Dangote strikes first oil, targets marketable crude within weeks

By: Amarachi Okonkwo 

Dangote Group has recorded its first oil output from upstream assets and is moving toward commercial-scale crude production, marking a significant expansion of its footprint across Nigeria’s oil value chain.

The development was disclosed by Devakumar Edwin, Vice President of Dangote’s oil and gas division, in an interview with S&P Global’s Platts. Speaking from the Dangote Petroleum Refinery, Edwin confirmed that initial crude testing has commenced on the company’s Niger Delta licences, with full production expected in the coming weeks.

According to him, the upstream venture operated through Dangote’s joint venture, West African E&P (WAEP) is currently producing about 4,500 barrels per day from the Kalaekule field located on Oil Mining Lease (OML) 72. The output follows the completion of a long-delayed start-up phase in December 2025.

The Chief Executive Officer of WAEP, Olajumoke Ajayi, projected a near-term ramp-up in production, stating that volumes could rise to 15,000 barrels per day within a month as testing concludes and additional wells come onstream.

Dangote holds an 85 per cent stake in WAEP, which itself owns a 45 per cent working interest in OML 71 and 72. The remaining equity is held by the state-owned Nigerian National Petroleum Company Limited, while First E&P operates the assets.

Edwin noted that well testing is expected to be completed within three to four weeks, after which production could be scaled up significantly. The company has also secured a drilling rig to begin a fresh campaign aimed at unlocking additional reserves within the mature basin.

The shallow-water licences are located approximately 22 kilometres from the Bonny export terminal in the Niger Delta. Originally discovered in 1966, the assets were acquired by WAEP from Shell in 2015. Production from the blocks peaked at about 21,000 barrels per day in 1999 before declining in the early 2000s.

The move into upstream production is expected to complement Dangote’s downstream operations. Chief Executive Officer of the refinery, David Bird, said the assets could provide a more reliable source of crude supply for the 650,000-barrel-per-day refinery, which recently reached full nameplate capacity.

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Bird added that the company is exploring the development of an in-house shipping network to optimise logistics and reduce costs, potentially creating a fully integrated supply chain spanning production, transportation and refining. However, he emphasised that crude transactions between Dangote’s upstream and downstream units would remain commercially driven.

Despite the progress, projected output from OML 71 and 72 remains modest relative to the refinery’s requirements. 

Forecasts by S&P Global Energy CERA indicate that production could plateau at around 43,000 barrels of oil equivalent per day by 2036 only a fraction of the refinery’s feedstock demand.

To bridge the gap, Dangote has continued to diversify its crude slate. Data from S&P Global Commodities at Sea shows the refinery has processed a mix of domestic and imported grades, including supplies from the United States and Angola. The plant is expected to refine at least four additional crude types in April, expanding its basket beyond the roughly 40 grades already tested.

Meanwhile, the Nigerian National Petroleum Company Limited is anticipated to supply about half of the refinery’s crude needs in the coming months through a combination of naira- and dollar-denominated transactions, easing earlier supply constraints linked to existing contractual obligations.

Nigeria’s broader oil production outlook remains constrained.

 Output stood at approximately 1.38 million barrels per day in March, according to the Nigerian Upstream Petroleum Regulatory Commission, well below the Federal Government’s 2 million barrels per day target for 2026. Industry challenges such as underinvestment, crude theft and limited exploration continue to weigh on national output.

For Dangote, the upstream breakthrough signals a strategic shift toward vertical integration, positioning the conglomerate to exert greater control over feedstock security while navigating volatility in global crude markets.