EMPIRICAL ANALYSIS OF DETERMINANTS OF NATURAL GAS FLARING IN NIGERIA

• Main Author: Nyong, Reuben
• Format: Others
• Language: English
• Published: Umeå universitet, Företagsekonomi 2017
• Subjects: Economics; Nationalekonomi
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:umu:diva-136511

The World Bank has set 2030 as the year for the cessation of routine natural gas flaring in countries concerned. Nigeria is among the most consistent natural gas flaring nations on earth and natural gas flaring remains an intractable negative externality for approximately six decades of crude oil exploration in the country. With a focus on the long run, we employ the Autoregressive Distribution Lag bounds test to cointegration approach to search for the determinants of natural gas flaring in Nigeria using secondary data from 1984-2013. Empirical result identified natural gas flaring penalty, crude oil production, natural gas price, natural gas marketization and lack of natural gas infrastructure as fundamental determinants of natural gas flaring in Nigeria. Crude oil production contributed the highest to the increase in natural gas flaring while natural gas marketization has the greatest impact on gas flaring abatement. The key conclusion from this paper is that the implementation of policies targeting optimal natural gas flaring can result in natural gas flaring mitigation in the long run and put Nigeria on the path towards meeting the 2030 World Bank deadline on cessation of routine natural gas flaring.