Nigeria Content Online

A
constitutional crisis looms as concession granted Bayelsa State to
receive extra derivation revenue for nine mega offshore fields may
trigger legal agitations from other oil producing states in the
federation.

The
Bayelsa State government, in a letter dated February 16 to the then
acting president, Goodluck Jonathan, had requested approval for the
attribution of nine oil fields to assuage negative impact of the
delimitation of maritime boundaries of littoral states by the National
Boundary Commission (NBC) in the wake of the promulgation of the
Offshore/Onshore Dichotomy Abrogation Act 2004.

Timipre
Sylva, the governor, who signed the letter, listed the oil fields,
which included some of the country’s biggest deep offshore oil
concessions, like the Agbami, operated by Chevron, with proven oil
reserve of over 770 million barrels; Bonga, operated by Shell, with
proven reserves of over 1.5 billion barrels; and Akpo, operated by
Total, with proven oil reserves of over 630 million barrels.

Others
include Chota oil field, with 60 million barrels reserve by
ConocoPhillips; N’Golo oil field, 100 million barrels reserve by Elf
Petroleum Nigeria; Nnwa Doro oil field, by Statoil; and Aparo by
Chevron.

Mr.
Sylva said the delimitation has put Bayelsa State in a disadvantaged
position in the allocation of revenue since 2004. He drew attention to
the impact of ecological damage to the state’s coastline, pointing out
that the exercise did not attribute the oil fields and wells to the
littoral zone of the state, “despite the huge security challenges,
increasing environmental and health concerns, and the state’s massive
contributions to the amnesty programme.”

The
presidential concession would make Bayelsa State the highest derivation
revenue earner among the oil producing states in the country.

However,
following the approval of President Goodluck Jonathan on August 31, the
other littoral states are poised to equally demand their share of
derivation revenue based on the delimitation of their location beyond
the 200-metre isobath of their seaward boundaries.

Available
data for the Revenue Mobilisation Allocation and Fiscal Commission
(RMAFC) on the revised 13 percent derivation indices for July, obtained
at the weekend, based on the concession, put total oil production for
Bayelsa State at 15,995,773 barrels, ahead of Rivers (13,317,840
barrels), Akwa Ibom (12,796,954 barrels), and Delta (11,163,493
barrels).

Prior
to the concession and subsequent revision of the volume of oil
production figures attributable to each state, Akwa Ibom topped, with
13,905,432 barrels, followed by Rivers (12,636,795 barrels), Delta
(11,163,493 barrels), and Bayelsa (10,313,368 barrels).

Legal breach

The
concession to Bayelsa State to enable it earn derivation revenue from
oil wells lying beyond the 200-metre isobath, according to some
lawyers, is in breach of the Offshore/Onshore Dichotomy Abrogation Act
2004 in the application of the 13 percent derivation principle.

Innocent
Ogboru, a Port Harcourt-based legal practitioner, said the decision may
lead to agitations and court actions by other states, like Lagos, which
also has oil wells located beyond the 200-metre isobath in waters
within their boundaries.

“The
new twist in the calculation of oil derivation revenue will reduce the
amount of net revenue available to the Federation Account for
distribution to the three tiers of government, consisting the 36 states
of the federation and the 774 local government councils, as well as the
Federal Capital Territory (FCT), after the deduction of derivation
payable to oil producing states,” Mr. Ogboru said.

The
2003 interpretation of the Supreme Court judgment in the resource
control suit instituted against the Federal Government over the
implementation of the offshore/onshore dichotomy, which ended the
controversy, did not include revenues from oil wells outside the
statutorily allowed 200-metre isobath as part of derivation calculation.