UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549
                                   FORM 10-Q

(Mark One)
 X       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
---                                                                     
         EXCHANGE ACT OF 1934

For the quarterly period ended   September 30, 1995    

                                       OR

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
---                                                                           
         EXCHANGE ACT OF 1934

For the transition period from                        to
                               ----------------------    ----------------------
Commission file number      1-2745     

                         SOUTHERN NATURAL GAS COMPANY 
             (Exact name of registrant as specified in its charter)

           DELAWARE                                             63-0196650 
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)


           AMSOUTH-SONAT TOWER
           BIRMINGHAM, ALABAMA                                      35203   
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number:                                 (205) 325-7410


                                   NO CHANGE                                    
     (Former name,  former address and former fiscal year, if changed since last
report)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                Yes  X      No  _

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

                         COMMON STOCK, $3.75 PAR VALUE:

                  1,000 SHARES OUTSTANDING ON OCTOBER 31, 1995

         REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
         H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH
         THE REDUCED DISCLOSURE FORMAT.

<PAGE>





                 SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES

                                     INDEX
<TABLE>
<CAPTION>

<S>                                                                                                               <C>
                                                                                                                  Page No.

PART I.           Financial Information

                  Item 1.           Financial Statements

                                    Condensed Consolidated Balance Sheets--
                                       September 30, 1995 and December 31, 1994                                    1

                                    Condensed Consolidated Statements of Income--
                                       Three Months and Nine Months
                                       Ended September 30, 1995 and 1994                                           2

                                    Condensed Consolidated Statements of Cash Flows--
                                       Nine Months Ended September 30, 1995 and 1994                               3

                                    Notes to Condensed Consolidated Financial
                                       Statements                                                                  4 - 8

                  Item 2.           Management's Discussion and Analysis of
                                       Financial Condition and Results of
                                       Operations                                                                  9 - 16

PART II.          Other Information

                  Item 6.           Exhibits and Reports on Form 8-K                                              17

</TABLE>


<PAGE>



                                             PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements
                                 SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      (Unaudited)
<TABLE>
<CAPTION>
                                                                                September 30,              December 31,
                                                                                    1995                        1994   
                                                                                              (In Thousands)
                                                        ASSETS
Current Assets:
<S>                                                                                <C>                         <C>     
    Cash                                                                           $    4,204                  $    975
    Notes receivable, primarily from affiliates                                       129,373                   173,060
    Accounts receivable                                                               102,174                   122,514
    Inventories                                                                        22,572                    20,930
    Gas imbalance receivables                                                          17,096                    35,053
    Prepaid income taxes                                                               22,604                      -
    Other                                                                              17,117                     8,511
                                                                                   ----------                    ------
          Total Current Assets                                                        315,140                   361,043
                                                                                   ----------                    ------
Investments in Joint Ventures and Other                                                51,425                    47,952
                                                                                     --------                   -------

Plant, Property and Equipment                                                       2,298,596                 2,241,972
    Less accumulated depreciation and amortization                                  1,504,977                 1,460,649
                                                                                   ----------                 ---------
                                                                                      793,619                   781,323
                                                                                   ----------                 ---------
Deferred Charges:
    Gas supply realignment costs                                                      211,169                   160,850
    Other                                                                              39,267                    24,042
                                                                                   ----------                  --------
                                                                                      250,436                   184,892
                                                                                   ----------                  --------
                                                                                   $1,410,620                $1,375,210
                                                                                   ==========                ==========

                                         LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities:
    Long-term debt due within one year                                              $   6,964                 $   6,964
    Accounts payable                                                                   44,410                    42,356
    Accrued income taxes                                                                5,408                    14,271
    Accrued interest                                                                   12,721                    19,505
    Gas imbalance payables                                                             18,831                    35,112
    Other                                                                              19,677                    19,892
                                                                                   ----------                   -------
          Total Current Liabilities                                                   108,011                   138,100
                                                                                   ----------                   -------

Long-Term Debt                                                                        317,947                   323,907
                                                                                   ----------                   -------

Deferred Credits and Other:
    Deferred income taxes                                                              88,118                    43,812
    Reserves for regulatory matters                                                   177,013                   183,343
    Operating and other reserves                                                       75,464                    79,610
    Other                                                                              72,157                    87,214
                                                                                   ----------                   -------
                                                                                      412,752                   393,979
                                                                                   ----------                   -------
Commitments and Contingencies

Stockholder's Equity:
    Common stock and other capital                                                    100,616                    78,635
    Retained earnings                                                                 471,294                   440,589
                                                                                   ----------                   -------
          Total Stockholder's Equity                                                  571,910                   519,224
                                                                                   ----------                   -------
                                                                                   $1,410,620                $1,375,210
                                                                                   ==========                ==========

</TABLE>

                                                See accompanying notes.
                 SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                                      Three Months                        Nine Months
                                                                  Ended September 30,                  Ended September 30,
                                                              1995              1994             1995                1994
                                                                                       (In Thousands)
Revenues:
<S>                                                         <C>                <C>                <C>                <C>     
    Natural gas sales                                       $ 44,884           $ 47,444           $138,820           $191,591
    Transportation and storage                                88,155             70,741            282,606            254,727
    Other                                                     46,093             36,627             78,106            138,165
                                                            --------           --------           --------           --------
                                                             179,132            154,812            499,532            584,483
                                                            --------           --------           --------           --------

Costs and Expenses:
    Natural gas cost                                          44,729             47,447            137,128            186,667
    Transition cost recovery                                  32,259             22,656             40,665             93,105
    Operating and maintenance                                 27,856             33,658             78,402             97,204
    General and administrative                                20,507             17,865             61,089             57,124
    Depreciation and amortization                             12,257               (720)            39,781             31,412
    Taxes, other than income                                   4,761              4,599             14,895             13,588
                                                            --------           --------           --------           --------
                                                             142,369            125,505            371,960            479,100
                                                            --------           --------           --------           --------

Operating Income                                              36,763             29,307            127,572            105,383

Other Income, Net:
    Equity in earnings of
       joint ventures                                          2,319              2,158              7,161              6,653
    Other                                                        269                181                371                388
                                                            --------           --------           --------           --------
                                                               2,588              2,339              7,532              7,041
                                                            --------           --------           --------           --------

Interest:
    Interest income, primarily
       from affiliates                                         1,783              3,465              6,707             11,962
    Interest expense                                         (10,663)            (9,744)           (31,624)           (32,144)
    Interest capitalized                                          64                 37                165                663
                                                            --------           --------           --------           --------
                                                              (8,816)            (6,242)           (24,752)           (19,519)
                                                            --------           --------           --------           -------- 

Income before Income Taxes                                    30,535             25,404            110,352             92,905

Income Taxes                                                  11,730              9,586             42,447             35,589
                                                            --------           --------           --------           --------

Net Income                                                  $ 18,805           $ 15,818           $ 67,905           $ 57,316
                                                            ========           ========           ========           ========
</TABLE>













                                                See accompanying notes.
                                 SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (Unaudited)
<TABLE>
<CAPTION>

                                                                                               Nine Months
                                                                                           Ended September 30,
                                                                                     1995                      1994
                                                                                              (In Thousands)
Cash Flows from Operating Activities:
<S>                                                                                 <C>                     <C>      
    Net income                                                                      $ 67,905                $  57,316
    Adjustments to reconcile net income to net
       cash provided by operating activities:
          Depreciation and amortization                                               39,781                   31,412
          Deferred income taxes                                                       38,172                   (9,270)
          Equity in earnings of joint
              ventures, less distributions                                            (2,911)                  (2,653)
          Reserves for regulatory matters                                             (6,330)                  48,407
          Gas supply realignment costs                                               (50,319)                  22,428
          Natural gas purchase contract
              settlement costs                                                        (1,328)                  18,360
          Change in:
              Accounts receivable                                                     22,717                   29,994
              Inventories                                                             (1,304)                   1,091
              Accounts payable                                                         1,055                  (24,674)
              Accrued interest and income taxes, net                                 (36,799)                  (9,445)
              Other current assets and liabilities                                    (8,002)                  (9,146)
          Other                                                                      (17,920)                   9,820
                                                                                    --------                ---------
              Net cash provided by operating
                 activities                                                           44,717                  163,640
                                                                                    --------                ---------

Cash Flows from Investing Activities:
    Plant, property and equipment additions                                          (36,823)                 (35,323)
    Notes receivable, primarily from affiliates                                       37,477                    4,098
    Proceeds from disposal of assets and other                                           945                    8,025
                                                                                    --------                ---------
              Net cash provided by (used in)
                 investing activities                                                  1,599                  (23,200)
                                                                                    --------                --------- 

Cash Flows from Financing Activities:
    Payments of long-term debt                                                        (5,960)                (106,730)
    Dividends paid                                                                   (37,200)                 (37,200)
                                                                                    --------                --------- 
              Net cash used in financing 
                 activities                                                          (43,160)                (143,930)
                                                                                    --------                --------- 

Net Increase (Decrease) in Cash                                                        3,156                   (3,490)

Cash at Beginning of Period                                                            1,048                    4,243
                                                                                    --------                ---------

Cash at End of Period                                                               $  4,204                $     753
                                                                                    ========                =========

Supplemental Disclosures of Cash Flow Information
Cash Paid for:
    Interest (net of amount capitalized)                                            $ 24,820                $  30,120
    Income taxes (refunds received), net                                              34,392                   50,301

</TABLE>


                                                See accompanying notes.

<PAGE>


                    SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.       Basis of Presentation

         Southern Natural Gas Company is a wholly owned subsidiary of Sonat Inc.

         The  accompanying   condensed   consolidated  financial  statements  of
Southern Natural Gas Company and its subsidiaries  (Southern) have been prepared
in accordance with the instructions to Form 10-Q and include the information and
footnotes  required  by such  instructions.  In the opinion of  management,  all
adjustments including those of a normal recurring nature have been made that are
necessary  for a fair  presentation  of the  results  for  the  interim  periods
presented herein.

         On  January  1,  1995,  Sonat  transferred  its  investments  in  Sonat
Intrastate-Alabama  Inc.,  Sonat  Gathering  Company and Sonat  Ventures Inc. to
Southern.  They had combined  revenues of $15,099,000 and combined net income of
$223,000 for the  nine-month  period ended  September 30, 1994. The combined net
book value that was  transferred  was  $21,981,000 and the companies had cash on
hand of $73,000 at January 1, 1995.

         In October  1995,  the  Financial  Accounting  Standards  Board  issued
Statement of Financial  Accounting Standards No. 123, Accounting for Stock-Based
Compensation, which will become effective for years beginning after December 15,
1995. Southern has not yet determined the effect of the new statement.

         Certain amounts in the 1994 condensed consolidated financial statements
have been reclassified to conform with the 1995 presentation.

2.       Joint Venture

         Southern  Natural  Gas  Company  owns 50 percent of Bear Creek  Storage
Company (Bear  Creek),  an  underground  gas storage  company.  The following is
summarized income statement  information for Bear Creek. No provision for income
taxes  has been  included  since  its  income  taxes  are paid  directly  by the
joint-venture participants.

<TABLE>
<CAPTION>
                                                          Three Months                          Nine Months
                                                       Ended September 30,                  Ended September 30,
                                                    1995               1994             1995                1994
                                                                           (In Thousands)

<S>                                                 <C>                <C>               <C>                 <C>    
Revenues                                            $8,885             $8,825            $27,113             $26,698
Expenses:
    Operating expenses                               1,206              1,385              3,732               3,950
    Depreciation                                     1,350              1,350              4,049               4,050
    Other expenses, net                              1,560              1,774              4,718               5,393
                                                    ------             ------            -------             -------

    Income Reported                                 $4,769             $4,316            $14,614             $13,305
                                                    ======             ======            =======             =======
</TABLE>

2.       Joint Venture (Cont'd)

         On October 31, 1995, Southern executed a Capital Contribution Agreement
in  connection  with the project  financing  for Bear Creek from The  Prudential
Insurance  Company of America.  In the event that Bear Creek does not  refinance
the remaining  principal,  this agreement provides that Southern and its partner
will  contribute  $21 million each to Bear Creek on October 31, 2000, to provide
funds to enable Bear Creek to make a principal payment due under the financing.

3.       Debt and Notes To and From Affiliates

         Lines  of  Credit  and  Credit  Agreement  - As  part of  Sonat's  cash
management  program,  Southern  regularly  loans funds to or borrows  funds from
Sonat.  Notes  receivable and payable are in the form of demand notes with rates
reflecting  Sonat's  return  on  funds  loaned  to  its  subsidiaries,   average
short-term   investment   rates  and  cost  of   borrowed   funds.   In  certain
circumstances,  these  notes are  subordinated  in right of  payment  to amounts
payable by Sonat under certain long-term credit agreements.

         Short-Term  Debt - On May 29,  1995,  Southern  renewed its  short-term
lines of credit with  several  banks to provide for  borrowings  of $50 million.
Borrowings  are  available  through  May 28,  1996,  in the  form  of  unsecured
promissory  notes and bear  interest  at rates  based on the  banks'  prevailing
prime,  international  or money market lending rates.  At September 30, 1995, no
amounts were outstanding.

4.       Commitments and Contingencies

         Rate Matters - Periodically, Southern and its subsidiaries make general
rate filings with the Federal Energy Regulatory Commission (FERC) to provide for
the recovery of cost of service and a return on equity. The FERC normally allows
the filed rates to become  effective,  subject to refund,  until it rules on the
approved level of rates. Southern and its subsidiaries provide reserves relating
to such amounts collected  subject to refund,  as appropriate,  and make refunds
upon establishment of the final rates.

         Customer  Settlement - In an order  issued on  September  29, 1995 (the
Settlement  Order),  the FERC approved a comprehensive  settlement (the Customer
Settlement) that Southern had filed on March 15, 1995. The Customer  Settlement,
which  became  effective  on  October  9,  1995,  resolves,  as to  the  parties
supporting  the  settlement,  all of  Southern's  pending rate  proceedings  and
proceedings to recover gas supply  realignment  (GSR) and other transition costs
associated  with the  implementation  of Order No. 636  (described  below).  The
Customer  Settlement  provides for reduced rates that became  effective March 1,
1995, and a three-year rate moratorium on future rate increases by Southern. The
Customer  Settlement  was  supported  by  Southern,  the FERC  staff,  customers
representing  approximately  95 percent of the firm  transportation  capacity on
Southern's system, and other parties.

4.       Commitments and Contingencies (Cont'd)

         Pursuant to the Customer  Settlement,  all issues in Southern's current
and prior rate cases have been settled as to the  supporting  parties.  Southern
will credit in the aggregate  the full amount of Southern's  rate reserves as of
February 28, 1995  (approximately  $155 million),  less certain amounts withheld
for potential rate refunds to contesting  parties, to reduce the GSR costs borne
by Southern's  customers.  Southern  implemented  reduced  settlement  rates for
parties that  supported the Customer  Settlement  on an interim basis  effective
March 1, 1995. The Customer  Settlement provides that, except in certain limited
circumstances,  Southern will not file a general rate case to be effective prior
to March 1, 1998. Southern's GSR costs are discussed below (see Order No. 636).

         The  Settlement  Order also  included  authorizations  for  Southern to
construct  approximately  $27 million of  additional  facilities  to improve its
existing  level of  transportation  service and to expand service to Atlanta Gas
Light Company and South Carolina  Pipeline  Corporation  and its affiliate under
firm contracts with terms of at least three years.

         The  Customer   Settlement   has  been   contested  by  firm  customers
representing  approximately  five percent of Southern's firm contract demand and
by certain interruptible customers.

         The  Settlement  Order permits the  contesting  parties to litigate the
issue of the recovery of Southern's GSR and other Order No. 636 transition costs
and to litigate  various rate issues with respect to rate periods prior to March
1, 1995,  with the results to be applied only to such  parties.  The  Settlement
Order decided the level of Southern's rates to contesting parties for the period
beginning  March 1,  1995,  and ruled on  numerous  other  rate  issues  for the
pre-March  1,  1995,  periods.  These  rulings  included  a  reversal  of a 1994
administrative  law judge  determination  that Southern could not include in its
rates any  portion of the  approximately  $45  million  cost of a pipeline  that
Southern  constructed  in  1992 to  connect  gas  reserves  developed  by  Exxon
Corporation  (Exxon)  in the  Mississippi  Canyon  and Ewing  Bank Area  Blocks,
offshore  Louisiana.  Certain of the contesting parties have sought rehearing of
the Settlement Order by the FERC. After rehearing,  the Settlement Order will be
subject to appeal to the courts.  Although there can be no assurances,  Southern
believes that rehearing of the Settlement Order should be denied by the FERC and
that the Settlement Order should be upheld on any judicial appeal.

         In the fourth quarter of 1994, Southern recognized a $27 million charge
associated with the Customer Settlement,  which included anticipated amounts for
GSR costs that Southern would not recover from its customers,  and a $28 million
charge for a provision  relating to regulatory  assets that may not be recovered
as a result  of the  Customer  Settlement,  including  amounts  for a  corporate
restructuring undertaken in 1994.



<PAGE>


4.       Commitments and Contingencies (Cont'd)

     Sea Robin - Several of the  shippers  on the  pipeline  system of Sea Robin
Pipeline Company, a subsidiary of Southern, filed with the FERC in February 1995
a complaint  against Sea Robin under  Section 5 of the Natural Gas Act  claiming
that Sea Robin's rates are unjust and unreasonable. Any reduction in Sea Robin's
rates as a result of this  complaint,  however,  could be implemented  only on a
prospective  basis.  In its  answer,  Sea Robin  asked the FERC to  dismiss  the
complaint or to find that its rates continue to be just and reasonable  based on
the data it  presented.  Sea Robin is  unable to  predict  the  outcome  of this
proceeding.

         Gas Purchase Contracts - Southern currently is incurring no take-or-pay
liabilities under its gas purchase  contracts.  Southern regularly evaluates its
position relative to gas purchase contract matters,  including the likelihood of
loss from asserted or unasserted take-or-pay claims or above-market prices. When
a loss is probable and the amount can be reasonably estimated, it is accrued.

         Order No. 636 - In 1992 the FERC issued its Order No. 636 (the  Order).
The Order  required  significant  changes in  interstate  natural  gas  pipeline
services.  Interstate  pipeline  companies,  including  Southern,  are incurring
certain  costs  (transition  costs) as a result of the Order,  the principal one
being  costs  related to  amendment  or  termination  of, or  purchasing  gas at
above-market prices under,  existing gas purchase contracts,  which are referred
to as GSR costs.  The Order  provided for the recovery of 100 percent of the GSR
costs and other  transition costs to the extent the pipeline can prove that they
are eligible, that is, incurred as a result of customers' service choices in the
implementation  of the Order, and were incurred  prudently.  The prudence review
will extend both to the prudence of the underlying gas purchase contracts, based
on the circumstances  that existed at the time the contracts were executed,  and
to the prudence of the amendments or  terminations  of the  contracts.  Numerous
parties have appealed the Order to the Circuit Courts of Appeal.

         As of  September  30,  1995,  Southern  had either paid or accrued $200
million in GSR costs  (including  interest) either to reduce  significantly  the
price payable under or to terminate a number of gas supply  contracts  providing
for payment of above-market  prices.  On February 17, 1995,  Southern reached an
agreement to resolve its  remaining  high-cost  supply  contracts  with Exxon by
paying an additional  $45 million in GSR costs and foregoing a claim against $19
million  in price  differential  costs  that have  been  paid to Exxon  under an
interim  agreement  entered  into  between the  parties  pending  resolution  of
litigation contesting Southern's termination on March 1, 1994, of a gas purchase
contract  with  Exxon.   This  agreement  became  effective  upon  the  Customer
Settlement becoming effective. Additionally, at September 30, 1995, Southern was
a party to an agreement  under which another  high-cost  contract price would be
reduced in exchange for monthly payments having a present value of approximately
$42 million. Southern entered into a payment agreement on October 20, 1995, with
a financial  institution,  pursuant to which Southern made a one-time payment of
$42.3 million to the institution, which agreed to make these monthly payments.

         In addition to its GSR costs  relating to  termination  or amendment of
its  remaining  gas  purchase  contracts,  Southern  has incurred and expects to
continue to incur certain price differential GSR costs resulting from Southern's
continued  purchase of gas under its remaining supply contracts that provide for
prices in excess of current  market prices.  As of September 30, 1995,  Southern
had incurred $103 million in price differential costs.

         As  described  above,  Southern's  Customer  Settlement  resolves as to
supporting parties all of the proceedings  pursuant to which Southern is seeking
recovery  of its  GSR  costs  as  well  as all of  its  other  outstanding  rate
proceedings.  Additionally,  Southern will absorb an agreed-upon  portion of its
total GSR costs,  an estimate of which was  reflected in the  provision  for the
Customer Settlement noted above.

         In its  Customer  Settlement  discussions,  Southern  has  advised  its
customers that the amount of GSR costs that it actually  incurs will depend on a
number of variables,  including  future natural gas and fuel oil prices,  future
deliverability under Southern's existing gas purchase contracts,  and Southern's
ability to renegotiate certain of these contracts.  While the level of GSR costs
is impossible to predict with  certainty  because of these  numerous  variables,
based on current  spot-market prices, a range of estimates of future oil and gas
prices, contract renegotiations that have occurred, and price differential costs
actually incurred,  the amount of GSR costs was estimated at September 30, 1995,
to be approximately $349 million on a present-value basis.




<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and
              Results of Operations

                        SOUTHERN NATURAL GAS COMPANY
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

         The  principal  business  of  Southern  Natural  Gas  Company  and  its
subsidiaries  (Southern) is the  interstate  transmission  of natural gas in the
southeastern United States,  which is regulated by the Federal Energy Regulatory
Commission  (FERC).  Southern also has some  operations  that are not regulated.
Southern's parent, Sonat Inc.,  transferred to Southern its investments in three
small unregulated  companies  effective January 1, 1995 (see Note 1 of the Notes
to Condensed Consolidated Financial Statements).

         Sea Robin  Pipeline  Company,  a wholly owned  subsidiary  of Southern,
filed a petition  with the FERC  requesting  it be declared an  unregulated  gas
gathering  system.  The FERC denied Sea Robin's  petition in an order  issued on
June 16,  1995.  Sea Robin filed for  rehearing of this denial on July 17, 1995,
but cannot predict the outcome of this proceeding.

         Southern  continues to pursue growth  opportunities to expand the level
of services in its traditional  market area and to connect new gas supplies.  On
April 26, 1995,  Southern  received  authorization  from the FERC to construct a
21-mile pipeline extension to a delivery point near Chattanooga, Tennessee, that
will deliver  natural gas to a group of new  customers  who have signed  10-year
contracts for firm  transportation  volumes  totaling  approximately  11 million
cubic  feet per day.  This  project  was  placed in  service  November  1, 1995.
Southern also sought approval in a filing with the FERC made on May 19, 1995, to
expand its north main pipeline system to provide  approximately 27 million cubic
feet per day of  additional  firm  transportation.  This increase in capacity is
supported  by  10-year  firm  transportation  agreements  with 15  customers  in
Alabama,  Georgia, and Tennessee.  If FERC approval is received,  the in-service
date is expected to be November 1996.

         In addition, on October 11, 1995, Southern received FERC approval for a
production area expansion  project with a capital cost of $15 million.  Southern
proposes to install  9,400  horsepower of  additional  compression  at its Toca,
Louisiana compressor station south of New Orleans and to install certain receipt
and delivery point facilities in order to increase its capacity to transport gas
supplies on the east leg of its offshore Louisiana supply system through Toca by
140 million cubic feet per day. The FERC issued an initial  determination on the
proposed project, which will become final upon Southern's filing of 10-year firm
transportation  agreements for 100 percent of the increased  capacity within 120
days from the initial  determination.  Southern  presently is in discussion with
potential customers  regarding such commitments,  although there is no assurance
that such commitments will be obtained.

         Southern  has  also  initiated  an  open  season  to  obtain   customer
commitments to expand its system in order to meet the growing demand for natural
gas in the  Southeast.  In the open  season,  Southern is seeking  requests  for
additional  firm  transportation  services and for a new  liquefied  natural gas
(LNG) service. The facilities to provide the firm transportation service will be
determined  based on the service  levels  requested.  The LNG  service  would be
provided at the existing LNG storage  terminal near Savannah,  Georgia,  that is
owned by Southern  Energy  Company,  a  subsidiary  of Southern.  If  sufficient
commitments  are obtained and the necessary  regulatory  approvals are received,
the  in-service  date for the firm  transportation  service  is  expected  to be
November  1997 and the  in-service  date for the LNG  service is  expected to be
sometime in 1998. The open season for the firm  transportation  service ended on
October 31, 1995, and requests for service are being evaluated.  The open season
for the LNG service will continue through November 17, 1995.




<PAGE>

<TABLE>
<CAPTION>

Operations
                                                        Three Months                           Nine Months
                                                     Ended September 30,                   Ended September 30,
                                                  1995                 1994              1995                 1994
                                                                            (In Millions)
Revenues:
<S>                                               <C>                  <C>              <C>                   <C> 
    Gas sales                                     $ 45                 $ 47             $139                  $192
    Market transportation and
       storage                                      75                   63              244                   229
    Supply transportation                           13                    8               39                    25
    Other                                           46                   37               78                   138
                                                  ----                 ----             ----                  ----
       Total Revenues                             $179                 $155             $500                  $584
                                                  ====                 ====             ====                  ====

Natural Gas Cost:
    Purchased from others                         $ 45                 $ 43             $130                  $175
    Purchased from affiliates                        -                    4                7                    12
                                                  ----                 ----             ----                  ----
       Total Natural Gas Cost                     $ 45                 $ 47             $137                  $187
                                                  ====                 ====             ====                  ====

Transition Cost Recovery                          $ 32                 $ 23             $ 41                  $ 93
                                                  ====                 ====             ====                  ====

Depreciation and Amortization                     $ 12                 $ (1)            $ 40                  $ 31
                                                  ====                 ====             ====                  ====

Operating Income                                  $  2                 $ 29             $128                  $105
                                                  ====                 ====             ====                  ====

Equity in Earnings of
    Joint Ventures                                $  2                 $  2             $  7                  $  7
                                                  ====                 ====             ====                  ====

                                                                        (Billion Cubic Feet)
Volumes:
    Intrastate gas sales                             1                    -                5                     -
    Market transportation                          143                  118              448                   402
                                                  ----                 ----             ----                  ----
       Total Market Throughput                     144                  118              453                   402
    Supply transportation                          101                   87              288                   249
                                                  ----                 ----             ----                  ----
       Total Volumes (1)                           245                  205              741                   651
                                                  ====                 ====             ====                  ====

    Transition gas sales                            21                   23               67                    80
                                                  ====                 ====             ====                  ====
</TABLE>


(1)      Volumes for the three months and nine months ended  September 30, 1995,
         include 8 and 28 billion  cubic feet of gas,  respectively,  associated
         with new subsidiaries of Southern which were not included in Southern's
         1994 volumes. These companies were subsidiaries of Sonat Inc. in 1994.

Quarter-to-Quarter Analysis

         Operating  results for the third quarter of 1995 were higher  primarily
due to lower  operating  expenses and the sale of previously  unsubscribed  firm
transportation capacity.

         Market  transportation  and  storage  revenues  for 1994  include a $16
million adjustment relating to a retroactive  reduction in certain  depreciation
rates. Supply transportation revenues increased 63 percent due to Southern's new
transportation  contract with Florida Gas and increased  volumes under  existing
contracts at Sea Robin  Pipeline  Company.  Other  Revenue and  Transition  Cost
Recovery  increased  due to an $18 million  adjustment  related to the  Customer
Settlement. This adjustment did not impact operating income.

         Operating  and  maintenance  expense  decreased  18 percent in the 1995
period  reflecting  lower fuel costs and the impact of the 1994  fourth  quarter
restructuring,   which  reduced   Southern's   staffing   levels.   General  and
administrative expense increased 11 percent in the 1995 period, primarily due to
higher employee benefit  expenses.  Depreciation  and  amortization  expense was
higher in 1995 due to a $16 million retroactive  reduction in depreciation rates
in 1994.

Year-to-Date Analysis

         Operating  results for the  nine-month  period were up primarily due to
lower  operating   expenses  and  the  sale  of  previously   unsubscribed  firm
transportation  capacity.  The 1995 period also reflected the positive effect on
revenue  of  a  $6  million   adjustment   to   reflect   actual   interruptible
transportation revenue and cost recovery in the first year of post-Order No. 636
operations  and the  reduction  of a  take-or-pay  liability.  The  1994  period
included a favorable $6 million reduction in fuel gas liability.

         Market  transportation  and  storage  revenues  for 1994  include a $16
million adjustment relating to a retroactive  reduction in certain  depreciation
rates  and the  sale  of firm  transportation  capacity.  Supply  transportation
revenues  increased 56 percent due to increased volumes under existing contracts
at Sea Robin Pipeline Company and to Southern's new transportation contract with
Florida  Gas.  Other  Revenue and  Transition  Cost  Recovery  decreased  due to
declining  billings  and lower  recovery  rates for GSR  costs  during  the 1995
period.

         Operating  and  Maintenance  expense  decreased  20 percent in the 1995
period,  reflecting  lower fuel costs and the impact of the 1994 fourth  quarter
restructuring.  General and  administrative  expense  increased 7 percent in the
1995 period, primarily due to higher employee benefit expenses. Depreciation and
Amortization expense increased in the 1995 period due to the $16 million revenue
reserve  established in the 1994 period partially  offset by lower  depreciation
rates as a result of the Customer Settlement.

Transportation Contracts

         Pursuant to the Customer  Settlement  (described in Note 4 of the Notes
to Condensed Consolidated  Financial  Statements),  Southern's largest customer,
Atlanta Gas Light Company,  and its subsidiary,  Chattanooga  Gas Company,  have
amended  their firm  transportation  contracts  for an  aggregate of 682 million
cubic feet per day to extend  their  primary  terms for a period of three  years
beginning  March 1, 1995.  An  additional  118  million  cubic feet per day will
remain under its current term to April 30, 2007.  Also  pursuant to the Customer
Settlement,  South  Carolina  Pipeline  Corporation  (SCPL) has amended its firm
transportation  contract for 28 million cubic feet per day to extend its primary
term for a period of three years beginning March 1, 1995. Such extension will be
in  addition  to the  remaining  160  million  cubic feet per day of SCPL's firm
transportation  services that remain in effect under terms  extending  from 1997
through 2003. Alabama Gas Corporation,  Southern's second largest customer,  had
earlier  executed firm  transportation  contracts for 393 million cubic feet per
day under terms extending  through October 31, 2008.  Southern's other customers
have contracted for firm  transportation  services for terms ranging from one to
ten or more years.  As a result,  substantially  all of the firm  transportation
capacity  currently  available  in  Southern's  largest  market  area  is  fully
subscribed.

Natural Gas Sales and Supply

         Sales by Southern of natural gas are anticipated to continue only until
Southern's  remaining supply contracts expire, are terminated,  or are assigned.
As a result of Order No. 636,  Southern is attempting to terminate its remaining
supply contracts through which it had  traditionally  obtained its long-term gas
supply.  Some of these contracts  contain clauses  requiring  Southern either to
purchase minimum volumes of gas under the contract or to pay for it (take-or-pay
clauses).  Although Southern  currently is incurring no take-or-pay  liabilities
under  these  contracts,  the annual  weighted  average  cost of gas under these
contracts is in excess of current spot-market prices. Pending the termination of
these remaining supply  contracts,  Southern has sold a portion of its remaining
gas supply to a number of its firm transportation customers under contracts that
are being  extended  through  November 30, 1997. The remainder of Southern's gas
supply will continue to be sold on a month-to-month basis.

         Southern's   purchase   commitments  under  its  remaining  gas  supply
contracts  for the  remainder  of 1995  and the  years  1996  through  1999  are
estimated as follows:

                                                                   Estimated
                                                                    Purchase
                                                                  Commitments
                                                                 (In Millions)

         1995                                                        $ 30
         1996                                                         129
         1997                                                         127
         1998                                                          40
         1999                                                          36

         These estimates are subject to significant  uncertainty due both to the
number of  assumptions  inherent  in these  estimates  and to the wide  range of
possible  outcomes  for each  assumption.  None of the three major  factors that
determine purchase commitments (underlying reserves, future deliverability,  and
future price) is known today with  certainty.  These  estimates  include two new
contracts with Exxon with terms from November 1, 1995, to November 30, 1997, and
provide for market-based index prices.

         See Note 4 of the Notes to Condensed  Consolidated Financial Statements
for a discussion regarding Southern's rate proceedings to recover its GSR costs.

Rate Matters

         The Customer Settlement resolves all outstanding rate and Order No. 636
transition cost recovery proceedings with respect to the supporting parties. The
Customer  Settlement  will  result in  reducing  Southern's  filed rates to more
competitive  levels,  will reduce somewhat  reported  revenues,  and will reduce
depreciation  expense to approximately $40 million in 1995. Southern implemented
reduced  settlement  rates for  parties  that  support the  Customer  Settlement
effective  March 1,  1995.  (See Note 4 of the Notes to  Condensed  Consolidated
Financial  Statements for a discussion of the Customer Settlement and other rate
matters.)

                               -------------------------------------------
<TABLE>
<CAPTION>

                                                  Three Months                              Nine Months
                                               Ended September 30,                      Ended September 30,
                                               -------------------                      -------------------
                                            1995                  1994             1995                    1994
                                            ----                  ----             ----                    ----
                                                                      (In Millions)

Interest
<S>                                         <C>                   <C>              <C>                     <C> 
    Interest income                         $  2                  $  4             $  7                    $ 12
    Interest expense                         (11)                  (10)             (32)                    (33)
    Interest capitalized                       -                     -                -                       1
                                            ----                  ----             ----                    ----

                                            $ (9)                 $ (6)            $(25)                   $(20)
                                            ====                  ====             ====                    ==== 
</TABLE>

         Interest income in 1995 decreased for the three and nine-month  periods
compared with 1994 due to lower balances of notes  receivable  from  affiliates,
slightly offset by marginally higher average rates on notes. Lower note balances
primarily  resulted from the special  noncash  dividend in December 1994 of $100
million  declared by Southern to Sonat,  which was satisfied by  forgiveness  of
intercompany debt.

         Interest  expense on outside debt was flat for the three-month  period.
However,  it decreased for the nine-month period due primarily to the redemption
of  Southern's  $100  million 9 5/8  Percent  Notes in June 1994.  Both  periods
reflect  increased  interest  expense on higher  average  reserve  balances  and
accrued interest on Federal Income Taxes for the 1995 periods.
<TABLE>
<CAPTION>

<S>                                         <C>                   <C>              <C>                     <C> 
Income Taxes                                $ 12                  $ 10             $ 42                    $ 36
</TABLE>

         Income taxes for both the three and nine-month periods increased due to
higher pretax income. Effective tax rates were consistent in all periods.

FINANCIAL CONDITION

Cash Flows
<TABLE>
<CAPTION>

                                                                                           Nine Months
                                                                                       Ended September 30, 
                                                                                   1995                    1994
                                                                                            (In Millions)

<S>                                                                                 <C>                    <C> 
Operating Activities                                                                $45                    $164
</TABLE>

         Net cash  provided by  operating  activities  for 1995 was $119 million
lower than the 1994  amount.  The  primary  reasons  for the  decrease  were $73
million  change in gas  supply  realignment  costs,  refunds,  lower  rates (see
below), and the $18 million decrease in natural gas purchase contract settlement
costs  reflecting  the  completion of the majority of recoveries of  take-or-pay
costs in 1994.

     The  increase in  deferred  income  taxes and the change in accrued  income
taxes is primarily  due to the timing of the amount of GSR cost  deductible  for
taxes. The decrease in regulatory reserves is due to lower rates effective March
1, 1995, under the comprehensive settlement, and to a $21 million refund made to
customers for the  overcollection of volumetric  take-or-pay costs. In addition,
reserve  balances  in 1994 were  increased  for the  effect  of the $16  million
depreciation adjustment.

<TABLE>
<CAPTION>

<S>                                                                                 <C>                   <C>   
Investing Activities                                                                $ 2                   $ (23)
</TABLE>

         Net cash flow from  investing  activities  increased  due  primarily to
repayments  of borrowings  by Sonat to Southern,  offset by lower  proceeds from
disposals of assets. Proceeds received in 1994 included insurance proceeds of $7
million related to damages from Hurricane Andrew.



<PAGE>

<TABLE>
<CAPTION>

                                                                                           Nine Months
                                                                                       Ended September 30, 
                                                                                   1995                    1994
                                                                                            (In Millions)

<S>                                                                                <C>                    <C>   
Financing Activities                                                               $(43)                  $(144)
</TABLE>

         Net cash used in financing activities decreased for the 1995 period due
to the maturity and redemption of Southern's $100 million 9 5/8 Percent Notes in
June 1994.

Liquidity and Capital Resources

         At September  30, 1995,  Southern had available $50 million under lines
of  credit.  Southern  also has a shelf  registration  with the  Securities  and
Exchange  Commission  for up to $200  million in debt  securities  of which $100
million has been issued.

         In October,  Southern  monetized a GSR  obligation  for $42.3  million.
Funds for this  transaction were obtained by Sonat repaying  intercompany  loans
and funds from operations.

         Southern expects to continue to use cash from operations and borrowings
on the public or private markets or loans from affiliates to finance its capital
and other corporate expenditures.
<TABLE>
<CAPTION>

                                                               September 30,                 December 31,
Capitalization Information                                         1995                          1994
                                                               ------------                  -----------


<S>                                                                    <C>                             <C>
         Debt to Capitalization                                        36%                             39%
</TABLE>

         The debt to capitalization ratio decreased slightly for the 1995 period
due to increased  stockholder's  equity and to scheduled repayments of long-term
debt.

NEW ACCOUNTING PRONOUNCEMENT

         In October  1995,  the  Financial  Accounting  Standards  Board  issued
Statement of Financial  Accounting Standards No. 123, Accounting for Stock-Based
Compensation, which will become effective for years beginning after December 15,
1995. Southern has not yet determined the effect of the new statement.




<PAGE>


                                              PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>

(a)  Exhibits(1)

Exhibit
Number                                               Exhibits

<S>                                         <C>                                
10                                          Amendatory  Agreement dated June 1, 1995, to Service  Agreement No. 904460,
                                            effective  November  1, 1994,  between  Southern  Natural  Gas  Company and
                                            Atlanta  Gas Light  Company  filed as Exhibit 10 to Form 10-Q of Sonat Inc.
                                            for the quarter ended September 30, 1995

12*                                         Computation of Ratio of Earnings to Fixed Charges

27*                                         Financial  Data  Schedule for the period ended  September 30,  1995,  filed
                                            electronically with this Report
</TABLE>



*  Filed with this Report

(b)  Reports on Form 8-K

  The  Company  did not file any  Report on Form 8-K during  the  quarter  ended
September 30, 1995.

     (1) The Company will furnish to requesting security holders the exhibits on
this list upon the  payment  of a fee of  10(cent)  per page up to a maximum  of
$5.00 per  exhibit.  Requests  must be in writing and should be  addressed to R.
David  Hendrickson,  Secretary,  Southern  Natural Gas  Company,  P.O. Box 2563,
Birmingham, Alabama 35202-2563.
<PAGE>





                                  SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES




                                                   SIGNATURES





      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                                Southern Natural Gas Company



Date:       November 13, 1995          By:      /s/ Thomas W. Barker, Jr.     
       ---------------------------              -------------------------------
                                                Thomas W. Barker, Jr.
                                                Treasurer



Date:       November 13, 1995          By:      /s/ Norman G. Holmes          
       ---------------------------              -------------------------------
                                                Norman G. Holmes
                                                Vice President & Controller