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Sinoenergy Signs Supply Agreement with Sinopec

Wednesday, 27 June 2007

China, Qingdao

Sinoenergy Corporation, a major manufacturer of compressed natural gas (CNG) filling station equipment and car/bus conversion kits in China, as well as an emerging developer and operator of natural gas filling stations in China, has signed a natural gas sale and purchase agreement between the Company's 55% subsidiary, Hubei Gather Energy Gas Co., Ltd. and with China Petroleum and Chemical Corporation, to replace the former letter of intent signed on May 21, 2007.

The agreement sets forth Sinopec's intention of providing Hubei Gather an initial annual volume of 50 million cubic meters per year increasing to not more than 200 cubic meters per year. The actual sales volume for every year as well as the sales price is subject to annual natural gas purchase agreements. Sinopec is to begin supplying Hubei Gather Energy once the Sichuan-Shanghai natural gas pipeline is operational, which is expected to occur in the first half of 2009.

In the interim, Sinoenergy will supply its 30 CNG filling stations under its existing quota agreement with PetroChina and some other CNG wholesalers for up to 100 million cubic meters of natural gas per year.

''We believe that our agreement with Sinopec will provide us with an abundant and long-term natural gas quota to support our efforts to win market share in the wholesale and retail markets in Central and Eastern China,'' said Mr. Deng Tianzhou, Chairman of Sinoenergy. ''As our new filling stations come online, the CNG wholesale and retail business will gradually become the major driver behind Sinoenergy's revenue growth and promote the growth of our other business segments.''

Sinoenergy is currently in a growth campaign, which involves the construction and operation of 30 new CNG filling stations. Construction is currently underway at 6 stations, with 10 filling stations in the design phase and the remaining 14 stations in the early preparation stage. The Company expects to open the first batch filling stations in August 2007, with the remainder up by the end of 2007.

Source: NGV Global