Energy is the lifeblood of a nation and among the energy sources, natural gas is the one which has been officially recognized as the cleanest energy in the world. Being a kind of clean feedstock and energy used in industry, commerce and residential house, natural gas is becoming more and more widely used today，which can not only change the city’s energy structure but also play an important role in reducing environmental pollution, promoting air quality and elevating the taste of the city.

Our government is dedicated to changing the current energy structure and advocating clean energy with efforts. After 20 years’ continuous economic growth, demand for energy in China has been increasing and the proportion of natural gas consumption in primary energy consumption has been mounting at such a fast speed that by 2010, growth rate of natural gas consumption in China will exceed 300% accounting for 10% of the gross energy consumption. Against such a backdrop of soaring demand for energy, our country lags far behind in natural gas exploitation and utilization, and energy bottleneck is increasingly conspicuous.

As an enterprise which seeks development and serves the society through utilizing and operating energy, China Gas has a deep awareness of energy shortage and a strong consciousness of social responsibility. It has been committed to the integrated exploitation and utilization of natural gas, and the career of the construction and development of city gas pipeline network in China for years.

China Gas mainly engages in the investment, operation and management of city gas pipeline network infrastructure, distribution of natural gas to residential, industrial and commercial users, and development and application of oil and natural gas related technologies in mainland China. It is the earliest civil compressed natural gas (CNG) supplier in China to lead the way to apply CNG into people’s life. China Gas has been energetically constructing city gas transmission network in China and exploring domestic gas market. In bidding for major city gas projects, facing the powerful competitors, China Gas kept on demonstrating its strong comprehensive strength by its outstanding achievements and topped the list of bidders for a number of projects. These victories are the testimony to the leadership position of China Gas in domestic city gas industry. China Gas has already had 60 natural gas pipeline network projects in mainland China, but in the second half of this year, it will develop another 10 more to further expand the scale and business scope. Moreover, China Gas holds natural gas concession right in more than 50 cities and districts in provinces and regions along the lines of West-East Natural Gas Transmission Project and Sichuan-East Natural Gas Transmission project including Hunan, Hubei, Guangdong, Guangxi, Anhui, Jiangsu, Zhejiang, Hebei, Liaoning provinces and Inner Mongolia Autonomous Region, supplying natural gas, the high-effect, high-quality and environmental energy to millions of residential users and more than 2,000 industrial and commercial users. Meanwhile, China Gas participates in “building new socialist countryside” actively to transmit natural gas to thousands of rural families. China Gas’s efforts are not only changing the efficiency of a city but also improving the quality of ordinary people’s lives.

With a view to guarantee a sustainable and stable development, enhance comprehensive competitive advantages in management and technology, and establish an internationalized brand image, China Gas always attaches great importance to international cooperation in fields of finance, HR, technology, management, etc., devoting itself to becoming a platform for cooperation among energy companies in Asia and a forerunner boasting vision and strategic heights. World-famous energy giants including China Petroleum & Chemical Corporation (Sinopec), Gail (India) Limited (GAIL), and Oman Oil Company (OOC) have joined China Gas, and along with the involvement of the giants, China Gas gradually optimized its shareholder structure. Domestic and overseas financial institutions including China Development Bank (CDB), The Netherlands Development Finance Company (FMO), Promotion et Participation pour la Coopération économique (PROPARCO), Commerzbank, United Overseas Bank (UOB), Societe Generale (SG), CQS and Industrial & Commercial Bank of China (ICBC) have provided substantial support to China Gas, and with the support, China Gas is assured of access to long-term capital support for future development with increased popularity and influence. In particular, the development financing loan of RMB20 billion with maturity of 15 years provided by CDB, and investment of US$24 million and long-term credit support of US$125 million made and offered by Asian Development Bank (ADB) have great significance in the development history of China Gas functioning as a landmark, and will surely further encourage China Gas to develop city gas industry, explore international energy cooperation and achieve internationalization.

While confronting the basic changes in energy consumption structure and energy demand and supply in the world, and the white-hot competition in “enclosure movement” in domestic gas industry, China Gas made a strategic target of “upgrade thoroughly, break through key point & create core-competitiveness of China Gas” in 2006 to lead the whole Group to explore with efforts, push management reform actively, advocate “profitable China Gas” continuously, strengthen cooperation at home and abroad, excavate value-adding points persistently and seek out new ideas to further increase and continue the economic and brand value of the career of China Gas.

Standing on the new historical starting point, China Gas will be carrying out its enterprise spirit of “honesty, innovation & cooperation” and keeping to its enterprise idea of “people-oriented” as usual to exploit initiative of each “China Gas person” and realize the biggest value of each talent; and together with all collaborative partners and strategic unions within China and outside the country concerning and supporting China Gas, China Gas would explore vigorously in fields of energy exploration, utilization and application to push the energy reform in China while creating high-quality social public services in a bid to become a gas enterprise group with strong international influence trusted by the customers and respected by the society.

President: (Liu Ming Hui) October 20, 2006