OML 72: Dangote mulls $12bn refinery cash flow diversion

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…projects 20,000 bpd from two oil blocs

Cash flow from $12 billion Dangote Refinery and Petrochemical will be channelled to oil production.

Group Executive Director of Dangote Exploration Assets, an upstream subsidiary of the group, Edwin Devakumar, who said this, maintained that the conglomerate aims at pumping around 20,000 barrels a day from Oil Mining Leases (OMLs) 71 and 72, at some point in the near term.

According to Africa Oil + Gas Report, although he didn’t give a timeline, he, however, said: “Crude oil production is where the majority of our cash flow from the refinery will go to. We’ll focus on that after we start the refinery.”

The NNPC/WAEP Joint Venture has refurbished parts of the production facility on the Kalaekule field in OML 72 in shallow offshore, Central Niger Delta Basin, off Nigeria.

The partners are hoping to achieve some production by the end of 2019, the report read.

WAEP is a subsidiary of Dangote Industry conglomerate. It purchased 45 per cent of OMLs 71 and 72 from Shell, Total and ENI for $300 million in March 2015, right in the thick of the crude oil price crash.

The plan had always been to put the Kalaekule field, the only asset in the two acreages with a history of production, back at work.

“We have established that some wells can flow and we have done minor refurbishment of the platform,” officials at the National Petroleum Investment Management Services (NAPIMS), the arm of the state hydrocarbon company, NNPC which oversees the project with WAEP, was quoted to have said.

Kalaekule produced crude oil between 1985 and 2002, peaking in 1999 at 22,000BOPD.

The partners have finalised integrity assessment and status evaluation and what remains is to do enough repair works to flow some crude, perhaps 2,000BOPD, to begin with.

“Everything points towards some output by the end of the year,” the NAPIMS sources say.

The news about Dangote Industries have, before this, been focused on the massive, 650,000 barrels of oil per day refinery.

The Nigerian National Petroleum Corporation (NNPC), owner of ailing refineries in Nigeria, had last Wednesday agreed to collaboration with Africa’s richest man, Alhaji Aliko Dangote, over his $12 billion refinery.

The Group Managing Director of NNPC, Mallam Mele Kyari, and Dangote made this known when President and Chief Executive Officer of the Dangote Group paid a courtesy visited NNPC Towers in Abuja.

The national oil company, Kyari said, was not in contest for market share with the forthcoming Dangote Refinery but rather providing support to the promoters of the project to boost in-country refining capacity.

He explained that as the chief enabler of the Nigerian economy, the NNPC had a duty to rally industry players like Dangote Group to achieve the long held target of making Nigeria a net exporter of petroleum products.

The NNPC GMD assured that the same level of support would be provided to other promoters of refineries, noting that the ultimate goal was to enhance in-country production to the point of self-sufficiency and ultimately for export.

Earlier in his presentation, Alhaji Dangote emphasised that the business approach of Dangote Refinery was to see NNPC as a collaborator rather than a competitor, noting that the refinery would rely heavily on the corporation’s invaluable knowledge of the refining business in Nigeria to achieve its central objective.

Dangote aligned his company with Federal Government’s aspiration to ensure adequate in-country refining capacity, stating that upon completion, the refinery would dedicate 53 per cent of its projected 650,000 barrels per day refining capacity to the production of petrol.

“The most important thing for us is to see how we can partner with NNPC; it is not to see how we can compete with NNPC. We would like NNPC to be part of us and we also want to be part of NNPC. I think that is the only way we can achieve a win-win situation,” he said.

Sinopec, China’s leading energy and chemical company, had on Monday (July 29), announced that a completed atmospheric tower it had built was sailing for the shores of Lagos in Africa’s biggest economy, Nigeria.

The facility, which it described as the world’s largest, is set to be installed at Dangote Refinery. The wharf carrying the tower left the city of Ningbo and is set arrive in Nigeria in weeks.

According to experts, the primary purpose of the atmospheric distillation tower is to separate crude oil into its components (or distillation cuts, distillation fractions) for further processing by other processing units.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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