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

Author

Listed:
  • Areghan A. Isibor

    (Department of Banking and Finance, Covenant University, Nigeria.)

  • Adetiloye A. Kehinde

    (Department of Banking and Finance, Covenant University, Nigeria.)

  • Olokoyo O. Felicia

    (Department of Banking and Finance, Covenant University, Nigeria.)

  • Adesina F. Tolulope

    (Department of Banking and Finance, Covenant University, Nigeria.)

  • Akinjare A. Victoria

    (Department of Banking and Finance, Covenant University, Nigeria.)

  • Udume E. Mercy

    (Department of Sociology, Covenant University, Nigeria.)

Abstract

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.

Suggested Citation

  • Areghan A. Isibor & Adetiloye A. Kehinde & Olokoyo O. Felicia & Adesina F. Tolulope & Akinjare A. Victoria & Udume E. Mercy, 2022. "Achieving Sustained Performance in the Nigerian Oil and Gas Sector despite Exchange Rate Fluctuations: A VAR Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 12(3), pages 341-351, May.
    • Handle: RePEc:eco:journ2:2022-03-37
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    References listed on IDEAS

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    Cited by:

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    2. Anna A. Gainetdinova, 2023. "Asymmetric Impact of Geopolitical Risk and Economic Policy Uncertainty on Russian Ruble Exchange Rate," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 22(2), pages 270-293.

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    More about this item

    Keywords

    Nigerian oil and gas; Oil export; Oil import; VAR; Balance of Payment;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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