[Stamp
      Tax]

    


    URBAN
      NATURAL GAS PROJECT DEVELOPMENT AGREEMENT

    


    Party
      A: Construction
      Bureau of Sihong Country

    


    Party
      B: Beijing
      Zhong Ran Wei Ye Gas Co., Ltd.

    


    Date: July
      23, 2004

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    URBAN
      GAS
      DEVELOPMENT AGREEMENT

    


    Contract
      SN: 

    Signatory
      Location:


    


    Party
      A: Construction
      Bureau of Sihong Country

    Party
      B: Beijing
      Zhong Ran Wei Ye Gas Co., Ltd.


    


    Chapter
      I  General
      Principles

    


    
      	
              1.1

            	
              WHEREAS,
                (i) the development of Sihong Country requires the pipeline gas project
                in
                the urban area, (ii) based on the Contact
                Law of the People’s Republic of China,
                the
                Cooperative Joint Venture Law of the People’s Republic of China
                and
                other relevant applicable laws and regulations, and (ii) after field
                study
                and friendly consultations, the Parties hereby agree as follows in
                relation to the construction of the Pipeline Project in Sihong Country
                (the “Agreement”).

            


    

    


    Chapter
      II Parties

    


    
      	
              2.1

            	
              Construction
                Bureau of Sihong Country (hereinafter referred to as “Party
                A”)

            


    

    


    
      	2.2	
              Beijing
                Zhong Ran Wei Ye Gas Co., Ltd. (hereinafter referred to as “Party
                B”)

            


    

    


    Chapter
      III Establishment
      of the Company

    


    
      	
              3.1

            	
              Party
                A, authorized by and on behalf of the Government of Sihong Country,
                agrees
                that Party B will be responsible for the Pipeline Project of Sihong
                Country and the total financing of the Pipeline
                Project.

            


    

    


    
      	3.2	
              Name
                of the Company: Sihong
                Wei Ye Gas Co., Ltd. 

            


    

    


    
      	
              3.3

            	
              The
                registered capital of the Company is RMB 10 million and the total
                investment for the Pipeline Project is RMB 100
                million.

            


    

    


    
      	
              3.4

            	
              The
                Company as a legal person under the PRC law: is subject to the
                jurisdiction and protection of the PRC laws, regulations and relevant
                rules (hereinafter referred to as “PRC
                laws”),
                and is authorized to conduct its business activities in compliance
                with
                the PRC laws.

            


    

    


    Chapter
      IV Business
      Scope

    


    
      	4.1	
              Business
                Scope of the Company: within
                the urban planned area of Sihong Country, to: design, construct,
                manage,
                develop and operate the pipeline network of natural gas and its auxiliary
                facilities, and provide relevant maintenance and emergency repair
                services; construct and operate natural gas stations; supply natural
                gas
                and provide after-sale services to industrial transmission, commercial
                construction, civic utility and public transportation; exploit natural
                gas
                reserves, design for the transportation and transmission thereof,
                construct and management the operation related
                thereto.

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Chapter
      V Exclusive
      Operating Right

    


    
      	
              5.1

            	
              Party
                A authorizes Party B to execute the pipe natural gas project within
                the
                urban planned area of Sihong Country and guaranties that Party B
                has the
                exclusive right to develop and construct the pipe gas project within
                the
                urban planned area of Sihong Country for 30
                years.

            


    

    


    
      	
              5.2

            	
              Party
                A will consider extending the 30 year exclusive operation term; provided,
                that Party B can ensure the normal supply of gas during such
                period.

            


    

    


    
      	
              5.3

            	
              If
                Party A breaches this Agreement during the term of this Agreement,
                Party A
                shall bear the losses resulting from such breach. If Party A or any
                of its
                agents or entrusted parties breach this Agreement during the term
                of this
                Agreement (which causes Party B to lose the exclusive operating right
                granted hereunder), Party A shall compensate Party B for its projected
                economic benefits for the term of this Agreement.
                

            


    

    


    Chapter
      VI Rights
      & Obligations of the Parties

    


    
      	
              6.1

            	
              The
                Parties shall construct the Pipeline Project based to the high standards
                and principles. Party B agrees that it shall construct a LNG gas
                station
                and pipeline network with the length of 7,000m and start gas supply
                to the
                first customers within 6 months after signing of this
                Agreement.

            


    

    


    
      	
              6.2

            	
              Party
                A shall be responsible for the coordination with the local government
                and
                relevant departments of the government and shall provide the following
                warranties to Party B in the form of official government
                documents:

            


    

    


    
      	
            	6.2.1	
              to
                grant Party B the exclusive right to construct and operate pipe natural
                gas project within the urban planned area of Longyao Country for
                30 years
                and ensure the legality thereof; not to approve any new pipe gas
                project
                during such time; to guarantee that the pipeline networks constructed
                by
                Party B in Sihong Country pursuant to this Agreement accept natural
                gas
                when the long natural gas pipeline reaches Suqian, and the continual
                operation of the pipeline network;

            


    

    


    
      	
            	6.2.2	
              to
                agree that the initial residential installation fee and the gas price
                shall be charged according to bidding documents temporarily, and
                shall be
                no higher than the average price in the urban and surrounding areas
                of
                Suqian and approved by the department in charge of
                pricing.

            


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.2.3

            	
              to
                ensure that Party B shall enjoy the relevant government preferential
                policies relating to business investment and raising of capital,
                urban
                infrastructure construction and land grant in Sihong Country. Considering
                that the Pipeline Project is an urban infrastructure project, any
                government fees to be incurred by Party B for the destruction of
                municipal
                roads for the construction of the condensed gas station and pipeline
                network shall be charged according to the relevant
                regulations.

            


    

    


    
      	6.3	
              Party
                A shall be responsible for assisting Party B in the following
                matters:

            


    

    


    
      	 	
              6.3.1

            	
              the
                application and registration procedures to establish the gas project
                company;

            


    

    


    
      	 	
              6.3.2

            	
              the
                procedures for land use, planning, fire protection and commencement
                of
                project construction;

            


    

    


    
      	 	
              6.3.3

            	
              making
                available water, electricity and transportation and handle other
                infrastructure related matters and assisting Party B to organize
                the
                design and construction of the
                project;

            


    

    


    
      	 	
              6.3.4

            	
              enjoying
                favourable treatment;

            


    

    


    
      	 	
              6.3.5

            	
              timely
                provision of the municipal planning and relevant materials to Party
                B upon
                its request;

            


    

    


    
      	 	
              6.3.6

            	
              implementation
                of warranties in appendices to this
                Agreement;

            


    

    


    
      	 	
              6.3.7

            	
              temporarily
                taking over Party B’s operation and management [of the Pipeline Project]
                in case of emergence;

            


    

    


    
      	 	
              6.3.8

            	
              handling
                public complaints against Party B;

            


    

    


    
      	 	
              6.3.9

            	
              supervising
                Party B to fulfill its legal
                obligations;

            


    

    


    
      	 	
              6.3.10

            	
              investigating
                the cost price of the company, and putting forward a proposal to
                adjust
                gas price.

            


    

    


    
      	6.4	
              Party
                B’s Responsibilities

            


    

     

    
      	
            	6.4.1	
              raising
                funds for the Pipeline Project; starting to construct within 45 days
                following the execution of this Agreement and ensuring a successful
                connection between the gas station and customers of the first stage
                within
                6 months following the start of
                construction;

            


    

    


    
      	 	
              6.4.2

            	
              project
                design and construction, and operation management upon completion
                of the
                Pipeline Project;

            


    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.4.3

            	
              ensuring
                the continuous and safe gas supply except in the case of force majeure.
                

            


    

    


    
      	 	
              6.4.4

            	
              periodic
                inspection, repair and maintenance of gas stations and pipelines
                inside
                and outside residential buildings according to the PRC rules to ensure
                year-round safe operation; organizing safe production and allowing
                supervision and inspection by the relevant governmental departments
                in
                accordance with the safety production regulations and industrial
                safety
                production specifications;

            


    

    


    
      	 	
              6.4.5

            	
              guaranteeing
                that the quality of gas supplied hereunder complies with the relevant
                PRC
                rules;

            


    

    


    
      	
            	6.4.6	
              organizing
                project inspection by the relevant parties upon completion of the
                Pipeline
                Project;

            


    

    


    
      	
            	6.4.7	
              The
                deposit of RMB 500 thousand shall be refunded to Party B after the
                timely
                completion of the first-stage milestones of the project. If Party
                B
                breaches this Agreement and the registered capital is not deposited
                timely, Party A shall keep the deposit of RMB 500 thousand as an
                amercement. 

            


    

    


    
      	
            	6.4.8	
              preventing
                unauthorized and arbitrary termination and suspension of
                operation;

            


    

    


    
      	
            	6.4.9	
              timely
                submission of organizational development plan, annual operational
                plan,
                annual report, and decisions of the
                board;

            


    

    


    
      	
            	6.4.10	
              timely
                maintenance and renovation of production equipments and facilities
                and
                guarantee that the facilities are in good
                condition;

            


    

    


    
      	
            	6.4.11	
              If
                Party B needs to change its name, address and legal representative,
                it
                shall inform Party A in written text in advance and obtain Party
                A’s
                approval first;

            


    

    


    
      	
            	6.4.12	
              strictly
                obeying the promises made in the bidding documents and submitting
                tax in
                accordance with the relevant regulations with no deduction
                granted;

            


    

    


    
      	6.5	
              Party
                A shall terminate the Exclusive Operating Right and take over it
                upon
                occurrence of any of the following behaviors of Party
                A:

            


    

    


    
      	
            	6.5.1	
              Disposition
                of the franchise by transfer, lease, lien and
                etc;

            


    

    


    
      	
            	6.5.2	
              Pledging
                the Company assets without
                authorization;

            


    

    


    
      	
            	6.5.3	
              Mismanagement
                that causes serious quality and safety accidents and seriously affects
                the
                public interest;

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
            	6.5.4	
              Unauthorized
                and arbitrary termination and suspension of operation that affects
                the
                public interest and safety; and

            


    

    


    
      	
            	6.5.5	
              Other
                situations as specified under the applicable laws, regulations and
                rules.

            


    

    


    Chapter
      VII Miscellaneous
      Provisions

    


    
      	7.1	
              Any
                modification to this agreement and its supplemental agreement(s)
                shall not
                be valid and effective unless such modification is in writing and
                signed
                by both parties to this Agreement.

            


    

    


    
      	7.2	
              Should
                any Party fail to perform any of its obligations under this agreement
                or
                materially breach the provisions of this agreement, which causes
                the
                project company to discontinue its operation or be unable to meet
                the
                operational purposes of the Pipeline Project as provided under this
                agreement, the breaching Party shall be deemed to have unilaterally
                terminated the agreement, and the non-breaching Party shall have,
                in
                addition to any right to and claim for damages, the right to apply
                to the
                original approving government authority for the termination of this
                Agreement in accordance with this
                Agreement.

            


    

    


    
      	7.3	
              Should
                any Party be prevented from performing its obligations under this
                agreement due to the occurrence of any event of Force Majeure such
                as
                earthquake, windstorm, flood, fire, war and any other unforeseeable
                event
                whose occurrence and consequences are beyond control, such Party
                shall
                immediately notify the other Party, and within 15 days [following
                the
                occurrence of such event], provide documents stating the details
                of such
                event, the reasons for complete or partial nonperformance by such
                Party
                and documents evidencing the occurrence of such events. Such documents
                shall be issued by a notary public institution located at the place
                where
                such event occurs. The Parties shall negotiate whether to cancel
                the
                entire Agreement or to discharge certain obligations of the non-performing
                party under this agreement based on the extent to which the performance
                of
                this Agreement has been affected.

            


    

    


    
      	7.4	
              Any
                and all disputes arising out of or relating to the performance of
                this
                Agreement shall be settled by the Parties through friendly consultations.
                If the disputes are not resolved through friendly consultations,
                then each
                party agrees to be subject to the jurisdiction of the People’s Court of
                the locality where this Agreement is
                executed.

            


    

    


    
      	7.5	
              In
                the course of judicial procedures, the Parties shall continue to
                perform
                their respective obligations under this Agreement, with the exception
                of
                those parts of this Agreement which are under
                dispute.

            


    

    


    
      	7.6	
              The
                Parties may negotiate and execute documents to supplement this Agreement.
                Such supplemental agreements shall have the same force and effect
                as this
                Agreement. 

            


    

    


    
      	7.7	
              This
                Agreement and any of its supplemental agreements shall not be binding
                upon
                any Party unless signed and sealed by the
                Parties.

            


    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	7.8	
              There
                are four originals of this agreement. Each party holds two
                originals.

            


    

     

    
      	Party A (Seal): Sealed	Party B (Seal): Sealed
	 	 
	Representative (Signature): Signed	Representative (Signature): Signed
	 	 
	Date: July
              23, 2004	Date: July
              23, 2004


    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    SUPPLEMENTAL
      PROVISIONS

    


    Party
      A: Construction
      Bureau of Sihong Country

     

    Party
      B: Beijing
      Zhong Ran Wei Ye Gas Co., Ltd.

    


    Party
      A
      and Party B hereby execute the Supplementary Provisions to the Urban
      Gas Development Agreement for
      Pei Town Sihong County.

    


    
      	1.	
              The
                initial residential installation fees shall be charged in accordance
                with
                Urban
                Gas Development Agreement for
                Pei Town Sihong County,
                and Party B agrees to pay Party A 5% of the initial residential
                installation fee.

            


    

     

    
      	2.	
              Party
                B agrees to pay a fee on Exclusive Operating Right in accordance
                with the
                relevant regulations. (The fee on Exclusive Operating Right will
                not be
                paid temporarily if the PRC government does not propose any standard
                thereof.)

            


    

    


    
      	Party A (Seal): Sealed	Party B (Seal): Sealed
	 	 
	Representative (Signature): Signed	Representative (Signature): Signed
	 	 
	Date: July
              23, 2004	Date: July
              23, 2004


    

     

    *

    
      
        
        

      

      
        8