EMPLOYMENT
AGREEMENT




Employer
(Party A): Xi'an Xilan Natural Gas, Co., Ltd.




Employee
(Party B): Ji Qinan




In
accordance to the provisions of the Law of the People's Republic of China on
Employment Contracts and other relevant laws and regulations, the Parties enter
into this agreement on the basis of equality, voluntariness and
consensus.




1.
Position Description




According
to its working needs, Party A retains Party B to serve as the Chairman of the
Board of Directors. Party B shall complete timely the work assigned by Party A,
as requested by Party A.




2.
Duration of the Agreement




The
Parties choose to Clause 2.2 set forth below regarding the duration of this
agreement.




2.2
            The
      Agreement is in non-fixed term. It shall be effective on May 10th, 2005,
      and would not be terminated until the occurrence of the circumstances
      specified by the parties.




3.
Working time, Salary and Benefits




3.1
According to the nature of Party B's work, the Parties choose to follow System A
(i.e. the Regular Working Hour System) as Party B's standard working
hour.




A. Regular Working Hour
System




B. Irregular Working Hour
System




C. Flexible Working Hour
System




3.2 The
salary of Party B is USD $1,250 per month.




3.3 Party
A shall pay Party B, in monetary form, Party B's salary for the previous month
on the twentieth days of each month. Party A shall not skimp, or delay the
payment of wages without due reasons.


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3.4 Party
A has a duty to optimize company's wage growth mechanism based on the Company's
development.




4. Rights
and Obligations of Party A:




4.1 Party
A shall provide Party B with working conditions that satisfy national safety and
sanitation standards, and with necessary labor protection supplies.




4.2 Party
A shall supervise and assess Party B's work regularly.




4.3 Party
A may change Party B's position due to Party A's business or Party B's actual
conditions. The salary for the new position should be agreed by both parties,
and conformed to the salary standard of the new position.




4.4.
Party A may award, or punish Party B, according to Party B's work attitude,
performance, or work capabilities, pursuant to related laws and
regulations.




4.5 Party
A shall propagandize and educate Party B, regarding the laws, policies, and
Party A's regulatory rules, and shall provide professional trainings to Party B,
pursuant to related regulations.




5. Rights
and Obligations of Party B:




5.1 Party
B shall have all the rights necessary to fulfil its duties.




5.2 Party
B shall have the right to receive compensation and benefits, for its
work.




5.3 Party
B shall adhere to the safety rules strictly during its work. If the management
of the Company gives directions violating relevant safety regulations and unduly
orders Party B to work at risk, Party B has the right to refuse the execution of
such directions or orders, and to criticize, impeach and accuse such
actions.




5.4 Party
B shall have the right to appeal the unjust evaluation or treatment, pursuant to
proper procedures.




5.5 Party
B should obey the administration and assessment by Party A, perform its duty
diligently, and fully complete the work assigned by Party A.




5.6 Party
B shall take good care of the properties of Party A, and shall keep strictly the
business secrets of Party A. It shall not divulge the information to any person,
during and after the working period. Party A shall specify persons who may know
the secrets, and take proper measures to keep the confidentiality of such
information. If the confidential information was revealed due to Party B's
fault, and caused Party A's loss of interests or other undesirable consequences,
Party B shall be responsible for all the loss of Party A. Criminal liability may
be pursued.


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The
"business secrets" of Party A include:




1)
financial information and company documents that are not yet disclosed to the
public;




2)
crafts, technological achievements, or other core technology that are not known
to the public;




3)
operational data and information of the company and its branches;




4) other
confidential information.




5.7 Party
B shall comply with the laws, regulations and policies of China, and with the
regulatory rules made by Party A in accordance with labor laws and regulations.
Party B shall be loyal to the company.




5.8 Party
B shall work diligently, and safeguard the honors and interests of the company
consciously.




6. The
Alteration and Termination of the Agreement




6.1 The
Alteration: Both parties may request to amend the provisions of their employment
agreement, but only if they so agree after consultations. The amendments will be
effective only when it was properly signed and sealed by the
parties.




6.2 Party
A may terminate the agreement if Party B:




1) uses
such means as fraud or coercion, or takes advantage of Party A’s difficulties,
to cause Party A to conclude the agreement, or to make an amendment thereto,
that is contrary to its true intent;




2) is
proved during the probation period not to satisfy the conditions for
employment;




3)
materially breaches Party A’s rules and regulations;




4) has
additionally established an employment relationship with another employer which
materially affects the completion of his tasks with Party A, or he refuses to
rectify the matter after the same is brought to his attention by Party
A;




5)
commits serious dereliction of duty or practices graft, causing substantial
damage to Party A;


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6)
intentionally breaks the machinery and equipments, wastes raw materials, causing
substantial damage to Party A;




7)
commits corruption, theft, gamble, drug-taking, fraud, or fighting;




8)
falsely accuses, frames, or slanders others, if the case is
serious;




9) has
his criminal liability pursued in accordance with the law.




10) makes
other serious mistakes




6.3 Party
A may terminate the agreement, after giving a written notice to Party B thirty
days prior to the termination, or after paying Party B the salary of an extra
month, under following circumstances:




1) after
the set period of medical care for an illness or non-work-related injury, Party
B can engage neither in his original work nor in other work arranged for him by
Party A;




2) Party
B is incompetent and remains incompetent after training or adjustment of his
position; or




3) A
major change in the objective circumstances relied upon at the time of
conclusion of the employment agreement renders it unperformable and, after
consultations, the Parties are unable to reach agreement on amending the
employment agreement.




6.4 If
any of the following circumstances makes it necessary to reduce the workforce by
20 persons or more or by a number of persons that is less than 20 but accounts
for 10 percent or more of the total number of the enterprise’s employees, Party
A may reduce the workforce after it has explained the circumstances to its Trade
Union or to all of its employees 30 days in advance, and has considered the
opinions of the Trade Union or the employees:




1)
Restructuring pursuant to the enterprise bankruptcy law;




2)
Serious difficulties in production and/or business operations;




3) The
enterprise switches production, introduces a major technological innovation or
revises its business method, and, after amendment of employment agreements,
still needs to reduce its workforce; or




4) other
major change in the objective economic circumstances relied upon at the time of
conclusion of the employment agreements, rendering them
unperformable.




When
reducing the workforce, Party A shall retain with priority
persons:


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1) Who
have concluded with the Employer fixed-term employment agreements with a
relatively long term;




2) Who
have concluded open-ended employment agreements with the employer;
or




3) Who
are the only ones in their families to be employed and whose families have an
elderly person or a minor for whom they need to provide.




If an
Employer that has reduced its workforce pursuant to the first paragraph hereof
hires again within six months, it shall give notice to the persons dismissed at
the time of the reduction and, all things being equal, hire them on a
preferential basis. 6.5 Party A may not terminate an employment agreement
pursuant to Article 6, Clauses 3 and 4 hereof if the Employee:




1) Has
been confirmed as having lost or partially lost his capacity to work due to an
occupational disease contracted or a work-related injury sustained with the
Employer;




2) Has
contracted an illness or sustained a non-work-related injury, and the set period
of medical care therefore has not expired;




3) Is a
female employee in her pregnancy, confinement or nursing period;




4) Has
been working for the Employer continuously for not less than 15 years and is
less than 5 years away from his legal retirement age;




5) Finds
himself in other circumstances stipulated in laws or administrative
statutes.




6.6 Party
B may terminate his employment agreement upon 30 days’ prior written notice to
Party A. The agreement will be terminated after the Parties finished
transferring the work and have gone through all the financial procedures. During
his probation period, Party B may terminate his employment agreement by giving
Party A three days’ prior notice. If Party B did not conform with the
aforementioned agreement and left the position unauthorized, causing
economic loss to Party A, Party B shall compensate Party A, depending on the
circumstances.




6.7 If
both Parties desire to renew this Agreement, it should be renewed thirty days
prior to the expiration of this Agreement.


7.
Liability for Breach




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7.1 If
Party A provides special funding for an Employee’s training and gives him
professional technical training, if the Employee breaches the agreement on the
term of service, he shall pay liquidated damages to the Employer as agreed. The
amount of the liquidated damages shall be equal to the amount offered by Party A
for the trainings.




7.2 If
force majeure renders the agreement unperformable, and thus causes loss to the
other party, the breaching party may be absolved from the
liabilities.




7.3
Severance pay raised due to the termination of the agreement should be paid in
accordance with the Law of the People's Republic of China on Employment
Contracts.




8. In
case of a labor dispute, the parties shall first find solution through
negotiations. If the parties are unwilling to go for negotiations or the
negotiation fails, the case may be referred to the mediation committee of Party
A; if mediation fails, the case may be referred to the labor dispute arbitration
committee for arbitration. When one of the parties or both parties refuse to
accept the arbitration award, he or they may bring a lawsuit before the people’s
court.




9. For
matters not covered by this Agreement, decisions shall be made by Party A and
Party B through friendly consultations.




10. The
attached schedules of the Agreement are integral parts of the Agreement, and
shall have the same effect as the Agreement.




11. In
the event that the provisions of this Agreement contravene applicable laws,
regulations and policies, applicable laws, regulations and policies shall
control.




12. This
Agreement shall be in duplicate copies, with one copy for each of the
parties.


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