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China Natural Gas Completes Joint-Venture Cooperation Agreement with CNPC Kunlun

Posted on: Wednesday, 29 July 2009, 04:46 CDT

NEW YORK, July 29 /PRNewswire-Asia/ -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (Nasdaq: CHNG), a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced that the Company's variable interest entity Xi'an Xilan Natural Gas Co., Ltd. ("Xilan") has completed a Joint-Venture Cooperation Agreement (the "JV Agreement") with China National Petroleum Corporation Kunlun Natural Gas Co., Ltd. ("CNPC Kunlun"), a wholly owned subsidiary of China National Petroleum Corporation ("CNPC") and the largest supplier of compressed natural gas in China.

The goal of the joint-venture ("JV") is to establish a win-win strategic cooperation between Xilan and CNPC Kunlun, dedicated for the processing and distribution of CNG throughout China. The purpose of the JV will be to build and operate CNG compressor stations and fueling stations along CNPC's natural gas pipelines in China, sell compressed natural gas and provide vehicle conversion services from gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. CNPC Kunlun will hold 51% ownership of the JV, and Xilan will hold 49% ownership.

"We are extremely happy to be partnering with CNPC Kunlun, the largest oil and gas operator in China. The JV will highlight our complementary strengths and should mutually benefit both partners," commented Mr. Qinan Ji, China Natural Gas's CEO and Chairman of the Board. "CNPC Kunlun is a subsidiary of CNPC, the designated state-owned enterprise by CNPC to specialize in vehicular CNG business. It is also the largest CNG supplier in China, with business operations in 18 provinces and over 70 cities throughout China. In our view, CNPC Kunlun has dominant market leading position, strong brand, broad market coverage, and well-established distribution. We believe China Natural Gas has leading technology, rich experience, and deep expertise in developing, positioning, and managing natural gas operations, and the combination of our full-range CNG business line and pending LNG business line can provide us with unparalleled competitive advantages.

"As we proceed with our planned expansion in China to build and operate CNG compressor stations, we are confident that our combined strengths will allow the JV to quickly expand its market presence. Securing CNPC Kunlun as a strategic supplier of CNG not only will ensure the success of the JV but also will ensure a reliable supply of natural gas for Xilan's overall needs. We are convinced that our alliance with CNPC Kunlun will further reinforce China Natural Gas' market position and brand awareness, enhance its competitive advantage in the natural gas industry, and will ultimately create more value for our shareholders."

Additional information on this joint venture can be found in the Company's filing with the SEC.

About China National Petroleum Corporation Kunlun Natural Gas Co., Ltd.

CNPC Kunlun is an affiliate of CNPC, a state-owned fuel-producing corporation and the largest integrated oil and gas company in China. CNPC Kunlun is designated by CNPC to specialize in vehicular CNG businesses. It is the largest supplier of CNG in China, with an established presence in 18 provinces and over 70 cities throughout the country.

About China Natural Gas, Inc.

The Company transports, distributes and sells natural gas to commercial, industrial and residential customers through its natural gas pipeline networks in China's Xi'an area, including Lantian County and the districts of Lintong and Baqiao, in Shaanxi Province. The Company owns approximately 120 km of high pressure pipelines in Xi'an, Shaanxi Province and, as of March 31, 2009, operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province.

The Company's four primary business lines include: (1) the distribution and sale of CNG through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned/leased CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fuelled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future plans and goals of the JV with CNPC and its prospects are forward looking and subject to risks. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

SOURCE China Natural Gas, Inc.

Source: PR Newswire

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