Dangote Group to Begin Crude Oil Production in Early 2025 to Support Refinery Operations
The Dangote Group, proprietors of the Dangote Petroleum Refinery, has announced plans to initiate crude oil production in the first quarter of 2025 amidst ongoing feedstock challenges. A high-ranking official from the $20 billion Lekki-based refinery confirmed the timeline in response to a report by S&P Global Commodity Insights, stating, “Yes, I saw the S&P report; our company is indeed set to begin crude oil production to support the refinery, with operations starting in the first quarter of 2025.”
The official emphasized that this production plan aims to enhance crude oil supply to the refinery, with significant ongoing efforts to meet the proposed date. When asked about the potential cost of a liter of Premium Motor Spirit (PMS), commonly referred to as petrol, the source opted not to provide details, but reiterated the commitment to commence crude oil production soon.
Earlier reports by S&P Global Commodity Insights indicated that the Dangote Group is gearing up to start production at its upstream projects in Oil Mining Leases (OMLs) 71 and 72 in the Niger Delta by late 2024. The production is expected to kick off at approximately 20,000 barrels per day (b/d) before increasing further in early 2025.
The company is reportedly in the process of procuring a floating production, storage, and offloading vessel capable of handling 650,000 barrels of crude. Dangote Group owns an 85% stake in West African E&P Venture, which holds a 45% working interest in the two oil blocks, while Nigeria’s state-owned Nigerian National Petroleum Company (NNPC) possesses a 55% share.
Located 22 kilometers offshore from the Bonny terminal, the licenses for OMLs 71 and 72 encompass the Kalaekule and Koronama oilfields. Although initial discoveries were made in 1966 and production scaled up by Shell in 1986, output peaked at 21,000 b/d in 1999 before experiencing a decline.
S&P Global forecasts that the fields still contain nearly 300 million barrels of recoverable oil and up to 2.3 trillion cubic feet of natural gas. The imminent commencement of production at OMLs 71 and 72 indicates that the Dangote refinery, which began operations in January and started its residue catalytic cracker in early September, could soon reduce its reliance on external crude supplies.
Despite the facility’s capabilities, it faced significant supply difficulties during its initial months, leading to the import of WTI Midland crude from the U.S. This sparked tensions among various stakeholders, including Dangote, the NNPC, international oil companies, and Nigeria’s upstream regulators. Data from S&P Global Commodities at Sea showed that in September, the Dangote refinery processed just under 200,000 b/d of Nigerian crude, ceasing U.S. imports since mid-July.
The Dangote Group may also source crude from other countries, including Libya, Senegal, and Brazil, as internal company sources caution that NNPC may only be able to meet 60% of its crude oil demands. The refinery was designed to eventually eliminate Nigeria’s longstanding reliance on imported refined products while producing gasoline, diesel, gasoil, jet fuel, and naphtha for both local consumption and export.
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