Dangote Begins Crude Production as Refinery Moves to Reduce Reliance on Imported Oil

Reported by: Oahimire Omone Precious | Edited by: Oravbiere Osayomore Promise.

The Dangote Group has achieved first oil from its upstream assets in the Niger Delta and is preparing to begin pumping marketable crude in the coming weeks, a strategic leap toward vertical integration that could help ease persistent feedstock shortages at its giant 650,000-barrel-per-day refinery near Lagos. The announcement, made by Devakumar Edwin, Vice President of Dangote’s oil and gas division, in an interview with S&P Global’s Platts on April 17, marks the culmination of a long-awaited entry into crude extraction. Initial output from the Kalaekule field on Oil Mining Lease 72 currently stands at about 4,500 barrels per day, following a delayed start-up in December 2025. According to Olajumoke Ajayi, Chief Executive of Dangote’s upstream joint venture West African E&P (WAEP), production is projected to rise to 15,000 barrels per day within the next month as operations stabilize.

The move into upstream production is a natural extension of Dangote’s ambition to build a fully integrated energy business spanning extraction, logistics, and refining. WAEP, in which Dangote holds an 85 per cent stake, has a 45 per cent working interest in two offshore licences, OML 71 and OML 72, located approximately 22 kilometres from the Bonny export terminal in the country’s southeast. The Nigerian National Petroleum Company Limited holds the remaining stake, while First E&P operates the assets. The licences, first discovered in 1966 and previously operated by Shell, were acquired by the joint venture in 2015. Output from the fields peaked at 21,000 barrels per day in 1999 before declining in the early 2000s, making the current restart a significant revival of legacy assets.

Edwin confirmed that standard well testing is underway and should be completed within the next three to four weeks, after which large-scale pumping and fresh drilling campaigns will commence. “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.” The company has already arranged a rig for the drilling campaign. However, David Bird, Chief Executive of Dangote’s refining business, stressed that crude supply decisions would remain commercially driven. “The refinery will take the crude if it makes sense,” he said, adding that joint venture partners will seek maximum value for the barrels produced.

The timing of Dangote’s upstream debut is significant. The refinery has repeatedly struggled to secure adequate domestic crude, operating far below its optimal capacity despite being Africa’s largest crude producer. Between October 2025 and mid-March 2026, the refinery faced a crude shortfall of about 79.53 million barrels, receiving only about 26.9 per cent of its estimated requirements. Monthly deliveries have consistently fallen short of the 19.77 million barrels needed for full capacity, forcing the plant to supplement feedstock with imported grades from the United States and Angola. In early 2025, Nigerian crude accounted for about 65 per cent of the refinery’s imports, with the remainder sourced internationally. Bird noted that the company is also seeking to establish its own shipping presence to reduce logistics costs and improve crude supply reliability, potentially creating a “fully integrated” and stable supply chain.

The upstream push comes as Nigeria’s broader crude production remains mired in challenges. The country produced about 1.38 million barrels per day in March, far below its OPEC quota of 1.5 million bpd and its 2026 budget benchmark of 1.84 million bpd (including condensate). Output has been constrained by underinvestment, crude theft, pipeline vandalism, and limited exploration activity. Against this backdrop, Dangote’s entry into upstream production, while modest in immediate volume, represents a strategic insurance policy against persistent supply uncertainties.

Despite its internal crude ambitions, the refinery continues to make historic strides in downstream processing. In March, Dangote exported 44,000 barrels per day of gasoline, creating a surplus of about 3,000 barrels per day and making Nigeria a net petrol exporter for the first time in history. The refinery shipped a 317,000-barrel cargo to Mozambique, marking its first delivery to East Africa. The milestone has drawn praise from the House of Representatives Committee on Petroleum Resources, which described it as a validation of ongoing reforms in the downstream sector. Ikenga Ugochinyere, chairman of the committee, said the development represents a “national pride milestone” and signals that domestic refining capacity is beginning to stabilise Nigeria’s energy supply chain.

Still, Dangote’s upstream output will remain a fraction of the refinery’s needs for the foreseeable future. Forecasts from S&P Global Energy CERA indicate that production from OML 71 and 72 could plateau at about 43,000 barrels of oil equivalent per day by 2036, far short of the 650,000 bpd the refinery consumes. The company is not relying solely on its own oil; the NNPC has recently increased crude allocation to the refinery from five cargoes to 10 cargoes, though the company has repeatedly stated that it still receives far below its requested volumes. Aliko Dangote, President and Chief Executive of Dangote Industries, has credited the economic and energy sector reforms of President Bola Tinubu for creating the policy environment that enabled large-scale domestic refining to become viable.

As Dangote moves to pump its first marketable crude in the coming weeks, the symbolism of the moment is not lost on industry observers. A company that once depended entirely on others for its raw materials is now becoming its own supplier. Whether that translates into lower fuel prices, reduced reliance on imports, and greater energy security for Nigeria will depend on how quickly the new wells can be brought online and whether the country’s broader crude production can keep pace with the appetite of its single largest industrial consumer.

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