China Natural Gas Announces New Supply Agreement with CNPC

China Natural Gas, Inc. , 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 it signed a natural gas supply agreement on November 25, 2010 with a subsidiary of China National Petroleum Corporation (“CNPC”) in Xi’an, China.

The new supply agreement between CNPC Changqing Oil Field Branch Company and Jingbian LNG Company, a wholly owned subsidiary of China Natural Gas, will provide the Company with a supply of natural gas for its LNG plant in Jingbian County, Shaanxi Province (“LNG Project”). The Company expects to complete Phase I of the LNG Project by the end of this year. Under the terms of the agreement, the Company has the option to purchase up to 500,000 cubic meters of natural gas per day, or 150 million cubic meters per year, of natural gas from CNPC Changqing at a purchase price of RMB 1.355 per cubic meter. The agreement is effective through December 31, 2011.

Mr. Qinan Ji, Chairman and CEO of China Natural Gas, commented, “This supply agreement will complement our strategic cooperation with CNPC, one of the largest oil and gas producers in China. As we prepare for commercial production at our new Jingbian LNG plant, we believe this agreement will provide us with a reliable supply of natural gas to provide to our customers. We are confident that this will further strengthen our relationship with CNPC and improve our competitive edge in the local markets where we operate.”

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Source: China Natural Gas, December 2, 2010;