The Dangote refinery is expected to start crude oil production soon, a report by S&P Global has said.
Dangote’s upstream oil assets, Oil Mining Leases 71 and 72, are expected to start pumping oil before the end of the year.
According to the report by S&P, the assets will start producing about 40,000 barrels of crude oil per day.
“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 said.
It was added that the Group President, Alhaji Aliko Dangote, remains interested in new upstream opportunities, which could add to an expanding asset base for the wider conglomerate.”
remAs the refinery grows, early challenges sourcing crude oil only risk becoming more acute. However, Dangote welcomed a breakthrough deal with the Nigerian National Petroleum Company Limited for alleviating supply concerns.
Under a current “crude for naira” swap agreement, NNPC supplies Dangote with 14 crude oil cargoes, or sources the equivalent value of US dollars, in exchange for the same volume of gasoline and gasoil to be supplied in the local currency.
The PUNCH reports that the NNPC signed another two-year crude supply agreement with the Dangote refinery.
The PUNCH gathered that the deal signed in August would ensure the steady supply of crude to the 650,000-barrel-per-day refinery located in Lekki, Lagos.
The naira-for-crude deal was ordered by President Bola Tinubu last year amid the crude crisis facing the Dangote refinery. The crude earmarked for local consumption was to be sold to local refineries, beginning with the Dangote refinery.
Though Dangote had repeatedly appreciated Tinubu for the intervention and its impact in helping lower crude prices, it had also complained of low crude supply forcing it to rely more on the United States for feedstock.
It is believed that the production of crude by the Dangote refinery would bolster fuel production at the refinery.
The refinery had consistently faced crude shortages as disagreements between it and oil producers stalled crude transactions.