Dangote Oil Refinery to Begin Crude Production Soon
Dangote Oil Refinery is poised to commence the extraction of marketable crude oil within weeks. This marks a significant milestone as it is the first instance of oil being sourced from an upstream asset to support the expansive refinery located near Lagos.
This announcement was made by Devakumar Edwin, Vice President of Oil and Gas at Dangote, during an interview with S&P Global’s Platts on April 17.
Edwin stated that preliminary testing is currently underway at the company’s Niger Delta license site. He noted, “We have drilled the well and started standard testing, which should be completed within the next three to four weeks.” He added that a major ramp-up in pumping and additional drilling activities are expected in the near future.
Strategic Growth in Upstream Oil Production
This development is a crucial step in Dangote’s strategic plan to expand its footprint in upstream oil production, enhancing its refining and logistics capabilities. Currently, the company is generating approximately 4,500 barrels per day from the Karaekul field, situated within Oil Mining Lease (OML) 72, although production faced delays since its planned start-up in December 2025.
According to Olajumoke Ajayi, CEO of Dangote’s upstream joint venture, West Africa Exploration and Production (WAEP), production is projected to rise to 15,000 barrels per day shortly. Dangote holds an 85% stake in WAEP, which owns a 45% interest in OML 71 and 72. The Nigerian National Petroleum Corporation (NNPC Ltd) retains the remaining shares, while First E&P manages the assets.
The oil block, located in shallow waters approximately 22 kilometers from the Bonny terminal, was initially discovered in 1966 and acquired from Shell in 2015. Its production peaked in 1999 at 21,000 barrels per day but saw a decline in the early 2000s. Officials believe that this upstream initiative could provide a more consistent supply of crude oil to the Dangote refinery, which recently achieved its full capacity of 650,000 barrels per day.
David Bird, CEO of Dangote’s refining segment, emphasized the company’s commitment to enhancing transportation and logistics, aimed at minimizing costs and bolstering supply security. The integration of in-house crude oil production with efficient logistics is expected to create a comprehensive system that covers extraction, transportation, and refining, although he cautioned that supply decisions would remain commercially driven.
Addressing Supply Challenges
Despite the advancements in upstream production, the Dangote field is anticipated to fulfill only a fraction of the refinery’s total demand. Projections indicate that output from OML 71 and 72 could peak at around 43,000 barrels of oil equivalent per day by 2036. Currently, refineries in Nigeria rely heavily on external crude oil; data reveals that Nigerian grades accounted for approximately 65% of imports in early 2025, complemented by supplies from the US and Angola.
NNPC Ltd is expected to contribute as much as half of the refinery’s feedstock in the upcoming months through a combination of naira and dollar-denominated sales. However, historical inconsistencies in supply have raised concerns, often linked to prior contractual commitments.
Nigeria’s crude oil production continues to fall short of government targets, attributed to a combination of inadequate investment, oil theft, and restrictions on exploration. In March, production hovered around 1.38 million barrels per day, starkly below the 2026 objective of 2 million barrels per day.
Complex Challenges in the Nigerian Oil Landscape
As Africa’s largest refinery, Dangote is envisioned as a pivotal solution to reduce fuel imports and stabilize domestic fuel supplies. However, previous reports indicate ongoing challenges related to crude oil procurement, price disputes, and reliance on imports. The company’s shift into upstream production signifies an effort to overcome these challenges by ensuring a dedicated supply chain. Analysts, however, caution that reaching levels of production capable of effectively meeting demand could take considerable time.
This development also underscores a broader transformation within Nigeria’s oil and gas sector, as leading companies increasingly adopt integrated business models to tackle supply uncertainties and navigate market volatility.
