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China Natural Gas, Inc. (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, has received government approval from the Shaanxi Province to pursue a diversified natural gas project, which when completed will enable China Natural Gas to produce various natural gas products, including liquefied natural gas ("LNG"), liquefied petroleum gas, dry ice, and sulfur. As part of the project, China Natural Gas plans to complete an LNG processing and distribution facility in Jingbian County, Shaanxi Province, in the first half of 2009.

Qinan Ji, chairman and CEO of China Natural Gas, stated, "We are so pleased to successfully gain government approval to pursue our diversified natural gas project, which when completed will be the first LNG facility in the Shaanxi Province and we believe will be the second largest in China. The approval process for projects of this type is lengthy and arduous -- a factor which we believe is a significant barrier to entry to potential competitors and which better positions our company for long-term growth. This project also allows us to diversify our business and focus on two high-growth areas at once, our CNG filling station business and the distribution and sale of other forms of natural gas, like LNG. Overall, we believe that the PRC's clean energy policies will bolster demand for natural gas in China and, with today's announcement, we have government support to be a leader in this exciting sector."

Management is currently working with Chemtex Engineering Co., one of the largest engineering consultants in the world and which has proven experience in the engineering, design and construction of similar projects in China. The company estimates the cost of phase one of the project, which includes the design, engineering and construction of the LNG facility, to be approximately $40.0 million. China Natural Gas expects to fund this project with existing cashflow although the company may also raise funds through the public or private sale of debt or equity. Costs and future revenue associated with the LNG project are not currently part of the company's existing financial guidance. The company continues to anticipate 70% revenue and net income growth in 2008.

About China Natural Gas, Inc.

China Natural Gas, Inc., ("CHNG"), is the first China-based natural gas company publicly traded in the US. It currently owns and operates a 120 kilometer long compressed natural gas pipeline in Xi'an, China, a fast growing Chinese city supported by a population of approximately eight 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.

For more information, call 212/786-7372.
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Publication:Worldwide Energy
Date:Nov 1, 2007

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