Achieving Sustained Performance in the Nigerian Oil and Gas Sector despite Exchange Rate Fluctuations: A VAR Approach

Achieving Sustained Performance in the Nigerian Oil and Gas Sector despite Exchange Rate Fluctuations: A VAR Approach

The issue of sustaining performance in the Nigerian oil and gas sector is one issue that is of concern to the present government of President Muhammadu Buhari and is in line with the UN’s Sustainable Development Goal (SDG) 7 of Clean Energy. The study examined the relationship between exchange rate...

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Bibliographic Details
Published in:International journal of energy economics and policy Vol. 12; no. 3; pp. 341 - 351
Main Authors: Isibor, Areghan A., Kehinde, Adetiloye A., Felicia, Olokoyo O., Tolulope, Adesina F., Victoria, Akinjare A., Mercy, Udume E.
Format: Journal Article
Language:English
Published: Mersin EconJournals 01-07-2022
Subjects:
Balance of Payment
Coronaviruses
COVID-19
Crude oil
Crude oil prices
Economic development
Economic growth
Energy economics
Exports
Foreign exchange rates
GDP
Gross Domestic Product
Nigerian oil and gas
Oil export
Oil import
Petroleum industry
VAR
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Summary:The issue of sustaining performance in the Nigerian oil and gas sector is one issue that is of concern to the present government of President Muhammadu Buhari and is in line with the UN’s Sustainable Development Goal (SDG) 7 of Clean Energy. The study examined the relationship between exchange rate fluctuations and Nigerian oil and gas sector performance with respect to achieving a sustainable economic growth. The three models used for the study are OBOP = f(OILE, OILI); OILO = f(EXR); and OILE = f(EXR). Secondary data were gathered and analyzed using the vector autoregression (VAR). The unit root test showed that all the variables were stationary at first difference while the Johansen cointegration proved the presence of a long run relationship among the variables in the model. The VAR result revealed that both oil export (OILE(-1)) and  oil imports (OILI(-1)) were significant both positively and negatively respectively with overall balance of payments (OBOP). Also, nominal exchange rate (EXR(-1)) was positively significant with OILE while EXR(-1) was negatively significant with OILO. The study therefore recommended amongst others that more refineries should be built in Nigeria, so more products are extracted from crude oil and can be exported to boost revenue.
ISSN:2146-4553
2146-4553
DOI:10.32479/ijeep.12787