Amid ongoing feedstock challenges, the Dangote Group is set to commence crude oil production soon.
Reports indicate that the Group aims to initiate production at its two Nigerian oil assets in the fourth quarter of 2024. After facing months of crude supply difficulties, the company plans to start operations at its Niger Delta upstream projects in Oil Mining Leases 71 and 72, expected to begin with approximately 20,000 barrels per day before increasing further in the first quarter of 2025.
The company is reportedly in the process of securing a floating production, storage, and offloading vessel with a capacity of 650,000 barrels of crude. Currently, Dangote holds an 85 percent stake in West African E&P Venture, which possesses a 45 percent working interest in the two blocks, alongside the Nigerian National Petroleum Company’s 55 percent stake.
Additionally, First E&P, a Nigerian upstream player, operates OMLs 71 and 72. These licenses are situated in shallow waters in the southeast Niger Delta, only 22 km from the onshore Bonny terminal, containing the Kalaekule and Koronama oilfields.
The blocks have a history of discoveries dating back to 1966, with Shell beginning production two decades later. Although output peaked at 21,000 b/d in 1999, it declined in 2003. Nevertheless, the fields are reported to still contain recoverable resources of nearly 300 million barrels of oil and approximately 2.3 trillion cubic feet of natural gas.
The anticipated startup of production at OMLs 71 and 72 marks a significant step for Dangote’s upstream activities, potentially alleviating the crude supply issues that have affected the Dangote refinery for months. The $20 billion facility began operations in January and recently started its residue catalytic cracker, preparing for high-volume petrol production.
Designed to reduce Nigeria’s longstanding reliance on imported refined products, the refinery has already produced various fuels for domestic use and export. However, the facility struggled initially to secure enough Nigerian crude, leading to imports of substantial volumes of WTI Midland crude from the US, stirring controversy among various stakeholders.
Recent data shows that in September, Dangote sourced almost 200,000 bpd of Nigerian crude and has not imported US crude since mid-July. Moving forward, the company may seek crude from other global oil producers, as estimates suggest that the NNPC could only meet around 60 percent of its crude demand.
