleum products in Nigeria, has not been diligently enforced. There is also an absence of a specific oil and gas legal framework criminalising crude oil theft. Section 3(e)(f)(iv) of the Nigeria Security and Civil Defence Corps Act only offers pipeline security as one of the functions of the corps, without distinctly stating the penalties to be imposed on those damaging crude oil pipelines. The study designs a hybrid model for the renovation of the country’s crude oil refineries. It also advocates the need to redefine legal regimes on illegal oil refineries by amending the Petroleum Industry Act to include specifically illegal oil refineries provision and to effectively criminalise crude oil theft. The implications of the main results are as follows: criminalising crude oil theft and pipeline vandalisation with vigorous punishments will serve as deterrence to others in the sector, increase revenues for the government and reduce environmental pollution.