- Establishing Joint Venture Company for Compressing and Distributing CNG - NEW YORK, July 9 /PRNewswire-FirstCall/ -- 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 on July 6, 2009, the Company's variable interest entity Xi'an Xilan Natural Gas Co., Ltd. ("Xilan") has signed a Strategic Cooperation Framework Agreement (the "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 CNG in China. Under the Agreement, Xilan and CNPC Kunlun will create a joint venture company (the "JV") dedicated to the processing and distribution of CNG throughout China. The JV will build and operate CNG compressor stations, as well as the fueling stations that the CNG is supplied to, in cities along the natural gas pipelines of CNPC. This "mother-son CNG stations" program is planned to be established in 20 cities throughout China along CNPC's existing natural gas pipelines during the initial two years from the date of the Agreement. CNPC Kunlun will hold 51% ownership of the JV, and Xilan will hold 49% ownership of the JV. "We are very excited about this cooperation agreement with such a leading supplier of CNG as CNPC Kunlun," commented Mr. Qinan Ji, China Natural Gas's CEO and Chairman of the Board. "The joint venture will take full advantage of each of CNPC Kunlun and our own complementary strengths, and allow us to explore and develop China's compressed natural gas market together. CNPC Kunlun's broad market coverage and well-established supply channels combined with China Natural Gas's strong market placement and extensive experience in the development, strategizing, and management of natural gas operations will allow us to penetrate the market more easily and establish a strong presence as a supplier and distributor of CNG in China. We are confident that this joint venture will mutually benefit both companies." 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. 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. DATASOURCE: China Natural Gas, Inc. CONTACT: Michael Tieu of ICR, Inc., +86-10-6599-7960, Web Site: http://www.naturalgaschina.com/

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