Partnership with Guangdong Natural Gas Grid Co., Ltd.

In April 2018, Changfeng Energy and Guangdong Natural Gas Grid Co., Ltd. (“Guangdong Grid”) signed a MOU to jointly pursue natural gas pipeline projects in Guangdong Province, the PRC. Guangdong Grid is a joint venture set up by the China National Offshore Oil Corporation (“CNOOC”), Sinopec Group, PetroChina Company Limited and Guangdong Yudean Group Co., Ltd., at a registered capital of RMB3.98 billion.

Guangdong Grid, as the exclusive gas transmission operation in Guangdong Province, delivered up to 19.65 billion cubic meters of natural gas to cities in the province in 2017. Currently, the Company is finalizing details of the partnership with the intention of creating a joint venture to develop, invest in and operate city natural gas projects in Guangdong Province.

Market Potential – 13th Five-year Plan of China

Guangdong Grid has to construct natural gas trunk pipelines in the Pearl River Delta, Eastern and Northern Guangdong, and four regional Western Guangdong pipeline networks that cover 21 cities in Guangdong Province and achieve full pipeline coverage by 2020.

The finished Guangdong pipeline network will stretch more than 3,200km, commanding a total investment of RMB470 million.