Dangote to Begin Oil Production to Support Refinery Operations
The Dangote Group is set to commence crude oil production from two of its upstream projects in the Niger Delta by the fourth quarter of 2024, according to a report by S&P Global Commodity Insights.
The move is expected to ease the company’s struggles with crude supply, which has affected operations at its new mega-refinery.
A company insider revealed that production will begin with an initial 20,000 barrels per day (b/d) at Oil Mining Leases (OMLs) 71 and 72.
“We expect production to start at around 20,000 b/d and ramp up significantly in the first quarter of 2025,” the source was quoted as saying.
The report further noted that Dangote is seeking a floating production, storage, and offloading (FPSO) vessel with a capacity of 650,000 barrels of crude. This will complement the group’s efforts to build a steady supply pipeline for its refinery.
The Dangote Group holds an 85% stake in West African E&P Venture, which owns a 45% working interest in the two leases alongside the Nigerian National Petroleum Company’s 55%. First E&P, a Nigerian upstream operator, manages both blocks, which host the Kalaekule and Koronama oilfields.
“These oilfields are located just 22 km from the Bonny terminal, with production history dating back to 1986 under Shell,” the report stated. Despite declining output over the years, the fields still contain recoverable reserves of nearly 300 million barrels of oil and 2.3 trillion cubic feet of gas.
S&P noted that Dangote’s venture into upstream activities reflects its strategic push to stabilize crude supply.
“The group has faced severe crude sourcing challenges since the refinery began operations, making this new oil production critical for uninterrupted refining,” the report concluded.
