China Oil And Gas Group announced that the Company entered into a framework agreement on cooperation for the development of natural gas industry with the Government of Shaoguan City, Guangdong Province, pursuant to which Shaoguan Government authorizes the Company to develop natural gas business in Shaoguan City and to construct the "Shaoguan Gasification" project.

Pursuant to the Framework Agreement, Shaoguan Government has agreed to the Company as the sole proprietor to construct and operate the natural gas pipelines with annual gas transmission capacity of 500 million m3, to construct the liquefied natural gas (LNG) plant, to invest in setting up logistics companies for the transportation of LNG and compressed natural gas (CNG), and to construct 20 LNG, CNG and LCNG filling stations; Shaoguan Government will approve in advance the Company’s projects of construction of filling stations and gas pipelines, a CNG mother station and an LNG plant following the entering into of the Framework Agreement.

The Company expects to invest approximately RMB1 billion in the "Shaoguan Gasification" Project. The Company plans to implement the above-mentioned project, to construct the piped gas pipeline network in a number of cities (towns), and to set up logistics companies within five years, involving the construction and operations of long distance gas pipelines, natural gas city retail stations, an LNG plant, logistics and transportation of natural gas, natural gas filling stations and city piped gas.

According to the amount of upstream gas source and the gas supply indicators, the Company guarantees to the greatest extent the adequate supply of industrial, public services and residential natural gas in Shaoguan City in line with the national natural gas utilization policy.