The Dangote Group, the owner of West Africa’s biggest refinery, will soon begin the process of crude oil production amid the current feedstock difficulties being faced by the oil firm, according to the S & P Global Commodity Insight.
Production at the company’s two upstream Niger Delta assets, located in Oil Mining Leases 71 and 72, would begin at approximately 20,000 barrels per day and increase significantly in the first quarter of 2025. According to S & P’s source , Dangote is presently aiming towards a floating production, storage, and offloading vessel with a capacity of 650,000 barrels of crude oil.
The company holds an 85 percent stake in West African E & P Venture, which, in turn, owns a 45 percent working interest in two oil blocks, while the Nigerian National Petroleum Company (NNPC) controls the remaining 55 percent. First E & P, a Nigerian upstream operator, is the other shareholder in West African E&P and is responsible for operating Oil Mining Leases (OMLs) 71 and 72.
These blocks are situated roughly 22 kilometres from the Bonny onshore terminal in the southeast of the Niger Delta, in shallow waters. The area includes the Kalaekule and Koronama oilfields where oil was first discovered In 1966.
Shell began Production there in the middle of the 1980s, and by 1999, it had reached a peak of 21,000 barrels per day before starting to decline by 2003. The fields still have recoverable quantities of up to 2.3 trillion cubic feet of natural gas and up to 300 million barrels of oil, despite the downturn.
Based on the report from S&P global commodity insight, although Dangote’s upstream operations are rarely addressed, the impending commencement of operations at OMLs 71 and 72 indicates that the refinery may soon add more crude feedstock to its mix, following months of supply concerns
Designed to break Nigeria’s decades-long reliance on imported refined products, Dangote’s refinery has produced large amounts of petrol, diesel, jet fuel and naphtha for both local consumption and export. However, in its early months of operation, the plant struggled to obtain enough crude oil from Nigeria, which forced it to import large amounts of WTI midland Crude from the United States. This resulted in a bitter public dispute between the Nigerian National Petroleum Corporation (NNPC), International oil companies, Dangote and Nigeria’s upstream regulators.
The NNPC was to supply Dangote’s refinery with 300,000 barrels of crude oil per day in return for a 20% stake in the project. But in the end, its stake was just 7.2%.
Data from S&P Global Commodities shows Dangote took just under 200,000 b/d of Nigerian crude in September. It has not imported any US crude since mid-July.
Nevertheless, corporate sources warn that NNPC may only be able to meet 60 percent of its crude demand, and Dangote has raised the prospect of purchasing crude from other oil suppliers, such as Libya, Senegal, and perhaps Brazil.
