[Stamp
      Tax]

     

    URBAN
      GAS DEVELOPMENT AGREEMENT

    


    Party
      A: Committee
      of Shangzhuang, Luquan Country

    


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

    


    Date: August
      07, 2003

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    URBAN
      GAS
      DEVELOPMENT AGREEMENT

    


    Contract
      SN: 

    Signatory
      Location: 

    


    Party
      A: Committee
      of Shangzhuang, Luquan Country

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

     

    Chapter
      I General
      Principles

    


    
      	1.1       
                          
                 	
              WHEREAS,
                (i) the Committee of Shangzhuang, Luquan Country agrees to authorize
                Party
                B the exclusive right to develop, construct and operate the pipeline
                gas
                project in the urban area of Shangzhuang, Luquan Country (the
                “Pipeline
                Project”),
                (ii) based on the Contact
                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 Shangzhuang,
                Luquan Country (the “Agreement”).

            


    

    


    Chapter
      II Parties

    


    
      	2.1 
                     	
              Construction
                Bureau of Shangzhuang, Luquan Country (hereinafter referred to as
                “Party
                A”)

              Legal
                address:

              Tel.:  (0311)
                2226770

            


    

    


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

              
                Legal
                  address: Caizhiguoji Building No.
                  18 Zhongguancundong Street Haidian
                  District

                Tel.:
                  (010) 82600041

              

            


    

    
    

    Chapter
      III Establishment
      of the Company

    


    
      	3.1    
                   	
              Party
                A, authorized by and on behalf of the Government of Shangzhuang,
                Luquan
                Country, agrees that Party B will be responsible for the Pipeline
                Project
                of Shangzhuang, Luquan Country and the total financing of the Pipeline
                Project.

            


    

    


    
      	3.2  
                         	
              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 Shangzhuang, Luquan 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. 

              


      

    

    


    
      
        
        

      

      
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    Chapter
      V Exclusive
      Operating Right

    


    
      	5.1 
                          	
              Party
                A authorizes Party B to execute the pipe natural gas project within
                Shangzhuang, Luquan Country and guaranties that Party B has the exclusive
                right to develop and construct the pipe gas project within Shangzhuang,
                Luquan Country for 50 years.

            


    

    


    
      
        	5.2	
                Party
                  A will consider extending the 50 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. The Pipeline Project is designed for supply gas to
                an
                aggregate of 15,000 units with the total investment of approximately
                RMB
                50 million. The first stage of the Pipeline Project is to supply
                for 3000
                units (the “First Stage”). Party B agrees that it shall complete the First
                Stage and start gas supply to the first customers within 6 months,
                provided, that the actual number of the households is not lower than
                1000.
                Party B agrees that it shall construct and improve the pipeline network
                in
                stages according to users’ requests after the First Stage
                completes.

            


    

    


    
      	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 natural
                gas
                project within the urban planned area of Shangzhuang, Luquan Country
                for
                50 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 Shangzhuang, Luquan Country pursuant to
                this
                Agreement accept natural gas when the long natural gas pipeline reaches
                Shangzhuang, Luquan Country, and the continual operation of the pipeline
                network; not to authorize any other company to
                operate;

            


    

    


    
      	
            	6.2.2	
              to
                guarantee that the initial residential installation fee shall be
                no higher
                than RMB 2,000/unit for a household and the residential gas price
                shall be
                RMB 2.2 per cubic meter. The initial residential installation fee
                for
                Shangzhuang villagers shall be RMB 1,800/unit for each household
                and the
                residential gas price shall be RMB 2.1 per cubic meter. The company
                guarantees that the initial residential fee and the gas price for
                Shangzhuang villagers shall be no higher than the price mentioned
                above
                and shall be adjusted according to the changing
                market.

            


    

    


    
      
        
        

      

      
        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 Shangzhuang, Luquan
                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 deducted or
                exempted;

            


    

    


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

            


    

    


    
      	
            	6.3.1	
              the
                procedures for land use, planning, fire protection and commencement
                of
                project construction;

            


    

    


    
      	
            	6.3.2	
              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;

            


    

    


    
      	
            	6.3.3	
              application
                of all potentially available tax and administrative fee waivers and
                deductions;

            


    

    


    
      	
            	6.3.4	
              timely
                provision of the municipal planning and relevant materials to Party
                B upon
                its request;

            


    

    


    
      	
            	6.3.5	
              implementation
                of warranties in appendices
                to this Agreement.

            


    

    


    
      	6.4	
              Party
                B’s Responsibilities 

            


    

    


    
      	
            	6.4.1	
              raising
                funds for the Pipeline Project;

            


    

    


    
      	
            	6.4.2	
              project
                design and construction, and operation management upon completion
                of the
                Pipeline Project;

            


    

    


    
      	
            	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;

            


    

    


    
      	
            	6.4.5	
              guaranteeing
                that the quality of gas supplied hereunder complies with the relevant
                PRC
                rules;

            


    

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

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

            


    

    


    
      	
            	6.4.7	
              signing
                specific gas supply contracts with the
                customers.

            


    

    


    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.

            


    

    


    
      
        
        

      

      
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      	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: August
              07, 2003	Date: August
              07, 2003


    

     

    
      
        
        

      

      
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