Effect of Liquefied Natural Gas Exports on the Nigeria Economy: An ARDL Model Approach

International Journal of Economics and Management Studies

© 2023 by SSRG - IJEMS Journal

Volume 10 Issue 5

Year of Publication : 2023

Authors : Kufre Jerome Udoudo, Ijeoma Emele Kalu, Koyejo Oduola

10.14445/23939125/IJEMS-V10I5P105

How to Cite?

Kufre Jerome Udoudo, Ijeoma Emele Kalu, Koyejo Oduola, "Effect of Liquefied Natural Gas Exports on the Nigeria Economy: An ARDL Model Approach," SSRG International Journal of Economics and Management Studies, vol. 10,  no. 5, pp. 35-46, 2023. Crossref, https://doi.org/10.14445/23939125/IJEMS-V10I5P105

Abstract:

This study examines the effect of Liquefied Natural Gas (LNG) export on the economy of Nigeria from 2000- 2021 using biannual data in an Autoregressive Distributed Lag model. The model incorporates Liquefied Natural Gas (LNG) exports, crude oil prices, natural gas prices, and Gross Domestic Product (GDP). The study activity included the collection and use of secondary data and the performance of a unit root test on such data to validate their stationarity and co-integration test to investigate the variables' long-run and short-run relationships. The findings indicate a significant and favourable correlation between LNG exports and the Nigerian economy (proxied by GDP). In the long run, LNG exports have a positive and significant influence on the economy at the 1% significance level, and a 1% rise in LNG export from Nigeria would result in a 0.72% gain in GDP. In the short run, there is a positive and strong association between LNG and the Nigerian economy, such that a 1% rise in LNG exports would result in a 0.23% gain in GDP. As a result, the Nigerian government should enhance investments in the natural gas sub-sector to assure a consistent and continuous supply of natural gas to the country's LNG facilities it is recommended that a proactive strategy should be implemented to encourage investment in floating LNG plants in regions and locations where laying a pipeline is uneconomical. This can convert stranded gas reserves to LNG for export and transform these regions/areas into gas development hubs.

Keywords:

ARDL, GDP, LNG exports, Natural gas price, Nigerian economy.

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