News - October 18, 2024

Dangote’s Crude Oil Production Postponed to 2025

Ukpono Nsima October 18, 2024

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Aliko Dangote has delayed plans to start crude oil exploration from the 4th quarter of 2024 to 2025. This adjustment follows a two-month crude supply dispute with Nigerian authorities.

According to S&P Global Commodity Insights, Dangote’s objective to kick off oil production by 2025 will occur at his two oil properties in Delta State, southern Nigeria. The initial production is slated to start at about 20,000 barrels per day, with an increase planned for the first quarter of 2025.

Official Confirmation of the New Timeline

A senior official at the Dangote refinery confirmed the revised start date in response to the S&P Global Commodity Insights report. “Yes, I saw the S&P report; our company is indeed planning to start crude oil production to support the refinery, but it will begin in the first quarter of 2025,” the official stated.

Anticipation and Challenges

The launch of Dangote’s crude production has been highly anticipated, as the Dangote refinery has experienced multiple delays in distributing refined petrol. These delays were due to ongoing disputes over crude sales conditions.

The Nigerian National Petroleum Company Limited (NNPCL) has been accused of blocking Dangote’s access to locally produced petroleum by either selling it at inflated prices, in US dollars, or claiming that the crude was unavailable.

Response to Supply Challenges

Faced with these obstacles, the Dangote refinery had to purchase oil at high prices from international markets, including Brazil and the United States.

In response, Dangote decided to initiate oil production at his Niger Delta upstream projects in Oil Mining Leases 71 and 72 as part of a broader strategy to ensure a steady crude supply for his refining operations

Furthermore, Dangote is seeking a floating production, storage, and offloading vessel capable of handling 650,000 barrels to enhance his logistical and production capabilities. This move is aimed at bolstering the efficiency and reliability of his oil refinery project.