NNPC Ltd ranks third for free cash flow generation among African oil companies in 2024 — Report

NNPC Ltd has been ranked third for free cash flow generation by oil companies in Africa by 2024.

This is according to the State of the African Energy 2024 Outlook Report released in November 2023 by the African Energy Chamber.  

A part of the report ranked oil companies (a combination of national oil companies and oil majors) for the years 2023 to 2024 in terms of free cash flow generation in Africa.

The report stated further that in the short term, African projects are aligning more closely with other continents in terms of their free cash flows.  

Among the top 10 companies generating free cash flows in Africa from 2023 to 2024, several National Oil Companies (NOCs) like Sonatrach in Algeria, NOC in Libya, NNPC Limited in Nigeria, and Sonangol in Angola feature prominently. Major companies such as Eni, TotalEnergies, ExxonMobil, Chevron, Shell, BP, and Azule Energy (a joint venture between Eni and BP in Angola) also hold positions in this ranking.  

For Libya’s NOC, the recovery in production drives its high position in free cash flow generation. Meanwhile, Algeria’s Sonatrach benefits from stakes in several producing blocks, and partnerships with major companies in Nigeria and Angola contribute to the national oil companies (NOCs) of these countries featuring in the top 10 list.  

The top 10 national oil companies were listed as follows: Sonatrach NOC (Libya), NNPC Limited, TotalEnergies, ExxonMobil, Eni, Sonangol, Chevron, Azule Energy, BP.

Commodity prices significantly influence the free cash flows of major companies, causing fluctuations in their positions within the top 10 rankings.

It is anticipated that oil projects across Africa will collectively yield approximately $55 billion in 2023, which is similar to the levels seen before the pandemic in 2018.  

After the pandemic’s impact in 2020 with free cash flow at less than $20 billion, there was a significant increase to almost $95 billion in 2022.

However, due to shifts in oil prices and revised strategies in upstream spending, the expected levels for 2023 dipped to around $55 billion, and it’s projected to remain relatively stable in 2024 at just over $52 billion.  

The year 2022 marked the peak in free cash flow for the first half of the decade, while 2025 is estimated to drop further to about $40 billion.

…Oil production outlook on the continent in 2024

The cited report from the African Energy Chamber also focused on oil production projections for 2024, noting that Nigeria, Libya, Algeria, and Angola are expected to be the top four producers in Africa for 2023 and 2024, contributing 1.45 million bpd, 1.29 million bpd, 1.19 million bpd, and 1.1 million bpd respectively in 2023, and 1.51 million bpd, 1.31 million bpd, 1.18 million bpd, and 1.01 million bpd respectively in 2024.

These four countries together account for two-thirds of the total output. Nigeria alone is anticipated to contribute slightly over a fifth of the annual volume, while the other three producers are expected to contribute just under a fifth of the annual average.

The global projection for oil production in 2024 suggests minimal growth, while Africa’s outlook is expected to remain relatively steady at an average of about 6.77 million barrels per day (bpd) between 2023 and 2024. Africa’s monthly contribution to global output over these years is anticipated to stay at around 8 percent of the total volume.  

However, month-on-month production forecasts for Africa in 2024 indicate a gradual decline from approximately 6.9 million bpd in January to about 6.62 million bpd by December 2024.

OPEC members in Africa, along with Egypt, Chad, and Ghana, are projected to be the primary drivers of oil and condensate output in the region over the next two years.  Egypt, expected to be among the top five producers in Africa, is estimated to flow about 560,000 bpd and 520,000 bpd for the years 2023 and 2024 respectively.

Libya, amid a recovery phase from previous lows due to civil unrest, is projected to witness month-on-month growth in 2024, similar to its neighbour Algeria.  

In the short term, National Oil Companies (NOCs), either as primary stakeholders like Algeria’s NOC or as joint venture partners with major companies as seen in Nigeria, are expected to lead oil and condensate production in Africa.

Approximately 40 percent of the total oil and condensate supply from Africa between 2023 and 2024 is projected to come from NOCs’ stakes in producing fields.

International oil majors such as Shell, TotalEnergies, Eni, BP, Chevron, and ExxonMobil form the second largest company segment in terms of short-term liquids production across Africa.

Nigeria, faced with production disruptions in 2023, is expected to gradually recover that year but experience a gradual decline in 2024.

The remaining top five producers are also forecasted to see a gradual month-on-month decline in 2024.