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China Natural Gas Solidifies Power Supply Agreement for Future LNG Plant

Posted on: Wednesday, 25 March 2009, 15:01 CDT

Shaanxi Province Supports Company's LNG Initiative with Funding for Electrical Station

Company Continues to Anticipate LNG Launch in 2009

NEW YORK, March 25 /PRNewswire-FirstCall/ -- China Natural Gas, Inc. (OTC Bulletin Board: CHNG), one of the leading providers of pipeline natural gas for industrial, commercial and residential use and compressed natural gas (CNG) for vehicular fuel in Xi'an, China, today announced that it has reached a power supply agreement with the City government of Yulin City, Shaanxi province and the government of Shaanxi province. Under this agreement, Yulin Electric Power Supply Bureau, in support of the Company's LNG initiative, will build an integrated 110KV electrical substation to provide the power needs of the Company's LNG plant. Yulin Electric Power Supply Bureau will provide the funding of approximately RMB 26 million for the build-out.

Mr. Qinan Ji, Chairman and CEO of China Natural Gas commented, "We are delighted to update investors with this positive news. The agreement has provided us an additional cost savings of approximately RMB 26 million, further enhancing our financial flexibility. We believe this further demonstrates the continuous support of local governments for our company as well as the importance of our LNG plant to the local economy. Currently the construction is progressing according to schedule and the electrical substation, along with the associated financial support from the government, paves the way for the kickoff of our LNG operations in late 2009."

Mr. Ji continued, "We have received many positive responses from several potential customers indicating their interest in our LNG products. We are confident that our LNG plant facility will enable us to capitalize on the growing demand for LNG in China and, initially, we can distribute up to 500,000 cubic meters of natural gas per day. Thus, we estimate that in this first phase, we should drive incremental revenue of at least $10 million in 2009, and we anticipate that our revenue from LNG will generate higher margin than revenue from our other businesses such as residential delivery of CNG and our CNG filing station business."

About China Natural Gas, Inc.

China Natural Gas, Inc., ("CHNG"), is the first China-based natural gas retailing company publicly traded in the U.S. It currently owns and operates a network of CNG retail filling stations as well as a 120 kilometer long compressed natural gas pipeline in Xi'an, China. Xi'an is a fast growing Chinese city supported by a population of 8.5 million and is the "gateway" to the broad Western regions of China. CHNG currently retails natural gas at company-owned filling stations, delivers natural gas services to residential, commercial and industrial customers, and converts gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. Currently it is estimated that there are 5,000 buses and 20,000 taxis using CNG in Xi'an.

This press release may contain forward-looking statements. These statements are based on the current expectations or beliefs of China Natural Gas, Inc. management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including the progress of construction and development activities, fluctuation of natural gas prices, the availability of natural gas supplies, changes in governmental regulations and/or economic policies.

CONTACT ICR, Inc. Ashley Ammon (US) +1 203-682-8200 Ashley.ammon@icrinc.com Wei-Jung Yang (China) +86 6599-7968 Weijung.yang@icrinc.com

SOURCE China Natural Gas, Inc.

Source: PR Newswire

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