13% Derivation: FG Plots Coordinates for Brand‑Spanking‑New, Disputed Oil Fields

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Introduction

The Federal Government of Nigeria is stepping up its efforts to resolve long‑standing disputes over oil‑field ownership by mapping the exact geographic coordinates of newly drilled and contested fields. The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), the body tasked with overseeing the 13% derivation formula, has announced that it has already begun plotting these coordinates and expects the exercise to be completed within a week. This move is critical because accurate field mapping directly determines which oil‑producing states receive their statutory share of revenue, a process enshrined in the 1999 Constitution and reinforced by the Derivation Act.

For citizens, investors, and state governments alike, the outcome of this verification will affect billions of naira in annual revenue, shape future development projects, and potentially settle legal battles that have lingered for years. In this comprehensive guide we break down what the 13% derivation means, why field coordinates matter, how the inter‑agency technical committee operates, and what practical steps stakeholders can take to stay informed and compliant.

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Key Points

Background

Historical Context of Derivation in Nigeria

Nigeria’s oil‑derived revenue sharing system dates back to the 1970s, when the federal government introduced a “derivation formula” to compensate oil‑producing states for the environmental and social impacts of extraction. The formula was formalised by the Derivation Act of 2001, which codified a statutory allocation of 13% of total oil revenue to the states where the resources are located.

Over the decades, however, disputes have arisen because of overlapping claims, ambiguous boundary definitions, and the emergence of new fields that fall outside existing concession maps. These disputes have often led to court battles, delayed payments, and strained relationships between the federal government and state administrations.

Legal Framework: The Derivation Act & 13% Allocation

The Derivation Act (Section 162 of the 1999 Constitution) obliges the federal government to allocate 13% of oil revenue to the “oil‑producing states”. The exact wording reads:

> “The Federal Government shall allocate 13% of the revenue derived from the exploration and production of crude oil and natural gas to the States of the Federation in which such crude oil and natural gas are produced.”

This allocation is calculated on a monthly basis using data supplied by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and verified by the RMAFC. The law also requires that any disputes over field location be resolved through a transparent, technical verification process.

Common Sources of Oil‑Field Disputes

– **Boundary ambiguity**: Many oil fields straddle state borders, especially in the Niger Delta region where creeks and waterways complicate demarcation.
– **New drilling**: As companies discover fresh reserves, they often need to confirm the state jurisdiction before reporting production.
– **Historical concession maps**: Legacy maps from the 1970s and 1980s may not reflect current geological realities.
– **Political disagreements**: States may argue over the interpretation of “produced” versus “explored” revenue streams.

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Analysis

Why Accurate Coordinates Matter for Derivation

The derivation formula hinges on two data points: (1) the **volume of crude oil or natural gas produced** and (2) the **state jurisdiction** where that production occurs. Without precise coordinates, the RMAFC cannot reliably assign revenue to the correct state, leading to:

– **Revenue leakage**: Funds that should go to a state may be incorrectly allocated to another, violating constitutional obligations.
– **Legal challenges**: States can file suits demanding the correct allocation, causing delays and additional administrative costs.
– **Investor uncertainty**: Companies prefer clear, stable revenue‑sharing agreements; disputes can deter future investments.

Therefore, the act of plotting coordinates is not merely a technical exercise but a legal prerequisite for fair derivation.

The Inter‑Agency Technical Committee: Roles and Responsibilities

| Agency | Core Function in the Verification Process |
|——–|——————————————-|
| **Revenue Mobilisation Allocation and Fiscal Commission (RMAFC)** | Oversees the derivation formula, receives production data, and coordinates with other bodies. |
| **National Boundary Commission (NBC)** | Provides official boundary definitions and validates state borders. |
| **Surveyor General’s Office (SGO)** | Supplies field‑survey expertise, conducts on‑site measurements, and certifies coordinate accuracy. |
| **Nigerian Upstream Petroleum Regulatory Commission (NUPRC)** | Supplies production statistics, assists in locating wells, and issues technical reports. |
| **Federal Ministry of Petroleum Resources** | Facilitates inter‑agency coordination and ensures compliance with national oil‑policy directives. |

The committee’s mandate, as articulated by Dr. Mohammed Shehu, Chairman of the RMAFC, is to **“check the coordinates of the new oil wells and the disputed ones”** and ensure that the 13% derivation is **“sent equitably to oil‑producing states.”** This collaborative approach minimizes bias and leverages specialized expertise from each agency.

Methodology: Field Verification and Mapping Process

1. **Data collection** – NUPRC supplied production reports and well‑site data for each field.
2. **On‑site inspection** – Surveyors visited the offshore platforms, inland rigs, and creek‑side sites to capture GPS coordinates.
3. **Cross‑state verification** – Representatives from each oil‑producing state’s Surveyor General attended the field visits as witnesses.
4. **Boundary alignment** – The National Boundary Commission cross‑checked the coordinates against the latest state boundary maps.
5. **Technical committee review** – All agencies compiled a joint technical report, which was then submitted to the RMAFC for final approval.

The exercise concluded in early January 2026, with the committee’s findings now being processed into a **standardised coordinate database** that will be published in the upcoming “Derivation Allocation Report”.

Timeline and Expected Outcomes

– **January 2026 (Week 1)**: Committee completed on‑site verification and generated raw coordinate data.
– **January 2026 (Week 2)**: Data cleaning, validation, and integration into the RMAFC’s GIS system.
– **Early February 2026**: Draft derivation allocation tables released to state ministries.
– **Mid‑February 2026**: Final allocation approved by the Federal Executive Council; revenue disbursement begins.

The **five‑day verification window** mentioned by Dr. Shehu refers to the intensive field‑work phase, not the entire administrative timeline. The overall process, from data capture to disbursement, typically spans **four to six weeks** due to bureaucratic review and public notification periods.

Potential Legal and Fiscal Implications

– **Constitutional compliance**: Accurate mapping ensures the federal government fulfills its constitutional duty under Section 162, reducing the risk of judicial injunctions.
– **Revenue certainty**: States can anticipate their monthly derivation payments, improving budget planning.
– **Dispute settlement**: Once coordinates are officially recorded, states may file formal grievances within the statutory 30‑day window, but the burden of proof shifts to the disputing party.
– **Investor confidence**: Transparent, data‑driven derivation enhances the credibility of Nigeria’s oil sector for foreign investors.

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Practical Advice

For State Governments

– **Establish a dedicated derivation liaison office** to receive and verify the coordinate data promptly.
– **Engage legal counsel** familiar with the Derivation Act to review any discrepancies before filing complaints.
– **Participate in public hearings** organized by the RMAFC to voice concerns and ensure representation.
– **Maintain updated GIS resources** to cross‑reference the federal data with local boundary maps.

For Oil Companies and Operators

– **Submit accurate well‑location reports** to NUPRC within the stipulated deadline (usually within 30 days of first production).
– **Coordinate with state surveyors** when new wells are drilled in contested zones to avoid later mapping disputes.
– **Document all field activities** (including GPS logs, production logs, and boundary surveys) for audit purposes.
– **Stay informed** about the RMAFC’s upcoming derivation tables to anticipate revenue allocations.

For Federal Agencies and Stakeholders

– **Publish the final coordinate database** on the RMAFC website with a clear release schedule.
– **Provide training sessions** for state officials on interpreting GIS data and derivation calculations.
– **Monitor compliance** through periodic audits of oil‑producing companies’ reporting mechanisms.
– **Facilitate dispute resolution mechanisms**, such as mediation panels, to handle any post‑verification challenges.

For Citizens and Civil Society

– **Track derivation payments** on the RMAFC’s public dashboard to ensure your state receives its fair share.
– **Participate in community outreach programmes** that explain how derivation revenues fund local development projects (e.g., infrastructure, health, education).
– **Report any anomalies** (e.g., missing payments, incorrect state attribution) to the RMAFC’s ombudsman office.
– **Stay informed** about the legal rights granted under the Derivation Act, which empower citizens to demand equitable revenue sharing.

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FAQ