Dangote Group plans to start production at its two Nigerian oil assets in the fourth quarter of 2024, following months of crude supply challenges, according to a report by S&P Global Commodity Insights.
The report, citing company sources, revealed that Dangote is actively seeking a floating production, storage, and offloading (FPSO) vessel with a capacity of 650,000 barrels of crude. Dangote holds an 85% stake in West African E&P Venture, which has a 45% working interest in the two blocks, alongside the Nigerian National Petroleum Company’s (NNPC) 55% stake.
The other key stakeholder in West African E&P is First E&P, a Nigerian upstream operator that oversees Oil Mining Leases (OMLs) 71 and 72. These licenses are located in shallow waters in the southeast of the Niger Delta, approximately 22 km from the onshore Bonny terminal. The blocks contain the Kalaekule and Koronama oilfields.
The oilfields were first discovered in 1966, with Shell commencing production two decades later. Output peaked at 21,000 barrels per day (b/d) in 1999 but began to decline in 2003. According to S&P Global Commodity Insights, the fields still hold significant recoverable resources—nearly 300 million barrels of oil and up to 2.3 trillion cubic feet (Tcf) of natural gas. The report projects that production from the blocks could commence in 2026, with output expected to reach 43,000 barrels of oil equivalent per day (boe/d) by 2036.
While Dangote’s upstream activities are not widely discussed, the upcoming production at OMLs 71 and 72 could provide a crucial supplement to feedstock for its refinery. Dangote has faced crude supply challenges since the $20 billion refinery began operations in January 2024. The refinery’s residue catalytic cracker, which stabilizes gasoline production, was brought online in early September.
Designed to reduce Nigeria’s reliance on imported refined products, the Dangote refinery has produced petrol, diesel, jet fuel, and naphtha for both domestic and export markets. However, securing sufficient Nigerian crude proved challenging during the refinery’s initial months, forcing Dangote to import large volumes of WTI Midland crude from the U.S. This supply shortfall led to public disputes between NNPC, international oil companies, Dangote, and Nigerian upstream regulators.
Initially, the NNPC was expected to supply 300,000 b/d of crude in exchange for a 20% stake in the Dangote project. However, its stake was eventually reduced to 7.2%. Data from S&P Global Commodities at Sea shows that Dangote received just under 200,000 b/d of Nigerian crude in September, and has not imported U.S. crude since mid-July.
Despite these challenges, Dangote has explored other crude sourcing options, including from Libya, Senegal, and Brazil, as company sources warn that NNPC may only be able to meet 60% of its crude supply demands. Analysts from Commodity Insights expect the Dangote refinery to reach steady-state production by around 2027, with a projected output of approximately 327,000 b/d of petrol at full capacity.
