Abstract
The study examined the effect of balance of payment on foreign direct investment on the oil and gas sector in Nigeria. The study used ex-post facto research design and the population is made up of 5 oil and gas foreign investors in Nigeria. The sample size is the 5 oil and gas foreign investors. The study relied on reports from Central Bank of Nigeria for secondary data. The study employed various procedures in analysing the data such as correlation matrix, unit root test, co-integration and vector error correction model. The study found that causality ran from balance of payment to multinational corporations in Oil and Gas sector in Nigeria in terms of foreign direct investment which implied that balance trade openness caused increase in the inflow of FDI in Oil and Gas sector of Nigeria. This implied that balance of payment attracted more inflow of FDI in Oil and Gas sector in Nigeria. The study recommended that balance of payment policy in Oil and Gas should be formulated to encourage inflow of foreign direct investment in the sector in Nigeria. Government of Nigeria should seek for the assistant of Organization of the Petroleum Exporting Countries (OPEC) to direct investors in Oil and Gas to refine the oil and gas in Nigeria without exporting the raw material to their home country.
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