The Dangote Group says it has achieved first oil from its upstream petroleum assets and is preparing to begin commercial crude production in the coming weeks, marking a major step toward fully integrating its oil and gas operations.
Vice-President of the Dangote Group, Devakumar Edwin, disclosed this in an interview with Platts, a division of S&P Global Energy, noting that early testing has already commenced on crude extracted from the company’s oil licences in the Niger Delta.
According to him, the company has begun standard well testing and expects the process to be concluded within three to four weeks.
“We have opened a well and begun standard testing, which should be completed in the next three to four weeks maximum,” Edwin said.
He added that once testing is completed, production would scale up, paving the way for additional drilling activities.
“After that point, oil can start to be pumped in larger volumes, and the company can begin work on drilling new wells,” he said.
The development marks Dangote’s formal entry into upstream crude production at a time when it is seeking to secure a more stable supply of feedstock for its refining operations.
Chief Executive Officer of the Dangote Refinery, David Bird, said the upstream expansion is expected to improve crude availability and reduce supply uncertainties for the refinery.
He also disclosed that the company is exploring the development of its own shipping operations to lower logistics costs and improve supply chain reliability.
“Alongside its upstream interests, the company is seeking to establish its own shipping presence to help reduce logistics costs and improve the reliability of its crude sourcing,” Bird said.
He added that a combination of indigenous production and company-owned vessels could provide the refinery with a more stable crude supply chain.
“Combined with WAEP’s indigenous production, Dangote-owned vessels could offer the refinery a fully integrated and attractive source of stable crude supply,” he noted.
Bird, however, stressed that crude transactions would still be governed by commercial terms, adding that internal supply arrangements would not automatically bypass market considerations.
“Dangote has interests in upstream, we will continue to grow that, but that doesn’t necessarily mean that it won’t be arms length at every phase,” he said.
The company did not immediately receive responses from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) or the Dangote Refinery when contacted for comments.
The move into crude production is expected to reduce supply constraints that have occasionally affected operations at the refinery since it commenced production.
Earlier in April, the Nigerian National Petroleum Company (NNPC) Limited announced plans to increase crude allocations to the Dangote Refinery from five to seven cargoes in May, in an effort to stabilise feedstock supply.
