Corporate Presentation

August 2010

Table of Contents
Section Page 3 8 13 19 26 29

1 2 3 4 5 6

About China Gas Natural Gas Business Liquefied Petroleum Gas Business Operational Highlights FY2010 Financial Highlights FY2010 FY2011-12 Outlook

About China Gas

China Gas Overview

Principal Business Segments

1. Natural Gas Services Operator: Engages in the investment, operation and management of city gas pipeline infrastructure, distribution of natural gas to residential, industrial and commercial users, and construction and operation of natural gas refilling stations

Business started in 2002 when China decided to construct the West-East Pipeline Operates in 134 city concessions with 30-year monopolistic operating right each Possesses a pipeline network of more than 31,943 km serving approximately 5.1 million household users and nearly 35,481 industrial and commercial users

2. LPG Supplier: The only vertically-integrated LPG operator in PRC

Entered into the LPG industry in September 2008 Owns 11 LPG receiving terminals, 275,000 m3 of LPG storage capacity, upstream to downstream distribution network in PRC Covering wholesale and retail LPG supply in Guangdong, Guangxi, Fujian, Zhejiang, Jiangsu and Anhui provinces.

Strategic Partnerships
Strategic shareholders have partnered and helped China Gas growth through the years
SINOPEC (Dec 2004) Management & Founders (2002)
18.39% 6.24%

Oman Oil (Jan 2006) GAIL (May 2005)

6.24% 7.06%

Oman Fund (Nov 2007)

Public SK E&S (June 2008)

ADB (Oct 2006)

4.46% 4.81%

3.90%

48.92%

CHINA GAS
Each of GAIL, Oman Oil, SK E&S and ADB has senior person on the board of China Gas, providing valuable insights

and advice from the international and diversified perspectives

As of 30 June 2010

Natural Gas
Project Development Process
China Gas has a strong track record of developing city gas projects on time and on budget
Bid & award
About 15 projects under review Investment criteria include: 1. Project IRR > 15% 2. Industrial demand 3. Natural gas accessibility

Construction & development 12-18 months

Revenue: Gas connection fees

Operation 30 years
Revenue: Sales of piped gas

Projects under development 2007: 20 projects 2008: 18 projects 2009: 47 projects 2010: 35 projects

Projects in operation 2007: 37 sites 2008: 50 sites 2009: 63 sites 2010: 99 sites

Natural Gas
Current Project Locations
Hebei Cangzhou, Cangzhou Economic
Development Zone, Nanpi, Qinghe, Leting, Xinle, Gaocheng, Pingshan, Feng Nan, Neiqiu, Wangdu, Nanbao, Bohai New Area, Hebei Pipeline

Henan 11 city gas concessions

Heilongjiang

Heilongjiang Harbin, Jiamusi,

Shuangcheng, Mudanjiang, Jiagedaqi

Liaoning Dalian, Fushun, Jinzhou,

Sujiatun(Shenyang), Jinzhou D. Zone, Liaoyang, Gaizhou, Zhuanghe, Linghai, Pulandian

Jilin

Inner Mongolia Hohhot, Wushenqi,

Wushenqi Pipeline, Changmeng Pipeline, Baotou, 4 counties, Etoke Banner, Etuokeqi
Xinjiang Gansu Inner Mongolia Ningxia Qinghai

Liaoning Beijing Tianjin

Tianjin Tianjin Pipeline Shandong Dezhou, Qingdao

Ningxia Zhongwei Shaanxi Baoji, Qishan Xian, Yulin

Tibet

Hebei Shanxi Shandong Henan Hubei Jiangsu Anhui Zhejiang Jiangxi Fujian Taiwan Shanghai

Shaanxi
Sichuan

Jiangsu Pizhou, Yangzhong, Nanjing

(Jiang Bei, Pukou), Xuzhou (Jiawang), Xuzhou (Xinyi), Yangzhou

Hubei Yichang, Xiaogan, Hanchuan,

Yingcheng, Yunmeng, Suizhou, Tianmen, Guangshui, Dangyang, Xiaogan Pipeline, Dangyang Pipeline, Huanggang-Daye pipeline

Chongqing Guizhou Yunnan

Hunan

Zhejiang Hangzhou (Xiaoshan),

Shaoxing, Taizhou, Jinhua

Chongqing Dianjiang E&P, Yubei District,

Dingwang purification, Chongqing Pipeline

Guangxi Guangdong

Fujian 29 city gas concessions

Anhui Wuhu, Huainan, Shouxian,
Suzhou, Wuhuxian, Nanling, Huoshan, Fengtai, Wuwei, Xiuningxian

Hunan Yiyang, Yuanjiang, Youxian Guangxi Yuling, Qinzhou, Liuzhou,

Fongchenggang, Laibin, Baise, Nanning City, Nanning Dongmeng Development Zone, Bobai

Hainan

Guangdong Maoming, Conghua, Jiangxi Nanchang (Wanliqu)

Meizhou, Yunfu, Shanwei, Xinxingxian, Fengshunxian, Pingyuanxian

Natural Gas Business

Natural Gas
Business Model
Natural gas fields National or provincial pipelines City gate

Storage tanks (spherical or cylinder)

Assets owned by the Group:

Main pipelines Branch pipelines Pressure regulating boxes Switches Processing stations * Customers pipelines which are not owned by the Group are within the customers premises and are not highlighted in this diagram

Industrial users* Residential households* Car refueling station Commercial users*

Natural Gas
Revenue Model and Pricing
Natural gas business operates on a cost-plus pricing model
END-USER TARIFF COMPONENTS
Exploration Transportation Distribution

Wellhead price

Transmission tariffs

Distribution cost + margin

NDRC Approval
2 main sources of revenue

Local Price Bureau Approval

Gas connection: one-off payment mainly from residential users, less so from industrial and commercial users Sale of piped gas: recurring income at tariffs approved by the local governments

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Natural Gas Supply Growth

Growth made possible by:

China Natural Gas Supply Projection

600 550

Additional gas supply from PetroChina as a result of the cooperation agreement Commissioning of new gas fields

LNG imports Pipeline imports Other imports CNOOC Sinopec PetroChina

500 450 400 350

Xinjiang Province
Billion m3

Inner Mongolia Sichuan Province

300 250 200 150 100 50 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Commissioning of new national pipelines

Sichuan East Pipeline West East Pipeline II

Import of piped gas from Central Asia, Russia and Myanmar

Completion of additional LNG terminals

Source: NDRC

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Peer Group Analysis

Sales Revenue Growth FY2009/2010 Number of Gas Projects

Source: individual companies annual reports

Source: individual companies annual reports

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Liquefied Petroleum Gas (LPG) Business

LPG Business
China Gas is the largest and only vertically

integrated LPG supplier in the PRC covering retail and wholesale

Our LPG business covers:

Heilongjiang

Jilin

Upstream: Direct supply from refineries of PetroChina and Sinopec; also import from the Middle East; Midstream: 11 receiving terminals, 275,000 m3 LPG storage facilities, fleets of vessels and trucks, and distribution logistics in Guangdong, Guangxi, Fujian, Zhejiang, Anhui and Jiangsu; Downstream: Direct retail of bottled LPG to households.

Xinjiang Gansu

Liaoning

Inner Mongolia
Ningxia

Beijing Tianjin Shanxi Hebei Shandong

Qinghai Shaanxi Sichuan

Henan Hubei

Jiangsu Anhui Zhejiang

Jiangxi Shanghai

Tibet

Chongqing Hunan Guizhou Yunnan

Fujian
Taiwan

Guangxi Guangdong
Hainan

LPG receiving terminals and storage facilities

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LPG
Business Model
Oil Refinery Class 1 Station Class 2 Station Class 3 Station

Import/ Domestic Supply

Bottling Station LPG Receiving Terminal

Domestic supply

Industrial users

City gas companies

Storage Facilities Assets owned by the Group

LPG vessels LPG trucks Trucks sending bottled LPG

Commercial users

Residential households

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Value Chain of LPG Supply

4-5%
Oil Refinery Class 1 Station LPG Wholesaler Class 2 Station Bottled LPG Maker Class 3 Station Bottled LPG Retailers

Gross Margin (%)

5-6%

6-7%

10-12%

2009 LPG gross margin for China Gas: 5.7% 2010 LPG gross margin for China Gas: 8.7%

Source: Company data

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LPG
Market Share and Margins Outlook
LPG Market Share by volume LPG Gross Margin Expansion

Source: Company data

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LPG
Supply and Demand in China

China LPG Demand by Sector

32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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China LPG Supply and Demand

26 24 22 20 18 16 14 12 10 8 6 4 2 0 -2 -4 -6 -8 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Feedstock for Cracking Industry Commercial (Transportation and etc) Residentail Gas

Supply Demand Net Trade

Source: Company data

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Operational Highlights FY2010

Natural Gas
Sales Volume (as at 31 Mar 2010)

Period
Total sales volume (million m3)

Sales Growth Total 54.5% 102.5.% 165.8%

FY10 FY09 FY08

Period
FY10 FY09 FY08

Sales Growth Natural Gas Only

58.7% 104.1% 191.7%

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Natural Gas
Customer Breakdown (as at 31 Mar 2010)
Sales Volume Growth in FY10 46.5% 52.3% 64.2% 41.7% % of Total Volume 7.3 % 10.0% 71.1% 11.6%

Sector
Natural gas sales volume (million m3)

CNG Stations Commercial Industrial Residential

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Natural Gas
Customer Data (as at 31 Mar 2010)
FY10 Portfolio Total
4,837,436 810 33,476 91

Customer Growth Residential Industrial Commercial CNG Stations Customer Tariffs (ex-tax) (RMB / m3) Residential Industrial Commercial CNG Stations

Organic
657,907 323 3,825 31

Acquired
434,159 67 1,140 -

Change from FY09

29.2% 92.9% 17.4% 51.7%

FY09 Portfolio Total

3,745,370 420 28,511 60

FY10
1.88 2.09 2.13 2.17

Change from FY09

1.6% 6.1% 3.4% 4.3%

FY09
1.85 1.97 2.06 2.08

FY08
1.75 1.84 1.85 1.95

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Natural Gas
Other Operational Data (as at 31 Mar 2010)
Natural gas daily consumption Urban population covered and penetration rate

Urban Population Covered (m)

Penetration Rate

(000 m3)

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Natural Gas
Other Operational Data (as at 31 Mar 2010)

FY10
Residential Connection Fee (RMB per customer) Total Pipelines (km) 2,368 31,513

Change from FY09

-2.8% 21.8%

FY09
2,437 25,886

FY08
2,295 16,217

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LPG
Operational Data (as at 31 Mar 2010)

FY10
Sale tonnage (ton) Gross Margin (%) Operating Margin (%) Net Profit Margin (%) 944,000 +8.7% + 1.6% + 0.2%

FY09*
495,155 +5.7% - 0.2% - 2.1%

* Only half year data as China Gas commenced LPG business in Sep.2008

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Financial Highlights FY2010

Financial Summary
Income Statement
HK$ ('000) Turnover Gas Sales Connection Fees LPG Sales Other Gross Profit Profit after tax FY10 % change FY09 FY08 2,552,075 1,691,159 615,282 245,634 746,119 187,571

10,211,959 3,831,627 1,461,573 4,637,924 280,835 2,116,292 1,015,501

61.5% 43.1% 29.6% 104.1% 14.2% 48.1% 658.1%

6,323,823 2,678,377 1,127,403 2,272,173 245,870 1,429,349 133,959

Profit Attributable to Shareholders

Basic EPS (HK Cents)

875,636
26.19 20.8% 70.6% 8.7%

744.6%
742.1% -

103,679
3.11 19.1% 67.4% 5.7%

141,059
4.39

Gross Margin Gas Sales Gross Margin Connection Fees Gross Margin LPG Sales

15.9% 72% -

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Financial Summary
Balance Sheet & Debt Position

HK$ ('000) Total Assets Total Equity

FY10 22,997,594 5,230,237

FY09 (restated) 18,024,749 3,982,128

Shareholder's Equity
Cash Short-term Bank Debt Long-term Bank Debt Convertible Bond

4,123,022
4,361,419 5,294,761* 8,021,345 -

3,223,270
2,896,457 3,103,855 ** 7,194,067 14,823

* of which HK$2,450,349 was Zhongyou Huadian LPG trade finance related facilities ** of which HK$2,255,659 was Zhongyou Huadian LPG trade finance related facilities

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FY2011-12 Outlook

Natural Gas Pricing Reform

Given residential gas sales is only 11.6% of total gas sales, the impact of the recent 24.9% wellhead natural gas price hike on 2010/2011 earnings should be immaterial
No impact on commercial & industrial gas sales: automatic 100% pass-through
represents 81.1% of users for China Gas

Sensitivity Analysis(1)
Period of Non-Pass Through As a % of Total Revenue % of Volume passedthrough (residential users only) 0% 50% 90% Full Year (0.95%) (0.47%) (0.09%) 6 month (0.47%) (0.24%) (0.05%) 3 month (0.24%) (0.12%) (0.02%)

Low elasticity: retail price hike of only RMB0.23/m3 and we anticipate residential users can absorb with minimal impact on demand On a macro-view, price hike will stimulate upstream domestic production and encourage LNG imports, further easing near-term shortage of supply

(1) Total revenue is based on FY2010 natural gas total volume, FY2010 total revenue and 100% automatic pass-through of RMB0.23/m3 of price hike for commercial and industrial gas sales

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FY2011-2012 Drivers
Natural Gas
Significant increase in upstream supply will lead to:

LPG
Completion of vertical integration of supply chain will lead to:

Increase in penetration rate: To reach 43% by 2012 enhanced connection fee income More industrial connections: More gas to connect industrial customers in backlog further increase gas sale volume Faster CNG stations rollout: To reach at least 180 CNG stations in 50 cities by 2012 improving overall operating margins of gas sale

Wider distribution network: To cover 9 provinces with wholesale and retail supply Increase in sale volume: To reach at least 2 million tons by 2012 Improved margins: To reach 15% gross margin and 5% net margin by 2012

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FY2011-2012 Guidance
Enhance organic growth of existing city gas and pipeline projects in terms of residential penetration, industrial connections and CNG station rollout Continue upstream LPG integration with refineries Sinopec and CNPC Active rollout of LPG downstream retail distribution network and CNG stations

FY2011 Gas volume (m3) New residential connections CNG stations LPG sales (million ton) 4.8 bn 700,000 to reach 120 1.3

FY2012 6.0 bn 850,000 180 2.0

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Disclaimer
Statements in this presentation and handout that are not strictly historical are forward-looking statements. Forward-looking statements involve risks and uncertainties, including, but not limited to, continued acceptance of the Companys product and services in the marketplace, competitive factors, new products and technology changes, the Companys dependence upon third party suppliers and other risks detailed from time to time in the presentation, handout and other related documents. China Gas is not responsible for the accuracy and completeness of the contents of such presentations and/or other documents. The materials and information in the presentations and other documents are for informational purposes only, and are not an offer or solicitation for the purchase or sale of any securities or financial instruments or to provide any investment service or investment advice.

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