China Natural Gas Inc. Increases Revenues by More Than 600%, Achieves Positive EPS of $0.02; Gross Profit Margin up to 52.9%.

NEW YORK -- China Natural Gas Inc., (OTCBB:CHNG, website: www.naturalgaschina.com) the first China-based natural gas public company in the U. S. capital market today announced that it achieved record growth in revenues and earnings from the sales and delivery of its natural gas services and products. E[acute accent]The following are some of the key financial highlights for the first quarter ended March 31, 2006 from the company's Form 10-Q filed with the Securities and Exchange Commission (SEC) today:

E[acute accent]FIRST QUARTER 2006 KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS

E[acute accent]--First quarter revenues grew more than 600% to $1.8 million from $242,722 in 2005

E[acute accent]--Gross Profit increased to $944,702, from $61,570 for the same period last year.

E[acute accent]--Net Income was $410,580, compared with net loss of $(48,263) for 2005.

E[acute accent]--Fully diluted EPS for the first quarter 2006 grew to $0.02 from $0.00 for the first quarter of 2005.

E[acute accent]--Completed $10.4 million in equity financing.

E[acute accent]--Completed opening of three new natural gas stations.

E[acute accent]"We're very pleased that the company started off the year with strong revenue and earnings growth, which was driven by the strategic actions we took in 2005 to expand delivery of our natural gas services and products," said Minqing Lu, CEO of China Natural Gas. "Our focus in 2006 is to continue expanding our channels of distribution in all areas of our business, thereby further driving our revenues and earnings growth throughout the year."

E[acute accent]REVENUES

E[acute accent]For the quarter ended March 31, 2006, China Natural Gas recorded $1,787,214 in total revenues, an increase of $1,544,492 from the same period last year when the company had revenues of $242,722. The growth in revenue was the result of sales of vehicular compressed natural gas from our company-owned filling stations and construction and installation revenues as the company attracted new residential and commercial customers.

E[acute accent]GROSS PROFIT

E[acute accent]China Natural Gas achieved gross profit of $944,702 for first quarter of 2006, an increase of $883,132 from the first quarter of 2005 when the company recorded gross profit of $61,570. The company's gross profit margin grew to 52.9% for 2006, compared to 25.4% for 2005. The increase in gross margin was due to increased sales of the company's products and services.

E[acute accent]NET INCOME

E[acute accent]The company achieved net income of $410,580, or $0.02 per fully diluted share, for the three months ended March 31, 2006, compared with net loss of $(48,263), or $0.00 for the same period last year.

E[acute accent]About China Natural Gas Inc.

E[acute accent]China Natural Gas, Inc., ("CHNG"), a Delaware company, is the first China based US public natural gas services provider that owns and operates a 120 kilometer long compressed natural gas pipeline in China's Xi'An area, a fast growing Chinese city supported by a population of 7 million and is the "gateway" to the broad Western regions of China. CHNG has three profitable business segments: end user delivery of natural gas services to residential, commercial and industrial customers; wholesale natural gas to retail natural gas filling stations; and retail natural gas at company-owned natural gas filling stations. The city of Xi'An has approximately 20,000 Taxis, 3,000 buses and 2,000 special purpose vehicles that are powered by compressed natural gas.

E[acute accent]Safe Harbor Statement

E[acute accent]This press release may contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. 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.