- Secured Abundant Natural Gas Supply to Ensure Future Growth -

NEW YORK, Jan. 5 /PRNewswire-FirstCall/ -- China Natural Gas, Inc. (OTC Bulletin Board: CHNG China Stock News), 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, today announced that it has completed the acquisition of Lingbao Yuxi Natural Gas Co. Ltd. ('Lingbao Yuxi'), including the land use right to 0.5 acres and all of its exclusive business operation rights in Lingbao City, in a cash transaction of RMB134 million. In conjunction with this acquisition, the Company has also secured abundant supply of natural gas to support its future expansion in the Henan province.

Lingbao Yuxi is located in Lingbao City, a strategically important geographical location that connects Henan, Shaanxi, Shanxi, and Hubei Provinces. It owns the exclusive rights to operate CNG fueling stations and pipelines in Lingbao City. Through Lingbao Yuxi, the Company has commenced the distribution of natural gas to approximately 100 residential customers in the fourth quarter of 2008 and expects Lingbao Yuxi to have a material contribution starting the first quarter of 2009.

Mr. Qinan Ji, Chairman and CEO of China Natural Gas, stated, 'We are delighted to announce this strategically important acquisition, which marks our major move in and beyond Henan province. Lingbao City will be the main platform for our potential strategic initiatives in the East and South China. Additionally, an important pipe outlet of the West-East high-pressure natural gas pipeline, built in one of the Country's largest infrastructure project, is situated at Lingbao City and will ensure sufficient natural gas supply for our existing and expanding network of CNG stations in the Henan province. With a population of 886,000 and a market size of approximately 90,000 residential customers, we estimate a potential annual demand of 18 million cubic meters of natural gas from residential customers, 9 million cubic meters from industrial and commercial customers, and 27 million cubic meters of vehicular consumption.'

Mr. Ji continued, 'Our initial efforts will focus on servicing residential customers with a long term goal of cultivating and capturing demands from commercial and industrial customers. We believe the acquisition provides us a solid platform to execute our long-term growth strategy and we look forward to leveraging the operational strength of our business.'

About China Natural Gas, Inc.

China Natural Gas, Inc., ('CHNG'), is the first China-based natural gas retailing company publicly traded in the U.S. It currently owns and operates a network of CNG retail filling stations as well as a 120 kilometer long compressed natural gas pipeline in Xi'an, China. Xi'an is a fast growing Chinese city supported by a population of approximately 8.5 million and is the 'gateway' to the broad Western regions of China. CHNG currently retails natural gas at company-owned filling stations, delivers natural gas services to residential, commercial and industrial customers, and converts gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. Currently it is estimated that there are 5,000 buses and 20,000 taxis using CNG in Xi'an.

This press release contains forward-looking statements regarding revenue and net income growth and our LNG processing and distribution plant. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'targets,' 'projects,' 'believes,' 'seeks,' 'estimates' and similar expressions are intended to identify such forward-looking statements. These statements are based on the current expectations or beliefs of China Natural Gas, Inc. management; are not guarantees of future performance; are difficult to predict 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, including the fluctuation of natural gas prices, demand for natural gas, the availability of natural gas supplies, changes in governmental regulations and/or economic policies, civil unrest, weather and general economic conditions. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, CHNG undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE China Natural Gas, Inc.