SHELL Nigeria Gas (SNG) Limited has signed a Memorandum of Understanding with the Gateway City Development Company Limited for the supply of natural gas to more industries in Ogun State.

The Ogun State governor, Otunba 'Gbenga Daniel and SNG MD 'Bayo Opadere signed the agreement in Abeokuta, the Ogun State capital.

Ogun State governor, Otunba 'Gbenga Daniel

His words: "This agreement is further testimony to Shell's commitment to Nigeria. It shows we're serious about playing our role in encouraging the use of natural gas in the country and also ready to partner with manufacturers and other users to bring the benefits of Nigeria's rich natural gas resources to the people."

Shell pioneered gas utilisation in Nigeria in the 1960s. Shell Nigeria Gas Limited began operations in 2003, and has connected over 40 customers to its gas distribution network within Ogun State. The signing of the MoU will help to ensure that more manufacturers get connected to the company's supply network, and open a new chapter of industrial growth by promoting the increased use of gas as a cleaner, more efficient and environment-friendly source of energy.

Recently, the Ogun State Chapter of the Manufacturers' Association of Nigeria (MAN) disclosed that its members had experienced an increase in capacity utilisation in 2007.

Reacting to the MAN statement, Bayo said: "It's no coincidence that the companies which use our gas in Ogun State are the ones experiencing increases in capacity utilisation, which further proves the point that natural gas is good for business."

In addition to Agbara and Ota in Ogun State, SNG also supplies gas to companies in Aba, Abia State. There are plans to extend supply of gas to other states.

There has been series of issues in the gas sector lately with the most recent being the Senate's accusation that the Federal Government lacks the political will to put an end to gas flare in the country, thereby making it more difficult for the gas domestication policy of the Federal Government to become a reality.

Flagging off the Senate public hearing on Gas Flaring (prohibition and punishment) bill in the National Assembly recently, the President of the Senate, Chief David Mark said oil-producing companies found it more convenient to flare and pay the inconsequential fines because of the lack of political will on the part of government to push them to stop the habit.

The bill under consideration prescribes a December 2008 deadline for the prohibition of gas flaring except on the express authority of the minister. Companies which flare gas after the deadline would pay U.S. $3.5, which is about N400 in local currency per million standard cubic feet of gas flared and companies which do not report themselves would be issued with shut down order by the minister.

Declaring open the public hearing on the bill, Senator Mark said:

"I am told that gas flaring is the largest contributor of green house gas to the atmosphere in sub-Saharan Africa, and we know the effect. I have been to so many places in the oil- producing areas and you really could pity the communities that live in that place because of the effects that goes on.

"Not that government has not been able to do anything about it, there has been government policies starting from Decree Number 99 of 1979 which was amended again in 1985. But those decrees which eventually are more like policies, have not been backed up by serious legislation.

"More importantly, I think the government has never been able to develop a strong will to ensure the implementation of these basic policies and the result of course is like any other law, the operators take the easiest line of resistance, which is to maybe pay N2, or 1k or whatever and flaring so many cubic feet of gas.

"More importantly, the penalty for any defaulter is too meager for anybody to go the hard way of reducing gas flaring. Whatever it is, it is cheaper for the companies or the operators to flare gas and pay the penalty than to stop."