RMAFC: Reopens Nigeria Oil Wells Verification Amid Derivation Fund Dispute

• The Revenue Mobilisation Allocation Fiscal Commission (RMAFC) has reopened the verification of disputed oil and gas wells in Nigeria.
• This decision follows complaints from states about a previous draft report used to determine the 13% derivation revenue sharing, specifically regarding well coordinates and locations.
• A reconstituted Inter-Agency Technical Committee will verify disputed and newly drilled wells from 2017 to the present, with a mandate to ensure accurate mapping and consider court decisions.
• The verification process employs a two-tier structure involving technical experts from various agencies, including the Nigerian Upstream Petroleum Regulatory Commission, and an executive oversight committee.
• Security agencies will provide support for field operations, and representatives from affected states and the Senate Committee on Petroleum Resources (Upstream) will participate as observers to ensure transparency and fairness.

The outcome of this comprehensive re-verification process is poised to significantly influence the distribution of the 13% derivation fund among Nigeria's oil and gas-producing states.

The Revenue Mobilisation Allocation Fiscal Commission (RMAFC) has initiated a fresh verification exercise concerning disputed oil and gas wells across Nigeria, following significant complaints from various states regarding a previous assessment. This new effort, which effectively reopens Nigeria oil wells verification, comes after the commission discarded an earlier draft report that was intended to guide the allocation of the 13% derivation revenue. States had raised numerous claims, counterclaims, and objections, primarily centered on the accuracy of coordinates and locations for both existing disputed wells and newly drilled oil and gas assets.

Dr. Mohammed Shehu, the Chairman of RMAFC, confirmed this development during the inauguration of a reconstituted Inter-Agency Technical Committee in Abuja. He explained that the previous draft report was rejected precisely because of these complaints, which emphasized the critical need to re-verify the coordinates of these wells and ensure their precise plotting on approved maps. The newly formed committee is specifically tasked with verifying disputed and newly drilled oil and gas wells that have emerged from 2017 to the present day. This significant undertaking was announced in a statement issued on Thursday by Maryam Umar-Yusuf, the Head of RMAFC’s Information and Public Relations Unit.

The outcome of this comprehensive re-verification process is poised to significantly influence the distribution of the 13% derivation fund among Nigeria's oil and gas-producing states. The precise location of these producing assets directly determines which states are legally entitled to receive derivation revenue from them, making the accuracy of the verification paramount. This exercise aligns with RMAFC's constitutional mandate to monitor both the revenue accruing to and disbursed from the Federation Account, with a core objective of ensuring an equitable distribution of derivation revenue.

Chairman Shehu has underscored the committee's responsibility to guarantee that all coordinates, maps, and boundaries utilized in determining the locations of the affected wells accurately reflect the actual situation on the ground. Furthermore, the committee has been explicitly directed to take into account relevant court decisions that pertain to these disputes. They must also rely strictly on approved maps and, where deemed necessary, conduct physical field verification of disputed oil and gas wells to ascertain their true positions, which could be crucial in resolving any inter-state oil well boundary dispute.

To bolster technical scrutiny and accountability throughout this complex exercise, RMAFC has adopted a structured two-tier approach. The first tier comprises a technical team composed of officers and subject-matter experts drawn from several key government bodies. These include the Revenue Mobilisation Allocation Fiscal Commission itself, the Office of the Surveyor-General of the Federation, the National Boundary Commission, and the Nigerian Upstream Petroleum Regulatory Commission. This technical team is responsible for conducting ground-level verification, performing field inspections, undertaking detailed technical analysis, and ultimately preparing the initial report derived from their findings.

The second tier is an Executive Committee, which operates under the leadership of the RMAFC. This higher-level committee is tasked with providing strategic direction for the entire process, coordinating the activities of all participating agencies, and overseeing the final approvals before the verification findings are formally presented for ratification. Recognizing the potential challenges of field operations, particularly in difficult coastal and other complex environments, the commission has also committed to engaging relevant security agencies. These agencies will provide essential administrative clearances, tactical assistance, and comprehensive security coverage for officials conducting the field work. To further enhance transparency, Surveyors-General from the affected states, alongside representatives from the Senate Committee on Petroleum Resources (Upstream), will participate in the exercise in an observer capacity.

This renewed focus on the accurate mapping and verification of oil and gas wells holds profound implications for Nigeria's fiscal federalism and inter-state relations. The chairman of the Revenue Mobilisation Allocation Fiscal Commission has urged all committee members to execute their assignment with the utmost integrity and objectivity, emphasizing that the overarching goal is to achieve "clarity, fairness, and stability" in the distribution of oil revenues. The resolution of the Nigeria 13% derivation fund dispute hinges significantly on the meticulous and unbiased execution of this exercise.

The precise determination of RMAFC oil and gas well coordinates is not merely a technical undertaking; it is a critical step towards ensuring that oil-producing states receive their rightful share of the derivation fund, thereby potentially mitigating future inter-state oil well boundary dispute issues. The findings from this re-verification could necessitate adjustments to existing revenue-sharing agreements and could significantly impact the financial stability and development prospects of various states, making it a closely watched development for all stakeholders.

Lawyers advising oil-producing states or energy companies in Nigeria should closely monitor the outcome of this re-verification exercise. The findings could significantly alter 13% derivation fund allocations, potentially impacting state revenues, triggering new inter-state boundary disputes, or necessitating adjustments to existing revenue-sharing agreements.

Source: Original reporting via Sami Tunji