A comparative study of the legal framework governing oil and gas exploration and exploitation in Nigeria

Abstract

Oil and gas remain the bedrock of the Nigerian economy, forming 90% of the total export and about 80% of the Federal Government's revenue. Thus, a good regulatory framework to ensure sustainable development of these valuable resources is sine-qua-non to economic well-being of Nigeria. Presently, Nigeria's petroleum industry is faced with many challenges. The huge revenue earned by the government does not translate to the well-being of Nigerians. The oil-rich region of the Niger Delta is heavily polluted through oil spillages and gas flaring . This has led to violent agitations in the Niger Delta. This thesis traces and interrogates the factors that went wrong and what can be done to rectify the situation. This study stemmed from the premise that the laws governing the exploration and exploitation of petroleum resources are inadequate to address the challenges facing the sector and that the Federal Government's poor control of petroleum resources in Nigeria has led to ineptitude and wastage in the sector. The Federal Government is too far removed from the sites of petroleum extraction and is only interested in rents, royalty and other tax collection which foils sustainable development of petroleum resources in the country. To test these assumptions, the thesis discusses the present legal framework in Nigeria to establish their adequacy or otherwise. This research study is triangulation based. This study verifies the findings in extant literature that the present legal framework for the exploration and exploitation oil and gas is inadequate in terms of sustainable development and the benefits accruable to the citizenry. The study conducted in-depth semi-structured interviews and administered questionnaires to find out the causes of the crisis in the Niger Delta and what could be done to bring about a lasting peace to the region. The field work assessed the performance of the government institutions at regulating the petroleum industry so as to achieve sustainable development. From the findings it was discovered that the Federal Government through its agencies could not adequately implement the laws and regulations in the industry and this has encouraged impunity in the oil sector; the oil companies flagrantly violate the rules concerning gas flaring and displayed a carefree attitude to clearing of oil spills that has devastated the Niger Delta environment. Apart from this, other challenges like poor compensation for damages suffered by the people, lack of access to justice on the part of oil pollution victims and problem of corruption in the sector were also discovered. In an effort to seek a solution to the challenges facing the petroleum industry this study compares the successful legal regimes of Australia, Canada and the United States of America with that of Nigeria to draw important lessons for Nigeria. It is hoped that if Nigeria adopts best practices in these countries to resolve some of the teething challenges in the sector. Based on the findings of the study, useful recommendations were made to help Nigeria achieve sustainable development in its petroleum industry.