Dangote to Start Crude Oil Production in Nigeria’s Niger Delta Region

In a significant development, the Dangote Group, owners of the Dangote Refinery, is set to start crude oil production in its two Nigerian oil assets in the fourth quarter of 2024. According to reports by S&P Global Commodity Insights, the company plans to commence production at its two Niger Delta upstream projects in Oil Mining Leases 71 and 72, with an initial output of around 20,000 barrels per day, which is expected to increase to around 45% by the first quarter of 2025.

This news comes as a big relief for the Dangote Refinery, which has been struggling with crude supply challenges for several months. The refinery, which was built at a cost of $20 billion, was designed to end Nigeria’s decades-long dependence on imported refined products. However, the plant was unable to secure sufficient Nigerian crude in its early months, forcing it to import large volumes of WTI Midland crude from the US, leading to a public row between the Nigerian National Petroleum Corporation (NNPC), international oil companies, Dangote, and Nigeria’s upstream regulators.

The Dangote Refinery has also been seeking 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 has a 45% working interest in the two blocks, alongside the state-owned Nigerian National Petroleum Company’s 55%.

The Niger Delta region, which is home to the Kalaekule and Koronama oilfields, has been a significant source of oil production in Nigeria. The region has a long history of oil production, with output peaking at 21,000 barrels per day in 1999 before declining in 2003. Although the fields have seen a decline in production levels, they still hold recoverable resources of almost 300 million barrels of oil and as much as 2.3 trillion cubic feet of natural gas.

The Dangote Refinery’s plan to start production in the Niger Delta region is a significant step towards supplementing its crude feedstock, which has faced challenges for months. With the company acquiring crude from other oil producers, including Libya, Senegal, and Brazil, it is likely to meet a significant portion of its crude demand. However, the NNPC may only be able to fulfill 60% of its crude demand, making it essential for the refinery to explore alternative sources.

The news of Dangote’s planned production in the Niger Delta region is a positive development for the region and the country as a whole, as it will help to boost economic growth and reduce dependence on imported refined products.