Crude: Dangote refinery eyes production as upstream project records first output

Dangote Petroleum Refinery has recorded its first oil from upstream assets and is set to begin pumping marketable crude in the coming weeks, as the company moves to secure supply for its sprawling refinery near Lagos.

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The development was announced by the Vice President of Dangote’s oil and gas division, Devakumar Edwin, in an interview with S&P Global’s Platts on 17 April.

The official stated that initial testing from the firm’s Niger Delta licences is underway.

“We have opened a well and begun standard testing, which should be completed in the next three to four weeks,” Mr Edwin said, adding that large-scale pumping and fresh drilling campaigns would follow shortly after.

The development marks a significant step in Dangote’s gradual expansion into upstream oil production, complementing its refining and logistics operations.

Early production, growth targets

The company is currently producing about 4,500 barrels per day from the Kalaekule field on Oil Mining Lease (OML) 72, following a delayed start-up in December 2025.

Production is projected to rise to 15,000 barrels per day within weeks, according to Olajumoke Ajayi, chief executive of West African Exploration and Production (WAEP), Dangote’s upstream joint venture.

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Dangote holds an 85 per cent stake in WAEP, which has a 45 per cent working interest in OML 71 and 72. The Nigerian National Petroleum Company Limited (NNPC Ltd) holds the remaining stake, while First E&P operates the assets.

Located in shallow waters about 22 kilometres from the Bonny terminal, the oil blocks were first discovered in 1966 and later acquired from Shell in 2015. Production previously peaked at 21,000 barrels per day in 1999 before declining in the early 2000s.

Officials say the upstream push could provide a more reliable crude supply for the Dangote refinery, which recently reached its full nameplate capacity of 650,000 barrels per day.

David Bird, CEO of Dangote’s refining business, said the company is also investing in shipping to reduce logistics costs and improve supply stability.

Combined with in-house crude production, this could create a “fully integrated” system spanning extraction, transportation, and refining.

However, he noted that crude supply decisions would remain commercially driven.

“The refinery will take the crude if it makes sense,” he said, adding that joint venture partners would seek maximum value for output.

Supply gaps persist

Despite the upstream gains, Dangote’s oilfields will supply only a fraction of the refinery’s needs. Forecasts indicate production from OML 71 and 72 could peak at about 43,000 barrels of oil equivalent per day by 2036.

The refinery currently relies heavily on external crude. Data shows Nigerian grades accounted for about 65 per cent of its imports in early 2025, supplemented by supplies from the United States and Angola.

NNPC Ltd is expected to provide up to half of the refinery’s feedstock in the coming months through a mix of naira- and dollar-denominated sales, although supply has historically been inconsistent due to prior contractual obligations.

Nigeria’s crude oil production has remained below government targets, constrained by underinvestment, oil theft, and limited exploration. Output stood at about 1.38 million barrels per day in March, significantly short of the 2 million bpd goal for 2026.

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The Dangote refinery, Africa’s largest, has been positioned as a key intervention to reduce fuel imports and stabilise domestic supply.

However, PREMIUM TIMES has previously reported persistent challenges around crude sourcing, pricing disputes, and reliance on imports despite the refinery’s scale.

The company’s move into upstream production signals an attempt to address those constraints by securing a dedicated supply, though analysts suggest it may take years before output reaches levels that can materially offset its crude demand.

Even so, the development underscores a broader shift in Nigeria’s oil and gas landscape, where major domestic players are increasingly pursuing integrated models to navigate supply uncertainties and market volatility.