Nigeria's Dangote starts production from upstream oil assets

Nigeria's Dangote Group has achieved first oil from its upstream assets and is aiming to start pumping marketable crude in the coming weeks, Devakumar Edwin, Vice President of its oil and gas division, said in an April 17 interview.

Speaking to Platts, part of S&P Global Energy, from the premises of the Dangote oil refinery near Lagos, Edwin said the company's upstream oil venture had begun testing crude from its Niger Delta licenses, and has already arranged a rig to begin a drilling campaign in the mature basin.

The Dangote-backed project is currently producing at 4,500 barrels/day from its Kalaekule field on Oil Mining Lease 72, after finalizing a long-awaited start-up in December 2025. Its upstream output should reach 15,000 b/d in the next month, according to Olajumoke Ajayi, CEO of Dangote's upstream joint venture West African E&P.

Dangote holds an 85% in the upstream business, also known as WAEP, which in turn holds a 45% working interest in two oil licenses -- Oil Mining Lease 71 and 72. The balance is held by state-owned Nigerian National Petroleum Corp, while WAEP's minority stakeholder, First E&P, operates the assets.

"We have opened a well and begun standard testing, which should be completed in the next three to four weeks maximum," Edwin said.

After that point, oil can start to be pumped in larger volumes, and the company can begin work on drilling new wells, he said.

Based in the shallow water southeast of the Niger Delta, the two oil licenses are located roughly 22 kilometers from the country's onshore Bonny terminal. Discoveries were first made on the blocks in 1966, and WAEP acquired the assets from Shell in 2015. Output peaked at 21,000 b/d in 1999, before declining in 2003.

Refinery integration

David Bird, CEO of the refining businesses, said that the assets could potentially offer a source of reliable crude for Dangote's own facility, which hit its full 650,000 b/d nameplate capacity earlier this year.

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. Combined with WAEP's indigenous production, Dangote-owned vessels could offer the refinery a "fully integrated" and attractive source of stable crude supply, he said.

Meanwhile, the refinery will take delivery of the crude "if it makes sense," he said, noting that the company's joint venture partners will be eager to realize maximum value for the barrels produced.

"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.

He declined to comment on whether the company is participating in the Nigeria's ongoing bid round, which involves over 50 oil blocks mostly in the Niger Delta.

According to forecasts by S&P Global Energy CERA, production from OML 71 and 72 is expected to plateau at 43,000 barrels of oil equivalent/d by 2036, representing just a fraction of the crude oil consumed by Dangote's own facility. According to figures from the country's downstream oil regulator, the plant ran at an average utilization rate of 94% in March. By 2028, the company plans to more than double the refinery's capacity to make it the largest in the world.

Nigerian crude made up 65% of all imports to the Dangote refinery in the first quarter of 2025, supplemented by US and Angolan grades, S&P Global Commodities at Sea data shows. In April, the company is set to process four new crude types, Bird said, adding that the company is seeking to widen its basket of grades from the 40 it has processed to date.

In the coming months, NNPC is expected to provide half the company's feedstock through a combination of naira and dollar-denominated sales, Edwin said.

"They had a lot of long-term commitments so they were not able to easily release, but things have really improved," he said.

The state-run oil company provided the refinery with five cargoes of crude in March, representing less than 40% of its total intake.

Nigerian crude production has so far remained well below a 2 million b/d target for 2026, with production negatively impacted by underinvestment, crude theft, and a lack of exploration activity. In March, national output was 1.38 million b/d, according to the country's upstream regulator.