Dangote Group is advancing plans to launch crude oil production to support its $20 billion refinery. The company is seeking a Floating Production, Storage, and Offloading (FPSO) vessel with a capacity of 650,000 barrels to facilitate this process.
Starting production in Oil Mining Leases (OMLs) 71 and 72 is set for the fourth quarter of 2024, following delays in securing crude supply from International Oil Companies (IOCs). The group’s assets are expected to play a crucial role in stabilising crude input to the refinery, which has faced ongoing supply challenges.
S&P Global Commodity Insights reports that the FPSO will not only produce but also store crude oil for the group’s refinery operations. This strategy aligns with Dangote’s long-term goal of vertical integration in the oil and gas value chain, reducing reliance on external suppliers.
The company holds an 85% stake in West African E&P Venture, which controls 45% of OMLs 71 and 72, while the Nigerian National Petroleum Company (NNPC) holds the remaining 55%. Additionally, First E&P, a Nigerian upstream operator, is the operator of these licenses.
These blocks, located in the Niger Delta’s shallow waters, contain the Kalaekule and Koronama oilfields, first discovered in 1966. Production, initiated by Shell, peaked in 1999 but has since declined. However, the fields hold an estimated 300 million barrels of recoverable oil and 2.3 trillion cubic feet of natural gas, with production targets of 43,000 barrels of oil equivalent per day (boe/d) by 2036.
With first production anticipated in 2026, Dangote’s refinery will likely benefit from this new supply, addressing months of crude shortages that have affected operations. The strategic use of FPSO technology signals a major step forward for Nigeria’s oil and gas sector.