NEITI: Nigeria’s economy threatened by decline in global crude oil demand

The Nigeria Extractive Industries Transparency Initiative (NEITI) says Nigeria is faced with significant threats to its economy over the possibility of a permanent decline in global demand for crude oil.

Speaking at a board retreat/meeting held in Lagos on Monday, Ogbonnaya Orji, NEITI’s executive director, said the global transition from fossil fuels to renewable energy sources poses significant risks to countries that heavily rely on hydrocarbon-based natural resource revenues for survival.

Orji said Nigeria is heavily reliant on oil revenues for survival.

“At current dependency levels, Nigeria already faces significant threats to its economy from the prospect of a permanent decline in global demand for crude oil,” he said.

“Given the fiscal problems Nigeria has experienced from short-term disruptions in crude oil and gas output, the much longer-term and permanent decline in demand would have far-reaching impact on the country’s economy.

“While the transition from carbon-based fuel will have significant long-term impact on Nigeria’s revenue and exports, the transition would also have other impacts on the economy.” 

Orji said a direct consequence of the transition would be the loss of fossil fuel as a source of energy.

“In 2021, crude oil and gas accounted for 46 percent of energy use and 78 percent of electricity generation in Nigeria,” he said.

“The transition would therefore require significant financial investment for the country to generate renewable energy to replace energy previously generated from carbon fuels.”

Orji said this financing and technological burden is in addition to the equally significant amount of money needed to close the current energy supply gap in Nigeria.