Dangote Group is set to commence production at its two Nigerian oil blocks by the fourth quarter of 2024, following months of crude supply difficulties, according to a report by S&P Global Commodity Insights. The company is actively seeking a Floating Production Storage and Offloading (FPSO) vessel with a 650,000-barrel capacity to support this initiative.
Dangote holds an 85% stake in West African E&P Venture, which controls a 45% working interest in the two oil blocks. The Nigerian National Petroleum Company (NNPC) owns the remaining 55% stake. First E&P, a Nigerian upstream operator, also has a stake in West African E&P and operates the two blocks—OMLs 71 and 72—located in shallow waters 22 km from the Bonny terminal in the Niger Delta. These blocks contain the Kalaekule and Koronama oilfields, first discovered in 1966, with production beginning two decades later under Shell.
Despite production peaking at 21,000 barrels per day (b/d) in 1999 and declining after 2003, the fields are estimated to hold recoverable resources of nearly 300 million barrels of oil and 2.3 trillion cubic feet of natural gas, according to Commodity Insights. Production is expected to resume by 2026, with forecasts suggesting a peak output of 43,000 barrels of oil equivalent per day (boe/d) by 2036.
The anticipated production boost from OMLs 71 and 72 could alleviate crude feedstock challenges at Dangote’s $20 billion refinery, which came online in January 2024. The refinery, designed to curb Nigeria’s reliance on imported refined products, has already started producing gasoline, diesel, jet fuel, and naphtha. However, it faced significant supply hurdles in its early months, importing large volumes of crude oil from the U.S. due to insufficient local crude from the NNPC.
The refinery aims to stabilize high-volume gasoline production by October 2024, but analysts predict it may take until 2027 to reach full production capacity, targeting an output of 327,000 b/d of petrol.
In a bid to diversify its crude supply, Dangote is exploring options to source crude from other countries, including Libya, Senegal, and Brazil, as NNPC is expected to fulfill only 60% of the refinery’s crude demand.
