Oyo, Shell sign $100m agreement to build gas distribution network

The Oyo state government and Shell Nigeria Gas (SNG) have signed an agreement worth over $100 million to build and operate a gas distribution network.

In a post on his X account on Friday, Seyi Makinde, the governor of Oyo State, said the deal was signed in London.

He said the project also involves the construction of a pressure reduction and metering station (PRMS) and the laying of pipelines by SNG on a build-own-operate-transfer (BOOT) basis.

“We were in London to sign the final investment agreement for the Oyo State Government-Shell Nigeria Gas Infrastructure Development and Distribution project,” Makinde said.

“This gas project worth about $100 million, involves the construction of a Pressure Reduction and Metering Station (PRMS) and laying of pipelines by SNG on a Build-Own-Operate-Transfer (BOOT) basis. Ownership will be transferred to Oyo State after 20 years.

“With this agreement in place, we are looking forward to the first flow of gas to industrial, manufacturing and commercial entities as well as our independent power project in Oyo State in 18 months.”

Ralph Gbobo, SNG managing director, said the agreement marks a major achievement for the company and the state, aiming to enhance economic activities in Nigeria by providing natural gas to industries and manufacturers.

Gbobo said it would serve as a more dependable, cost-efficient and environmentally-friendly source of energy.

He also said it would contribute to increasing the state’s internally generated revenue (IGR) and creating additional job opportunities.

“For SNG, the project is a milestone in our efforts to continue growing the energy supply to businesses in Nigeria, in line with the country’s ambition to drive progress on the back of natural gas availability across Nigeria, under the Decade of Gas Initiative,” he said.

“The project will start with the construction of gas distribution infrastructure along 15 kilometres of pipeline route and will grow to deliver up to 60 million standard cubic feet of gas per day across the state.”

Also speaking, Osagie Okunbor, managing director of Shell Petroleum Development Company of Nigeria Limited (SPDC), said the agreement points to the importance of collaboration as the firm continues to drive advancement in Nigeria.

Okunbor said the collaboration would lead to an increase in cleaner energy solutions for commercial and industrial customers in the state.