By John Alechenu, Abuja
A new study has warned that Nigeria faces urgent economic challenges alongside potential opportunities as global demand for oil declines.
The report, published by Climate Strategies and Salzburg Global, highlights how Nigeria’s dependence on oil and gas revenues leaves the country vulnerable to the accelerating global shift away from fossil fuels.
Authored by Dr. Oluwasola E. Omoju, the study titled “Domestic Implications of Existing and Planned Oil and Gas Demand Reduction Strategies for Nigeria” notes that Nigeria, despite holding some of the world’s largest oil and gas reserves, is already grappling with declining oil revenues, high production costs, and limited refining capacity.
“As key export markets—including the EU, US, and India—intensify decarbonisation efforts, demand for Nigerian oil is projected to fall sharply,” Omoju observed. He warned that this trend could negatively affect government budgets, foreign exchange earnings, and employment, particularly in oil-dependent regions.
However, the report also pointed to significant opportunities. It suggested that declining fossil fuel demand could accelerate long-needed diversification into agriculture, manufacturing, solid minerals, and services—sectors with strong potential for job creation and inclusive growth.
Nigeria’s natural gas resources, critical minerals such as lithium, and its growing renewable energy sector were identified as key assets that could support sustainable prosperity in the short- to medium-term.
The study called for decisive policy action, including redirecting investments away from costly oil exploration into high-growth sectors, expanding non-oil exports, implementing tax reforms to reduce reliance on oil revenues, and partnering with the private sector to develop renewable energy and reskill oil workers.
It also emphasized leveraging natural gas and critical minerals as transition strategies, while accelerating clean energy deployment.
“This transition can be an opportunity, not just a threat,” Dr. Omoju stated. “Nigeria must act now to diversify its economy and ensure a just, inclusive energy future.”
The research formed part of the Prosperity Post Fossil Fuel Policy Dialogue on Just Energy Transitions, a multi-year initiative bringing together fossil fuel-dependent economies to navigate the risks and opportunities of the shift away from oil and gas.
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