Dangote Upstream Unit Eyes Production Surge, Gas Monetisation Within Two Years

The upstream company has contracted three jack-up rigs and plans to begin drilling in December as it pursues sustained production, gas monetisation and a potential crude supply link with the Dangote refinery.

West Africa Exploration and Production Company Limited, majority-owned by Dangote Group, is accelerating plans to unlock more than 1.6 billion barrels of oil in place across two Nigerian offshore licences, targeting sustained production growth and gas monetisation within the next 24 months.

The upstream company has signed contracts for three jack-up rigs, with drilling expected to begin in December as part of a phased redevelopment of Oil Mining Leases 71 and 72, according to a statement on Sunday.

WAEP Managing Director and Chief Executive Officer Olajumoke Cecilia Ajayi disclosed the plans at the AOW Energy Conference in Accra, Ghana, during a session.

Ajayi said discoveries across OMLs 71 and 72 had established more than 1.6 billion barrels of oil in place and about 1.9 trillion cubic feet of gas, highlighting the scale of the opportunity within the former Shell-operated assets.

She said WAEP’s strategy was to begin with readily accessible production opportunities, generate early cash flow and reinvest the proceeds in broader field redevelopment.

“The first thing is to look at the low-hanging fruit, the short-term oil gains, generate cash flow from that, put it back into the assets and start redevelopment,” she said. “And that’s exactly what is happening currently.”

The strategy is now moving into execution, with the three-rig campaign expected to raise production and unlock additional value from the two leases.

“We will be drilling to ramp up production and also bring out the value in the asset,” she said.

The campaign is being supported by six field development plan studies that could pave the way for what Ajayi described as “back-to-back developments” across WAEP’s portfolio. The combination of near-term production opportunities, development drilling and field planning is expected to sustain activity beyond the initial campaign.

WAEP holds a 45 per cent working interest in OMLs 71 and 72, while the remaining interest is held by the state-owned Nigerian National Petroleum Company Limited. First E&P, a minority shareholder in WAEP, operates the assets.

Dangote holds an 85 per cent stake in WAEP, creating a potentially significant link between the upstream assets and Dangote Petroleum Refinery and Petrochemicals, Africa’s largest refinery.

“One of the shareholders, one of the partners on this asset, is the owner of the largest refinery in Africa, Dangote Petroleum Refinery and Petrochemicals,” Ajayi said. “So the oil would definitely be needed by the refinery.”

A supply arrangement could deepen the connection between Nigerian crude production and domestic refining as the country seeks to retain more value within its energy industry.

WAEP is also working toward establishing a dedicated crude terminal to support evacuation as output increases. Ajayi said the proposed facility could serve other producers seeking to aggregate and evacuate crude, potentially creating an additional infrastructure business for the company.

Located in shallow waters southeast of the Niger Delta, OMLs 71 and 72 are approximately 22 kilometres from the Bonny terminal. Discoveries were first made on the blocks in 1966, while WAEP acquired its interest from Shell in 2015.

Production from the assets peaked at about 21,000 barrels per day in 1999 before declining from 2003.

Ajayi said reviving mature assets required more than holding licences and reserves, stressing that African independent producers must develop the technical expertise, financial capacity and operational discipline needed to maintain output.

“We need to put round pegs in round holes. We need to put the right skill and competence in the different units,” she said.

WAEP has consequently focused on strengthening its technical and organisational capabilities ahead of the next stage of development.

Ajayi said the company expected to achieve a substantial and stable increase in production over the next two years, alongside the infrastructure and commercial arrangements required to monetise its gas resources.

“Between now and the next 24 months, gas monetisation would have been in place. We would have ramped up production consistently,” she said. “Not produce today, tomorrow you are down. Consistent, sustained production.”