According to a report by S&P Global Commodity Insights, the Dangote Group aims to commence production at its two Nigerian oil assets by the fourth quarter of 2024, after months of challenges related to crude supply.
The report, citing company sources, indicates that Dangote is currently in search of a floating production, storage, and offloading vessel with a capacity of 650,000 barrels of crude.
The company holds an 85% stake in West African E&P Venture, which in turn has a 45% working interest in the two blocks, alongside the Nigerian National Petroleum Company (NNPC), which holds the remaining 55%.
West African E&P also includes another stakeholder, Nigerian upstream player First E&P, which operates Oil Mining Leases (OMLs) 71 and 72.
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These licenses are situated in shallow waters in the southeast of the Niger Delta, about 22 km from the onshore Bonny terminal.
The blocks, which contain the Kalaekule and Koronama oilfields, were first discovered in 1966. Shell began production there in the mid-1980s, peaking at 21,000 barrels per day (b/d) in 1999 before a decline in 2003.
Despite this, Commodity Insights data suggests the fields still hold an estimated 300 million barrels of recoverable oil and up to 2.3 trillion cubic feet (Tcf) of natural gas.
The report projects that production could begin in 2026, potentially reaching 43,000 barrels of oil equivalent per day (boe/d) by 2036.
While Dangote’s upstream operations have generally attracted little attention, the expected production startup at OMLs 71 and 72 could help address the crude supply issues faced by the Dangote refinery.
After launching in January, the $20 billion refinery activated its residue catalytic cracker in early September, enabling high-volume gasoline production, which is anticipated to stabilize by October, according to a company executive.
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The refinery, designed to end Nigeria’s reliance on imported refined products, has already produced petrol, diesel, jet fuel, and naphtha for both domestic use and export.
However, in its early months, it faced difficulties securing enough Nigerian crude, leading to the importation of large quantities of WTI Midland crude from the U.S. This triggered public disputes between the NNPC, international oil companies, Dangote, and Nigeria’s upstream regulators.
The NNPC, initially expected to supply Dangote with 300,000 b/d of crude in exchange for a 20% stake in the project, ultimately saw its share reduced to 7.2%. S&P Global Commodities at Sea data shows Dangote received just under 200,000 b/d of Nigerian crude in September, with no U.S. crude imports since mid-July.
Despite this, Dangote is exploring the possibility of acquiring crude from other producers, such as Libya, Senegal, and Brazil, as NNPC may only be able to meet about 60% of its crude needs.
Analysts from Commodity Insights predict the refinery will reach full production capacity by around 2027, at which point it is expected to produce about 327,000 b/d of petrol.
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