China Natural Gas Inc.NASDAQ Global Market: CHNG

April 1, 2010

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This presentation contains "forward-looking statements" within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including changes from anticipated levels of sales, future national or regional economic and competitive conditions, changes in relationships with customers, access to capital, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, and other factors disclosed in the Company’s Annual Report on Form 10K for the year ended Dec. 31, 2008 and all of the Company’s subsequent Quarterly Reports on Form 10Q, especially in the “Risk Factors” sections of these reports. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this presentation.

Safe Harbor Statement

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Company OverviewBusiness China’s Leading Provider of Natural Gas Services

Headquarter Xi’an, China

Capital Market Timetable

• Established in January 2000• Listed in OTC BB in December 2005• Upgraded to NASDAQ Global Market in June 2009

Capital Structure NASDAQ: CHNGPrice (4-1-2010): $9.89Shares Outstanding.: 21.2 millionThree Month Avg. Trading Vol.: 298kMarket Cap: $209.51 million

Financials Fiscal Year Revenue Net Income

2009 A $81 million $18.8 million

2008 A $68 million $15.2 million

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Large & Growing Market Opportunity for Natural Gas

Strong Government Support For Clean Energy Industry

High Brand Recognition and Market Leadership

Strategic Cooperation with CNPC for CNG Expansion

Large LNG Project Augments Long-Term Growth

Proven Management Team – Strong Revenue Growth Trend since 2006

China Natural Gas is Uniquely Positioned to Capitalize on China’sExpanding Natural Gas Market

Investment Highlights

• A leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas (PNG) for industrial, commercial and residential use

• 36 fueling stations for taxis and buses in Shaanxi (24 stations) and Henan (12 stations)• 176 million Nm3 sold for the year ended December 31, 2009 • CNG suppliers include PetroChina Changqing and Shaanxi Natural Gas Co. among others

CHNG Overview

• Population: 8.4 million(1)

• Number of Vehicles: 1 million(2)

• GDP CAGR 17.4% from 2003 to 2008 (national average of 17.2%)

Xi’an City, Shaanxi Province

• Zhengzhou, Kaifeng, Xuchang• Higher retail pricing• Higher potential as car conversion rate

increases

(1) Xi’an Municipal Government as at December 31, 2008(2) Xi’an Vehicle Management Bureau statistics as of December 31, 2008

Introducing CHNG

Henan Province

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Tank Truck FleetProcessing CNG Fueling Stations

Residential, commercial, industrial consumers

Distribution of CNG

Retailing of CNG

Liquefaction/Processing of LNG

Distribution/ Delivery of LNG

CNG CNG

Exploration / Production Transmission

PNG

LNG LNG

Utility/Power Plants/Industrial customers

CHNG’s existing core businesses CHNG’s core businesses under development (LNG plant currently under construction, expected to be completed by second quarter of 2010)

Growing Footprint in the Natural Gas Industry Supply Chain

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Improving Delivery Infrastructure Will Drive Gas Usage Rate

Phase I of West East Pipeline constructed in 2004

Phase II will be launched in 2011

Xi’AnThree pillars of PRC’s gas supply are onshore (Northwest), imported (LNG) and piped (gas from Russia)

Xi’an is the central hub for China’s gas delivery from key Northwest region

Phase 1

Phase 2

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• Strong Government Relations• Supply Contracts with PetroChina and Shaanxi Natural Gas• Perfect Safety Record• Strategic Location near Natural Gas Supply Pipeline• Successful Track Record of Organic and Acquisition Growth

Operating History

Dominant Supply Position and Operations

2005 2006 2007 2008 2009

First CNG fueling station business

in Xi'an

2010E

LNG project launched

Construction of LNG processing and distribution

plant started

$40MM debt financing with

Abax Lotus completed

NASDAQ Global Market Listed

Construction of LNG Project expected to be completed by Q2

2010

CNG Fueling Stations

Total Revenues ($MM)$18.8 $35.4 $67.724 3511

$4.91

High Growth Through Sustainable Competitive Advantages

6.9MM nm³ 39.3MM nm³ 83.7 MM nm³ 149.4 MM nm³ 164.3 MM nm³ CNG Sold Through Fueling Station

$81.136

Increasing Diversification of Revenue Sources

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Construction of LNG plant will complete in 2nd quarter of 2010

2009CNG fuelingstation

Gasoline

Pipelinenatural gas

Installation

Automobileconversion

2010CNG fuelingstation

Gasoline

Pipeline naturalgas

Installation

Automobileconversion

LNG

Business Segments

CNG Fueling Stations

LNG

Piped Natural Gas

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Comprehensive Fueling Station Network Drives Volume

•Taxis refill 3-4 times a day; buses 1-2 times•Our network must provide them with

accessible locations throughout the city•Taxis take 2 minutes to refuel; buses take 6

minutes

Key Locations

Network Statistics

•Ownership of 24 stations in Shaanxi Province

•12 owned stores in Henan Province•36 stations in total

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CNG Business Model: Strong Cash Flow Annuity

Fueling Stations / Sales Volume Analysis

Revenue (millions)

Revenue and Gross Profit Margin Analysis

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Self Built and Acquired Stations Both Attractive

(1) Based on negotiated prices to date

(2) Defined as EBITDA/Initial Capital Investment + Gas Inventory

Historical cash payback between 2 and 3 years

USD '000 Self-built* Acquired (1) Self-built* Acquired (1)

Filling Station $1,300 $2,000 $1,300 $2,000Tankers (2); Locomotive (1) $400 $400 $400 $400

Total Investment $1,700 $2,400 $1,700 $2,400

Annual sale volume ('000 m3) 4,889 4,889 4,037 4,037Average sale price net of VAT ($/m3) 0.34 0.34 0.41 0.41

Annual revenue $1,673 $1,673 $1,675 $1,675

Gross margin (%) 52.5% 52.5% 54.1% 54.1%

EBITDA 751 751 793 793EBITDA (%) 44.9% 44.9% 47.3% 47.3%

Cash Payback period (years) (2) 2.26 3.19 2.14 3.03

Shaanxi Province Henan Province

New Joint Venture with CNPC

CHNG invests $3.6m for 49% stakeCNPC invests $3.7m for 51% stakeCHNG has 2 of 5 board seats and CEO appointee rights

Co-development of CNG fueling stations along West East Pipeline

Day to day operation of fueling stations10 planned by end of 2010

Scope

Initial Investment / Ownership

Gas supply

CHNG Role

PetroChina Role

中石油昆仑CNPC Kunlun Limited

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Vehicle Conversion Businesses

Vehicle Conversion Service

• 4 CNG conversion workshops in Xi’an• Target customers: taxis, public

transportation vehicles and fleet vehicles

40 to 60 day payback period for taxi conversion

Daily taxi fuel cost (based on 250 miles per day)

$20.8

$10.3

50% savings

CNG

•Significantly reduced harmful emissions (87% less NO2; 70% less CO; 25% less CO2)

•Longer service life – up two to three years over gasoline or diesel engines

•Reduced maintenance requirements

Other Benefits

Gasoline

Daily Savings

* Data source: HondaMotor Company

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Business Segments

Piped Natural Gas

LNG

CNG Fueling Stations

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Piped Natural Gas Businesses

• 120 km high pressure natural gas pipeline

• Franchise monopoly rights for 40 years

• 108,423 residential and industrial users (growing 10% annually)

• 9 service areas including Lantian, Hongqing, Tianwang, Tangyu, Fangzhi Chen, International Port Zone, the energy and chemical industry base, Xinzhu Town and Lingbao

• Gas provided by Shaanxi NG (SOE)

• Regulated pricing

Piped Natural Gas

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Business Segments

LNG

CNG Fueling Stations

Piped Natural Gas

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Our 150MM m3 Gas Liquefaction Project in Yulin, Shaanxi

Liquefaction/Processing Distribution/Delivery

We are the only licensed supplier in Shaanxi Province

• Net Capacity is 150 million normal m³• 100% already committed • EPC contractor is Chemtex• Customer reach up to 1,600 km radius (Guangdong,

Guangxi, Fujian)

Upstream supply sourced from Petro China

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LNG Project: Attractive Economics

• $50.4MM total cost for phase I; $42MM invested to date

• PetroChina supplying natural gas at their well head price• 150MM m³ per annum commitment

• Strong government assistance for utility infrastructure

• Highly automated plant will save labor costs

• Retail price USD 0.48 per m³ includes transportation up to 1,600 km

We project to recover our $50.4 million total investment in less than 3 years from commencement of production

• Center of the Ordos Basin• 2 km from PetroChina Changqing

natural gas purification factory• 35 acres of land for phase II and III

expansion• 320 billion cubic meters reserves • Expected to be the major transport

hub

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Yulin, Shaanxi LNG Project Completion Blueprint

1Q’082Q’07 2Q’10 2Q’08

Commence Construction

Trial TestingPurchase

Contract for Equipment

Secure Financing to Fund Plant

LNG Project on Track

Liquefied Natural Gas (LNG) Target Customers

• Industrial Customers covering ceramic factory, metal smelt, glasswork, etc.;

• City gas companies covering industrial, commercial and residential pipeline end users;

• LNG fueling stations in cities and ocean ports;

• Natural gas power plants

Key Target Customers• The industrialized and urbanized coastal

areas of China

Key Target Geographic Markets

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South China

East China

•Demand driven support via conversion subsidies for cabs and buses

•1999 Clean Auto program implemented in 12 key cities

•Energy blueprint (2007) •New policy submitted in May 2009 further supports

natural gas development•CNG/Gasoline hybrid vehicles a top priority

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Central Government

National Development and Reform Commission

Provinces and CitiesReduce consumption

of coal

Increase the use of natural gas

Subsidies and beneficial tax

policies

Market oriented price

mechanism

•11th 5-Year Plan: Reemphasized natural gas usage at expense of coal•2007 Energy Law: Provided legal infrastructure for natural gas market

Key PRC Mandates

Explicit Policy Support for Natural Gas

24(1)IEA, Natural Gas in China, Market Evolution and Strategy (June 2009)

Industry and residential sectors both demonstrate high demand

0

10

20

30

40

50

60

70

80

2000 2001 2002 2003 2004 2005 2006 2007

Electricity P lants

Heat P lants

Energy Sector

Industry Sector

Transport Sector

Residential

Commercial, Public Services

Feedstock Use in Industry

Natural Gas Consumption in China by Sector(1)

Volume in billions m3

CAGR 2000 – 2007: 17.0%

Robust Growth Since Broad Introduction 10 Years Ago

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Addressable Market Still Very Large

Billion Cubic Meters

Annual ConsumptionTotal Reserve

U.S. Natural Gas vs. Total Energy Usage

5,978

2,266

0

1000

2000

3000

4000

5000

6000

7000

U.S. China

653

70

0

250

500

750

U.S. China

Billion Cubic Meters

China Natural Gas vs. Total Energy Usage

Source: US Energy Information Association, 2007; PRC Statistical Year Book, 2007

Available supply, government motivated by environmental concerns

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Competition By Business Line

Xi’an City: Shaanxi Qinhua (JV with HK Town Gas – 0384.HK) 790,000 customers

Xi’an City: Xi’an Municipal NG (15 stations), another 32 privately owned (We dominate 1/3 Market)Henan: Zhengzhou NG (8 stations)

Xinjiang Guanghui (600256.SH): 450MM m³ facility, FY08 sales of 306MM m³Xinao Gas (2688.HK): 270MM m³ in two facilities (Shanxi and Ningxia), Operations began in 2009

CNG fueling stations

Piped Natural Gas

LNG

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Comparable Peer Valuation

Figures in millions except per share data. Conversion rates: US$1.00 = CNY6.83 = HKD7.75

(1) Source: Bloomberg; Company guidance;

        Sales(1)   EPS(1)   P/E(1)

Ticker Company Name Share Price (03/10/10)

Market Cap 2008A 2009E   2008A 2009E   2008A 2009E

CHNG China Natural Gas Inc 10.58 224.1 M 67.7 81.1 　 1.04 1.13 　 9.0x 9.4x

Peers 　 　 　 　 　 　 　 　 　 　

135 HK CNPC Hong Kong Ltd 1.32 5,903.2 M 5,208.30 5,254.00 　 0.09 0.03 　 13.0 x 39.0 x

600256 CHXinjiang Guanghui Industry

4.11 3,918.0 M 1,985.60 2,692.70 　 0.07 0.09 　 56.5 x 44.0 x

2688 HK Xinao Gas Holdings Ltd 2.44 2,558.7 M 8,265.50 10,050.00 　 0.09 0.11 　 26.2 x 21.5 x

3928 HK Zhengzhou Gas Co Ltd 2.05 256.8 M 1,028.80 1,196.00 　 0.17 0.22 　 11.3 x 8.7 x

1083 HK Towngas China Co Ltd 0.46 894.2 M 4,409.20 3,166.90 　 0.01 0.02 　 41.8 x 20.9 x

CLNE Clean Energy Fuels Corp 19.32 1,154.2 M 129.5 131.5 　 -0.9 -0.6 　 n/a n/a

SNEN Sinoenergy Corp 1.68 26.7 M 40.9 41.8 　 1.02 -0.82 　 1.8x n/a

Avg (ex CHNG) : 25.1x 26.8x

Median (ex CHNG) : 19.6x 21.5x

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Pursue Strategic CNG

Acquisitions / Cooperation

Ensure Adequate Supply of

Natural Gas

Expand Compressor

Station’s Production

Capacity

Expand Geographical

Coverage

Increase Market Share in Existing

Markets

Diversify into LNG business

Growth Strategies

Robust Revenue Growth

(USD in millions)

Consolidated Revenues

3 yr CAGR 2006 – 2009: 63%$67.7

$35.4

$18.8

$81.1

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Consistent Financial Margins

Source: Audited Financials

(USD in millions)

Solid Balance Sheet

Summary Balance Sheet

(USD In millions)

Cash $13.3 $5.9 $48.2

Accounts Receivable 0.3 0.9 1.3

Current Assets 15.7 9.6 53.3

Total Assets 53.3 118.3 197.6

Total Current Liabilities 2.1 4.6 6.7

Long Term Liabilities 0.0 42.0 46.8

Shareholder's Equity $51.2 $71.6 $144.1

Long Term Liabilities/Equity 0.0% 58.7% 32.5%

As of December 31

2007 2008 2009

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Compressed Natural Gas (CNG)• CHNG prepays suppliers 15-30 days in advance• Buses prepay CHNG 1 month in advance• Taxis pay CHNG with cash

Liquefied Natural Gas (LNG)• CHNG prepays suppliers 1 month in advance• Customers pay CHNG 15-30 days in advance

Piped Natural Gas (PNG)• CHNG prepays suppliers 15-30 days in advance• Customers pay CHNG with cash

Consolidated DSOs• FY2007 – 4.5• FY2008 – 3.2• FY2009 – 4.9

Strong Working Capital Position

Capital Expenditures• FY2007 – $10.5MM• FY2008 – $20.9MM• FY2009 – $25.4MM

Cash Flow from Ops• FY2007 – $14.7MM• FY2008 – $62.2MM• FY2009 – $29.1MM

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•Joined CHNG in 2008•Promoted to Assistant CFO in December 2008 •Master in Finance from State University of New York in Buffalo

•Acquired CHNG in 2003 •Over 20 years experience in the energy business •Bachelor of Economic Management from Northwestern University (Shaanxi)

•Joined former company in 2001•More than 10 years in energy project engineering•Responsible for maintenance, safety and new construction•Bachelor in Engineering from Nanchang Hangkong Industry College

Experienced and Proven Management TeamName

Qinan JiChairman and CEO

Experience

David SheActing CFO

Bin WangChief Engineer

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Large & Growing Market Opportunity for Natural Gas

Strong Government Support For Clean Energy Industry

High Brand Recognition and Market Leadership

Strategic Cooperation with CNPC for CNG Expansion

Large LNG Project Augments Long-Term Growth

Proven Management Team – Strong Revenue Growth Trend since 2006

China Natural Gas is Uniquely Positioned to Capitalize on China’sExpanding Natural Gas Market

Summary

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Contact Info

Company – China Natural Gas, Inc.Mr. David She – Acting CFO19th Floor, Building B, Van Metropolis Tang Yan RdHi-Tech Zone | Xi’an, Shaanxi, ChinaTel: (86) 29-8832 7391 Email: david.she@naturalgaschina.com

US Contact:Tel: (718) 910 1231 Email: ir.chng@naturalgaschina.com

China Contact:Tel: (86) 29-8845 4353, (86)1399 287 9998

Investor Relations – RedChip Companies, Inc.Mr. Jon Cunningham500 Winderley Place, Suite 100Maitland, FL 32751Tel: (800) 733 2447Email: jon@redchip.com

Legal Counsel – The Crone Law GroupMr. Mark E. Crone101 Montgomery St. Suite 1950San Francisco, CA 94104Tel: (415) 955 8900Email: mcrone@cronelaw.com

Auditor – Frazer Frost, LLP Ms. Susan Woo 135 South State College Blvd, Suite 300Brea, CA 92821Tel: (714) 990 1040Email: swoo@frazerfrost.com