A new case study published by Climate Strategies and Salzburg Global has highlighted the urgent challenges and untapped opportunities Nigeria faces as the world accelerates its shift away from fossil fuels.

The report titled “Domestic Implications of Existing and Planned Oil and Gas Demand Reduction Strategies for Nigeria,” authored by Dr Oluwasola Omoju, warned that the country’s heavy dependence on oil and gas revenues makes it especially vulnerable to global energy transition trends.

Despite holding one of the world’s largest oil and gas reserves, Nigeria is already experiencing declining oil revenues, high production costs, and limited refining capacity.

“As key export markets (including the EU, US, and India) ramp up decarbonisation efforts, demand for Nigerian oil is projected to fall sharply. This poses risks for government budgets, foreign exchange earnings, and employment especially in oil-dependent regions,” Omoju said.

According to the report, it is not a hopeless situation as the decline in fossil fuel demand could catalyse long-overdue diversification into agriculture, manufacturing, solid minerals, and services with strong potential for job creation and inclusive growth.

“Nigeria’s natural gas, critical mineral deposits such as lithium, and growing renewable energy sector also offer short- to medium-term pathways for sustainable prosperity,” the report added.

The publication stresses that seizing these opportunities will require decisive action, such as reallocating investment away from costly oil exploration into high-growth sectors; expanding non-oil exports and tax reforms to reduce dependence on oil revenues; partnering with the private sector to invest in renewable energy and reskill oil workers; and leveraging natural gas and critical minerals as transition strategies while accelerating clean energy deployment.

“This transition can be an opportunity, not just a threat. Nigeria must act now to diversify its economy and ensure a just, inclusive energy future,” Omoju added.

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