Effect of Oil and Gas Revenue Sources on Economic Growth in Nigeria

Abstract

Research Objective: The study aimed to examine the effect of oil and gas revenue sources on Nigeria's economic growth over a ten-year period, from 2014 to 2023. The proxies used for oil and gas revenue sources included White Products (PMS, AGO, DPK, ATK, LPFO), Lubricants (L), and Liquefied Petroleum Gas (LPG), while Gross Domestic Product (GDP) served as the proxy for economic growth. The study was anchored on the resource endowment theory of growth.

Methodology: The study employed an Ex-Post Facto research design, focusing on Conoil Plc as the sample firm. Data for the study were obtained from secondary sources and analysed using multiple regression analysis. A two-tailed test at a 5% significance level was conducted to determine the relationship between the variables.

Findings: The multiple regression analysis revealed that White Petroleum Products (WP) showed a positive but non-significant effect on GDP, with a p-value of 3.7285, indicating a limited impact on economic growth. Lubricants (L) also demonstrated a positive and non-significant effect on GDP, with a p-value of 0.1254, suggesting a marginal influence on economic growth. Liquefied Petroleum Gas (LPG) had a negative and significant effect on GDP, with a p-value of -0.0001, signifying that LPG negatively impacts Nigeria’s economic growth.

Conclusion: The study concluded that White Petroleum Products and Lubricants have a positive yet non-significant impact on GDP, while Liquefied Petroleum Gas has a negative and significant effect on economic growth in Nigeria. This suggests that although oil and gas revenues contribute to the economy, certain factors, particularly LPG, may hinder overall growth.

Recommendations: The government should strengthen the security around oil pipelines to deter illegal oil bunkering, which compromises the sector’s efficiency. Additionally, appropriate policy mixes should be formulated to motivate firms in the oil sector, aiming to enhance their performance and increase their contribution to Nigeria’s economic growth.