ABUJA, Nigeria (VOICE OF NAIJA)-The Dangote Refinery is set to begin crude oil production soon, according to a report by S&P Global.
The company’s upstream oil assets, Oil Mining Leases 71 and 72, are expected to commence operations before the end of the year.
The report stated that the assets are projected to produce about 40,000 barrels of crude oil per day, adding:
“Dangote’s upstream assets in the Niger Delta, Oil Mining Lease 71 and 72, could soon provide another supply injection, with production expected to start this month and reach up to 40,000 b/d.”
The report also noted that Alhaji Aliko Dangote, the Group President, remains interested in exploring additional upstream opportunities that could further expand the conglomerate’s asset base.
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As the refinery scales up operations, earlier challenges in sourcing crude oil could intensify. However, Dangote recently secured a major breakthrough through a deal with the Nigerian National Petroleum Company Limited (NNPC) aimed at addressing supply shortages.
Under the current “crude for naira” swap arrangement, NNPC provides Dangote with 14 crude oil cargoes or the equivalent value in U.S. dollars in exchange for the same volume of gasoline and gasoil, which are to be supplied in local currency.
Additionally, NNPC has signed a new two-year crude supply agreement with the refinery to ensure a consistent supply of feedstock to the 650,000-barrel-per-day facility in Lekki, Lagos.
The naira-for-crude deal, introduced last year by President Bola Tinubu, was designed to ease the refinery’s crude supply crisis by ensuring that locally produced crude earmarked for domestic use is sold to local refineries, beginning with Dangote.
Although Dangote has expressed gratitude to Tinubu for the policy’s positive impact on lowering crude prices, the refinery has continued to face supply shortages, forcing it to depend on crude imports from the United States.
With its own crude production coming onstream, the Dangote Refinery is expected to strengthen fuel output and reduce dependence on external suppliers, helping to stabilise Nigeria’s downstream market.