President Trump is actually 2.0 because he came first time and this is his second coming. But Trump is not the person but a phenomenon and how it does affect us? How does it affect the energy industry and how it is being financed and the way new rules will run the world?
Those who expected same of what we had Trump in 1.0 are in shock.
Paradigm shifts 2025
Day one of Trump, he signs 27 executive orders and he went into action. He is trying to define all the world order. What is the basis of MAGA? It means Make America Great Again. I don’t know whether it wasn’t great before, but he wants to make it great again. The other expression is America first. He brought the richest man in the world in tech and injects him into the system. This is 2.0 in action.
One of those driving this climate change, and from 2.0 we’re no more going to be part of the Paris Climate Agreement, hence US is out and it is a major player. What is the new world? He hopes to increase the production of America by 3 million barrels a day.
Dangote refinery is 650 and how much do you have left to export? It’s not even up to a fraction. Where will Nigeria’s oil and gas industry be? These are the big questions to be asked?
There are two effects from Trump 2.0
The Ripple and Domino effects
The ripple effect is the one that affect Mexico, Canada and the industries in America including the EU.
Although Trump has called for 50% increase in whisky and 200% on wines therefore the trade war has begun.
The world we have now is not the world of yesterday. That world has gone. There is a bull in china shop.
Trump seems to pride in the world of ambiguity, as he keeps all guessing, surprising disruptions lightly, business models in industry and elsewhere must be revised for the new heightened risks and hostility which 2.0 reflects.
Nothing can be predicted anymore. It results to isolation and everybody to himself.
The ECA is already abandoning developing markets, including those in Africa and so the door is shut, America first. Import dependent developing countries such as Nigeria are particularly vulnerable to uncertainty and market disruptions.
How are the Americans reacting?
After that disastrous outing with Zelensky of Ukraine, Americans and the world are beginning to ask questions. Placards are up throughout America, including those who voted for him.
According to Fareed Zachariah, when he appeared in CNN, “Trump is re-orienting America’s moral compass. In other words, what is right and wrong yesterday is no more right and wrong today.” Since people imitate America, the same trend will be spread all over the world.
Concerning the tariff, the Wall Street Journal said is the dumbest tariff.
Rory Stewart said: “Will the US continue to be a force for good? I think the question everyone is asking, not just Americans and the Westerners, even Nigerians, we should be asking, Will it continue the way it is going, inflation and stock crash.
The prediction is that there’s going to be a Q1 recession? The approval rating for Trump is that nearly 60% of Americans do not approve his handling of the US economy.
How will this impact us?
The domino effects
Brent is currently hovering around $70 and below but nobody knows how far it will go and Nigeria’s budget is at $75, we are beginning to feel the impact. Will the market take in threatening additional 3 million barrels, if those 3 million barrels stops, which is yet to arrive. When it arrives, what will happen to Nigeria budget?
We have refused to export anything from this country, even though there are so much to export and be prosperous, the country is not doing it. How do we fare?
Some years ago, non OPEC countries were greater and had global incremental demand growth by 20%.
In 2023 production from non OPEC countries exceeded global incremental demand according to the AI statistical review, and that was just three years ago. What is it going to be today?
Nigeria is still a fraction of US ramp up. The country should not be talking about 2 million barrels a day when currently it has slipped from 1.5 to 1.4 which will not take the country anywhere.
If Dangote’s production is deducted considering the country’s targets, we need 3 million barrels a day as requirement. With the right permutation and combination, how do we get to 3 million?
The global oil and gas in 2025 is expected to be around 630 billion, showing a slight decline compared to 2024 due to factors like reduced investment growth in North America, Europe and Russia.
But the one that concerns us is focus on share holder value. Will the Americans listen to Trump because the first thing is, can I pay dividends to my shareholder or deliver shareholder value? As long as that is the focus, then Trump 2.0 ramp up may never be achieved.
Sun sets on US offshore wind
10% of electricity in America comes from offshore wind. Trump says he doesn’t believe in climate change. Clearly, the energy transition, not only in America, but around the world is wobbling because US is a loud influential voice.
US according to Environmental Protection Agency, contributed about 15% of global GAG emissions while the whole of Africa contributes less than 4% they are contributing four times more than the continent and nothing is done about it.
Anyway, energy transition makes sense, Trump or no Trump. The Joe Biden administration earmarked $20 billion to support renewable energy technologies to the Greenhouse Gas Reduction Fund (GGRF). With Trump return, that is at risk.
Removal of tax credit for carbon storage and capture will soon be on hold which is preferable by some multinationals due to cost cutting. However, domino effects on similar projects around the world are enjoying USA institutional support. How will they fare? Some of these institutions or projects are in Nigeria, unfortunately, climate change adaptation borders will not add up as a leader and champion drops out. In Baku for example in COP 29 US was among those who clamoured that 300 billion to be raised annually by 2035 where will that money come from?
If US money is not involved, where will be the incentive? The Europeans will have to choose between Ukraine and climate change and how to get to the extra money? It’s going to be tough time going ahead.
Each time we hear USAID has been withdrawn, it is affecting Nigeria. Most initiatives in Nigeria are from USAID. For example, the SURE P, Electrify Nigeria or Power Africa, US aid is the instrument and variable to get that and with its withdrawal, this will be trouble!
Some of these issues are in the courts and hopefully they will slow down Trump’s action extinguishing US hasty withdrawal. “If US aid is dirty, clean it up not throwing away the baby with the bath water that is precisely what is being done currently in Trump 2.0.”
Another interesting thing is that 30% increase in solar products which mean solar lanterns and panels will be increased due to US aid withdrawal.
Also, 30 million people in rural Nigeria will be at risk. This statistic is baffling, who de-risks the private sector? USAID assists financial institutions. If US does not assist, who de-risks the renewable energy space. We can really see the direct impact between Trump 2.0 and energy in Nigeria.
The ripple effect
How does it affect American institutions? The ripples were stronger and three institutions were touched including the IOCs. If Trump withdraws fund, there’s a funding code that affects US exit which affects the whole world indirectly. What happens to Biden’s promise $4 billion over the next three years for the poorest countries? Nigeria is in the middle class and does not benefit from the poor or rich. Obviously it is the poorest oil producing country in the world.
Nigeria is in love with World Bank and the country is expecting to hopefully borrow 2.3 billion in 2025. Surprisingly, concerning the AfDB, six and a half percent of voting rights is held by America. There will be election in May 2025 with five candidates, in case there is a change, will Dr. Akinwunmi Adesina’s successor pursue Trump 2.0 agenda or African agenda? Is the AfDB candidate going to be a pro-Trump or pro-Africa?
Global banks
Can you imagine a world where there is no more Bank of America, JP Morgan whether you like it or not policies of these organisations will be influenced by Trump 2.0 with a cascading effect.
With City Group as a multinational bank, it will adapt to the transactional new tariffs as the new unknown in the economic outlook. The trade war has started; Africa and Nigeria may be on the receiving end.
In summary, there is uncertainty that Trump 2.0 brings disruptions, isolation, and retaliation. Perceive risks on capital will rise and it will not be cheap in the next four years. People will be starved with capital and exacerbation of trade war. According to a statement in Chatham House, “Trump action portends a permanent shift in the global governance landscape.”
This paper was delivered by Victor Eromosele, Chairman and CEO of ME Energy Finance Consultant, at the Center for Petroleum Information (CPI), Energy Finance Forum (EFF-XIII). Eromosele is also the Secretary of CPI and has his footprints across the energy industry for the past 37 years.
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