The Dangote Group has commenced oil production from its upstream assets in the Niger Delta, a strategic entry into crude extraction as the company moves to strengthen supply security for its refining operations.
Early output from the Kalaekule field on Oil Mining Lease 72 is currently estimated at about 4,500 barrels per day (bpd) with plans to ramp up production to 15,000 bpd within the next month, according to executives familiar with the project.
The development follows the opening of a production well and the start of standard testing procedures, which are expected to be completed within three to four weeks.
Upon completion, the company is expected to begin pumping crude at commercial scale and proceed with drilling additional wells to expand output capacity.
The upstream operations are being executed through Dangote’s joint venture, West African E&P, in which the group holds an 85 percent stake.
The venture maintains a 45 percent working interest in two offshore licences, OML 71 and OML 72, located approximately 22 kilometres from the Bonny export terminal in Nigeria’s south-east region. The balance is held by the Nigerian National Petroleum Company Limited, while First E&P operates the assets.
The licences, originally discovered in 1966 and previously operated by Shell, were acquired by the joint venture in 2015.
Production from the fields had peaked at 21,000 bpd in 1999 before declining in the early 2000s, making the current restart a significant revival of legacy assets.
The move into upstream production aligns with Dangote’s broader strategy to build a vertically integrated energy business. By combining crude extraction with refining and logistics, the company aims to reduce dependence on third-party suppliers and mitigate the supply constraints that affected early operations at its refinery.
Executives say the upstream output is expected to complement crude sourcing for the Dangote refinery, subject to commercial terms.
The group is also exploring the development of its own shipping capacity to enhance logistics efficiency and ensure more reliable delivery of feedstock.
The refinery, one of the largest in Africa, has faced challenges in securing consistent crude supply since commencement.
The Nigerian National Petroleum Company Limited recently increased crude allocation to the refinery, committing additional cargoes in response to supply gaps.
Industry analysts view Dangote’s entry into oil production as a strategic shift that could improve operational stability while reducing exposure to fluctuations in the domestic crude supply chain.
However, they note that achieving meaningful scale will depend on sustained investment, operational efficiency, and regulatory support.
The commencement of production positions Dangote as a fully integrated player across the oil value chain with exposure spanning upstream extraction, midstream logistics, and downstream refining.