Crude Oil Theft and Illegal Refining in Nigeria: A Matter of Political and Moral Economy (Part II)

In part one of this brief on crude oil theft and illegal refining in Nigeria, we discussed the typologies of oil theft (large-scale oil theft and small-scale/artisanal theft). While the large-scale oil robbers sell their proceeds in the international market, their artisanal counterparts refine the crude for sale mainly in the local markets. We also traced the push and sustaining factors of oil theft to failures in the oil sector governance, which include the collapse of four government-owned refineries in Nigeria and suspicious enormous expenditures that have been unsuccessful in reviving them, the opaque role of the Nigerian National Petroleum Corporation (NNPC) for which it is alleged to be involved in corruption; collusion of senior government officials in oil theft. Further push and sustaining factors include the profit accruing from the underground economy of bunkering and illegal refining, vulnerabilities of pipelines and collusion of technical experts in the oil sector in vandalising the pipelines. The government also remotely enables local oil theft and refining by persistent engagement in fuel importation, which services corruption through false oil subsidy claims. Related to this is the Federal Government’s unwillingness to properly support the development of modular refineries, which would have served local consumption needs and ended fuel importation. Joining the list of prompts and sustainers of artisanal oil theft and refining is the collaboration of security forces (police, army and others) in oil theft. In short, oil theft and illicit refining in Nigeria involve a complex ring of influential stakeholders who are difficult to dislodge.

The groups involved in illegal refining are not deterred by either the risks of explosions, fire outbreaks and deaths that occur in the process, arrests by government forces or losses from the destruction of the illegal refineries. To explain the defiance of petro-business saboteurs, we look at two sets of underpinning factors. The first is the interests and incentives of the different stakeholders in the oil sabotage practices and the character of the regulatory system. The second is the moral motivations of the local actors to engage in artisanal theft and refining of crude oil persistently. The former aspect of the analysis refers to the political economy, while the latter points to the moral economy of the practices. Thus, this week’s edition of the Nextier SPD Policy Weekly focuses on the political and moral economy of local artisanal oil bunkering and refining.

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