The Dangote Group, owners of the Dangote Refinery, is set to commence crude oil production soon, despite facing significant challenges with securing crude supply. According to a report by S&P Global Commodity Insights, production at the company’s two Nigerian oil assets is expected to start in the fourth quarter of 2024.
Dangote will begin production at its Niger Delta upstream projects in Oil Mining Leases (OMLs) 71 and 72, initially targeting 20,000 barrels per day (bpd). The company aims to increase production further in the first quarter of 2025.
Dangote is reportedly seeking a floating production, storage, and offloading vessel (FPSO) with a capacity of 650,000 barrels of crude to support this production effort. The company holds an 85% stake in West African E&P Venture, which has a 45% working interest in the two blocks, while the Nigerian National Petroleum Company (NNPC) holds the remaining 55%.
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OMLs 71 and 72 are located in the shallow waters of the Niger Delta, near the Bonny terminal, and contain the Kalaekule and Koronama oilfields. While production in these fields peaked at 21,000 bpd in 1999, recoverable resources are estimated at nearly 300 million barrels of oil and 2.3 trillion cubic feet of natural gas.
This move signals that Dangote may soon be able to supplement crude feedstock for its $20 billion refinery, which came online earlier this year. After facing early struggles with crude supply, the refinery has been producing gasoline, diesel, jet fuel, and other products for both domestic use and export.
Despite these efforts, reports indicate that NNPC may only be able to fulfill about 60% of Dangote’s crude demand, leading the company to consider sourcing oil from other producers, including countries like Libya, Senegal, and Brazil.
