Impact of Gas Production on Economic Growth in Nigeria

International Journal of Research and Innovation in Social Science (IJRISS) | Volume V, Issue VI, June 2021 | ISSN 2454–6186

Impact of Gas Production on Economic Growth in Nigeria

Eze Chikodili¹, Okoli, Uju Victoria², Onugha Chinwendu Benedette^3
1Department of Economics, University of Nigeria Nsukka, Enugu State, Nigeria.
²,³Department of Economics, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.

Abstract
This study attempts to examine the impact of gas production on economic growth in Nigeria from 1985-2020. The objective of the study broadly is to determine the impact of gas production growth rate on economic growth rate in Nigeria. In a bid to ascertain the impact of gas utilization growth rate on economic growth rate in Nigeria and determine the impact of gas flared growth rate on economic growth rate in Nigeria, Secondary data were collected based on the model used in the research work, through the use of Ordinary Least Squares (OLS) as estimation technique. As required of time series data Augmented Dickey Fuller (ADF) for stationarity test, that is unit root test was conducted on the data and the variables were stationary at level form I(0), after which Johansen co-integration test was conducted and the variables were co-integrated showing evidence of long-run relationship between the dependent and independent variables. Level form I(0) stationarity indicates short run instability, as a result the study analysis is based on long run analysis. The result obtained from empirical analysis shows that there exist 47% goodness of fit between the dependent and independent variables. Economically, Growth Rate of Gas Utilized (GRGU) and Growth Rate of Gas Flared(GRGF) confirmed to a priori expectation. Statistically, GRGU and GRGF were positively significant and the overall statistical test indicates positive significant relationship. By implication GRGU and GRGF is favorable to the Nigerian economy. This study recommended that the government should set a benchmark for gas production efficiency and withdraw license from companies that failed to comply. There should be proper accountability, transparency and sell-off of compromise and Corrupt practices by adhering to economic rationalities rather than political expediencies.

Keywords: Augmented Dickey Fuller, Growth Rate of Gas Utilized, Growth Rate of Gas Flared, Random Effect, Economic Growth Rates.

Introduction

The discovery of oil and gas in Nigeria by Royal Dutch shell in 1956 marked the start of oil and gas production in Nigeria. Shortly after commercial production of oil in 1958 by shell, other multinationals such as Chevron oil and gas company, Total Nigeria Plc, Mobil oil Nigeria Plc, Nigeria Agip Oil Company, Texaco and Pan Ocean etc were officially licensed to start oil and gas exploitation, exploration and production in Nigeria. Oil was the main target for the operators and any gas associated with oil was usually flared as there was no plan for its use as at that time (Yewende and Omowumi, 2014).

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