Dangote Set to Start Crude Oil Production Soon
Dangote Group plans to initiate production at its two Nigerian oil assets in the fourth quarter of 2024, following months of challenges with crude supply, according to a report by S&P Global Commodity Insights.
Sources within the company indicate that Dangote is currently in search of a floating production, storage, and offloading vessel capable of handling 650,000 barrels of crude.
The group holds an 85% interest in West African E&P Venture, which possesses a 45% working stake in two offshore blocks, alongside the 55% interest held by the Nigerian National Petroleum Company (NNPC).
Another partner in West African E&P is First E&P, which operates OMLs 71 and 72. These licenses are situated in shallow waters in the southeast Niger Delta, just 22 kilometers from the Bonny terminal, and encompass the Kalaekule and Koronama oilfields.
Oil discoveries in these blocks date back to 1966, with Shell commencing production in the late 1980s. Production peaked at 21,000 barrels per day in 1999 before declining in 2003. However, data suggests that these fields still contain recoverable resources of nearly 300 million barrels of oil and approximately 2.3 trillion cubic feet of natural gas.
Commodity Insights predicts that production could commence in 2026, potentially reaching 43,000 barrels of oil equivalent per day by 2036.
Addressing Supply Challenges
While Dangote’s upstream operations are not frequently highlighted, the upcoming production from OMLs 71 and 72 may soon enhance the crude supply for the Dangote refinery, which has struggled with sourcing crude domestically for several months.
The $20 billion refinery began operations in January and initiated its residue catalytic cracker in early September, positioning itself to ramp up gasoline production by October, pending stabilization.
Designed to eliminate Nigeria’s reliance on imported refined products, the refinery has already produced petrol, diesel, jet fuel, and naphtha for both domestic consumption and export.
In its initial months, the refinery faced significant challenges in securing enough Nigerian crude, resulting in the need to import large quantities of WTI Midland crude from the U.S. This situation led to tensions among the NNPC, international oil firms, and Nigeria’s upstream regulators.
The NNPCL was originally set to supply Dangote with 300,000 barrels per day of crude in exchange for a 20% stake in the project, but its stake was ultimately reduced to 7.2%.
Recent data reveals that in September, Dangote imported just under 200,000 barrels per day of Nigerian crude and has not imported any U.S. crude since mid-July.
Despite these challenges, Dangote has explored sourcing crude from
