Dangote refinery to begin crude oil production – Report

The Dangote Group says it has achieved its first oil from its upstream assets and is preparing to begin marketable crude production in the coming weeks.

In an interview with Platts, part of S&P Global Energy, Devakumar Edwin, the vice-president of the Dangote Group, said early testing has commenced on crude from its Niger Delta licences.

According to Edwin, the company has already begun standard well testing and is preparing to scale up output.

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

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

Also speaking, David Bird, the chief executive officer (CEO) of the Dangote refinery, said the upstream assets could provide a more stable crude supply for the refinery.

“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 the refinery will take delivery of the crude “if it makes sense”, noting that the company’s joint venture partners will be eager to realise 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.

The Dangote refinery and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) did not respond to enquiries on the development as of the time of filing this report.

Crude oil production could help close supply gaps, a major challenge that threatened the refinery’s operations when it came on stream.

On April 1, the Nigerian National Petroleum Company (NNPC) Limited said it would allocate seven cargoes in May to Dangote refinery, an increase from the five allocated in previous months. (TheCable)