The Dangote Group, owners of the Dangote Refinery, has put mechanism in place to commence crude oil production.
According to reports by S&P Global Commodity Insights, the Dangote Group is looking to start production at its two Nigerian oil assets in the fourth quarter of 2024.
The company, which has endured months of crude supply woes, would reportedly commence production at its two Niger Delta upstream projects in Oil Mining Leases 71 and 72, starting with about 20,000 barrels per day before ramping up further in the first quarter of 2025.
“The company source said production at the company’s two Niger Delta upstream projects in Oil Mining Leases 71 and 72 would start at around 20,000 b/d, before ramping up further in the first quarter of 2025,” the report said.
The report stated that Dangote is currently seeking a floating production, storage and offloading vessel with a capacity of 650,000 barrels of crude.
The company, it was learnt, holds an 85 per cent stake in West African E&P Venture, which in turn has a 45 per cent working interest in the two blocks, alongside the state-owned Nigerian National Petroleum Company’s 55 per cent.
The other stakeholder in West African E&P is Nigerian upstream player, First E&P, which operates OMLs 71 and 72.
“The licences are located in the shallow water in the southeast of the troubled Niger Delta, just 22 km from the onshore Bonny terminal. They contain the Kalaekule and Koronama oilfields.
“Discoveries were first made on the blocks in 1966, and Shell began production there two decades later. Output peaked at 21,000 b/d in 1999, before declining in 2003,” S&P explained.
However, according to Commodity Insights, the fields still hold recoverable resources of almost 300 million barrels of oil and as much as 2.3 trillion cubic feet of natural gas.
The report noted that though Dangote’s upstream activities are seldom discussed, the imminent startup of production at OMLs 71 and 72 suggests the Dangote refinery could soon supplement its crude feedstock, after battling crude supply issues for months.
The $20 billion facility came online in January, and started up its residue catalytic cracker in early September, allowing for high-volume petrol production when the unit stabilises.
Built by Africa’s richest man, the refinery was designed to end Nigeria’s decades-long dependence on imported refined products. To date, it has produced volumes of gasoline, diesel, gasoil, jet fuel and naphtha, for domestic use and export.
However, the plant struggled to obtain sufficient Nigerian crude in its early months, forcing it to import large volumes of WTI Midland crude from the US, and sparking a bitter public row between the NNPC, international oil companies, Dangote and Nigeria’s upstream regulators.
Data from S&P Global Commodities at Sea shows Dangote took just under 200,000 bpd of Nigerian crude in September and it has not imported any US crude since mid-July.
However, Dangote may acquire crude from other oil producers, including Libya, Senegal and even Brazil, with company sources warning that NNPC could only be able to fulfil 60 per cent of its crude demand