Nigeria’s oil revenue could decline by more than 60 per cent from 2030 as global demand for crude oil weakens, potentially exposing the country to heightened fiscal and economic instability, a new report has warned.
The projected decline is linked to the anticipated shift away from fossil fuels as countries increasingly adopt renewable energy and electric vehicles.
The report, based on research by the E3G think tank and published by The Guardian UK on Tuesday, identified Nigeria among oil-producing countries that could face significant economic pressures from the global energy transition because of its heavy dependence on oil revenues and limited economic diversification.
It said global oil demand was expected to plateau over the coming decade, with a likely peak in the early 2030s. This could force oil-producing countries to compete for a shrinking pool of buyers.
According to the report, low-cost producers with abundant reserves and more developed infrastructure, including Saudi Arabia and the United Arab Emirates, would be better positioned to retain market share as demand declines. Higher-cost and less diversified producers, however, could experience substantial revenue losses.
The study projected that Algeria could record an 87 per cent decline in oil revenue, while Nigeria could suffer a fall of more than 60 per cent from 2030.
It warned that declining oil income could leave affected countries struggling to finance basic public services and service debts, potentially triggering fiscal crises with wider economic and security consequences.
Beth Walker, a co-author of the report, said governments were not doing enough to prepare for the consequences of declining oil demand.
“Governments are not thinking about and not prepared for these outcomes. The transition becomes riskier for everyone when oil producers are left to adjust on their own and oil markets are left to manage themselves. Producer fragility becomes a global security risk,” Walker stated.
The report noted that oil revenue accounts for more than 40 per cent of government income in 17 countries worldwide, with the proportion reaching between 70 and 90 per cent in countries such as Iraq and Libya.
For Nigeria, it warned that a sustained decline in oil revenue could undermine the government’s capacity to provide essential services while creating broader economic and security challenges across Africa.
Walker said the consequences might not emerge as one global crisis but through a series of national fiscal crises that could contribute to unrest, migration and security problems.
She identified Nigeria as a particular concern because of its large population and strategic influence on the African continent.
“Most of these problems are on a much larger scale than Venezuela, and they could all unravel just as the UK and Europe’s capacity to contain live conflicts is drained,” she said.
The report further stated that the global transition away from oil was already taking place, with the expansion of renewable energy contributing to declining oil consumption in some countries.
China, which has historically been a major driver of global oil demand growth, has also recorded a downward trend in consumption, partly due to the rapid adoption of electric vehicles.
India’s future oil demand, however, remains uncertain and could play a major role in determining the pace at which global oil demand declines.
The researchers cautioned that delaying the energy transition would not resolve the challenges facing oil-dependent economies, particularly amid the worsening climate crisis.
“None of this is an argument for slowing the transition. A slow but chaotic transition can be just as destabilising as a fast one, maybe even more so,” another co-author, Maria Pastukhova, said.
The E3G study was reportedly compiled over two years and involved “war-gaming” different scenarios around declining oil demand with more than 100 public servants and experts from across the world.
It called for governments, the International Monetary Fund, the World Bank and private financial institutions to collaborate in helping oil-dependent economies prepare for declining oil revenues and the wider consequences of the global energy transition.
