A Systems Dynamics Model for Analysing the Long-Term Evolution of Nigeria’s Domestic Gas Sector Under Competing Policy Scenarios

The complex feedback dynamics governing Nigeria's domestic gas sector, encompassing investment decisions, regulatory responses, demand evolution, and infrastructure development, are poorly represented by conventional equilibrium-based economic models, limiting the ability of policymakers to anticipate second-order and long-term sector evolution. This study develops and applies a comprehensive systems dynamics (SD) model to analyse the long-term evolution of Nigeria's domestic gas sector under competing policy scenarios spanning the period 2025 to 2050. The model is constructed using Vensim software, incorporating causal loop diagrams and stock-and-flow structures representing the interdependencies between upstream gas supply investment, midstream infrastructure capacity, gas price regulation, domestic demand growth, and export diversion decisions. Model parameterisation draws on 25 years of sector historical data and is validated using a split-sample historical fit approach. Five policy scenarios are simulated: baseline continuation, commercial pricing reform, infrastructure investment acceleration, methane regulation tightening, and an energy transition acceleration scenario consistent with Nigeria's 2060 net-zero ambition. The study's original theoretical contribution is the endogenous modelling of political economy feedback loops, specifically the regulatory capture mechanisms through which below-cost gas pricing policy perpetuates itself despite negative long-run supply consequences, which is not represented in existing Nigerian gas sector models. Findings demonstrate that commercial pricing reform, even partial, produces a non-linear supply expansion response after a 5 to 7 year investment lag. The acceleration scenario reveals potential stranded asset risks for long-payback gas infrastructure if the energy transition accelerates faster than central case projections. Recommendations include a real-time policy monitoring dashboard based on the SD model structure and annual scenario updates for NUPRC strategic planning. Keywords: systems dynamics, gas sector policy, Nigeria, scenario modelling, energy transition.