The Dangote Group, which owns the Dangote Refinery, plans to start producing crude oil soon despite feedstock shortages.

S&P Global Commodity Insights reports state that the Dangote Group plans to begin production at its two oil properties in Nigeria in the fourth quarter of 2024.

The company would reportedly start production at its two Niger Delta upstream projects in Oil Mining Leases 71 and 72, starting with roughly 20,000 barrels per day before ramping up further in the first quarter of 2025. The company has been dealing with problems related to the supply of crude oil for months.

Production at the company’s two upstream Niger Delta projects, located in Oil Mining Leases 71 and 72, is expected to commence at approximately 20,000 barrels per day and then increase significantly in the first quarter of 2025, according to the business source.

According to the article, Dangote is presently looking to purchase a floating production, storage, and offloading vessel that can hold six hundred fifty thousand barrels of crude oil.

According to information obtained, the corporation owns a whopping eighty-five percent of West African E&P Venture, which in turn owns fifty-five percent of the state-owned Nigerian National Petroleum corporation and forty-five percent of the working interest in the two blocks.

The other partner in West African E&P is First E&P, a Nigerian upstream company that manages OMLs 71 and 72.

Situated barely 22 kilometres from the Bonny terminal on land, the licenses are situated in the shallow waters of the southeast of the unstable Niger Delta. The oilfields of Kalaekule and Koronama are located there.

“Shell started production on the blocks two decades after the first discoveries were discovered there in 1966. According to S&P, output peaked in 1999 at 21,000 b/d and began to decline in 2003.

Commodity Insights claims that the fields still have recoverable resources of up to 2.3 trillion cubic feet of natural gas and about 300 million barrels of oil.

Although Dangote’s upstream operations are rarely addressed, the report pointed out that, following months of fighting problems with the supply of crude oil, the refinery may soon be able to replace its feedstock with additional oil due to the impending beginning of production at OMLs 71 and 72.

After coming online in January, the $20 billion plant activated its residual catalytic cracker in early September, enabling the manufacture of high-volume fuel once the unit stabilises.

The refinery, which was constructed by the richest man in Africa, was intended to eliminate Nigeria’s long-standing reliance on imported refined goods. It has generated large amounts of jet fuel, naphtha, diesel, gasoline, and gasoil for both domestic and export markets up to this point.

But in the early going, the facility had trouble obtaining enough Nigerian crude, which led to it having to import significant amounts of WTI Midland crude from the US. This resulted in a public spat involving the NNPC, foreign oil corporations, Dangote, and Nigeria’s upstream regulators.

Dangote purchased slightly less than 200,000 barrels per day of Nigerian crude in September, according to data from S&P Global Commodities at Sea. Since mid-July, the company has not imported any US crude.

NNPC may only be able to meet 60% of its crude demand, according to company sources, thus Dangote may purchase petroleum from other oil suppliers, such as Libya, Senegal, and perhaps Brazil.