The Role of Natural Gas in Nigeria's Energy Transition and Economic Growth - An Econometric Approach

Abstract Nigeria's economy stands at a critical juncture in leveraging its abundant resources of approximately 209 trillion cubic feet of proven gas resources as a fulcrum for energy transition and economic development. Natural gas is a pivotal energy source that not only drives the transition to sustainable energy sources but also fosters economic diversification and development. This study investigates the role of natural gas in facilitating Nigeria's energy transition and fostering economic growth using an Autoregressive Distributed Lag (ARDL) and Vector Error Correction model (VECM) econometric approach. Employing time-series data from [1970 - 2022], the analysis examines the long-term and short-term dynamics between natural gas utilization, energy transition indicators, and key economic growth metrics such as Gross Domestic Product. The research findings highlight natural gas as a critical link to Nigeria's plan for a sustainable energy transition and economic growth by enhancing energy security, attracting foreign direct investments and bolstering key economic indicators like the country's GDP. Additionally, the findings suggest that increased natural gas consumption positively influences the energy transition by reducing reliance on crude oil systems and promoting the adoption of cleaner technologies. The study also highlights the importance of robust policy frameworks and infrastructure development in maximizing the benefits of natural gas for sustainable growth. In the end, insights from this paper contribute to the existing literature by providing empirical evidence on the dual role of natural gas in energy transition and economic development, specifically within the Nigerian context. It also offers valuable implications for policymakers, industry stakeholders, and investors, emphasizing the need to integrate natural gas strategically within Nigeria's broader energy and economic policies. By leveraging natural gas as a bridge fuel, Nigeria can effectively navigate its path towards a more sustainable and economically resilient future.