In 2000 -2008 years of China's natural gas consumption of the average growth rate in 16%, according to the growth estimates, in 2009 is expected to reach 90000000000 cubic meters of natural gas consumption. The future of domestic natural gas demand will continue strong, mainly because: 1) characteristics of high calorific value, clean natural gas has, along with the improvement of people's living standard, will increase the demand for clean energy: at present domestic city gas pipeline gasification rate of only about 42%, improved; 2) natural gas price adjustment of domestic lag, natural gas and alternative energy is relatively cheap, and further promote the increase of natural gas demand; 3) strengthen the city around the energy-saving emission reduction, environmental protection requirements increase, city coal or oil fired boilers to natural gas space is large, especially in economically developed regions. Domestic natural gas supply and demand contradiction prominent be imperative, natural gas price reform: to alleviate the domestic natural gas supply shortages, imported LNG volume is growing: according to the current domestic Principal company LNG import contract amount, to the 2012 LNG imports will be equivalent to 21500000000 cubic meters, accounting for about 10% of current demand.

Natural gas price adjustment is helpful for natural gas consumption structure is reasonable and the upstream exploration investment increased: in 2007 the domestic natural gas consumption structure, chemical raw materials industry accounted for 32% of natural gas consumption, resulting in high quality natural gas resources are unreasonable use, through the price lever to regulate the these needs, but also conducive to the exploration and an increase in investment, increase effective supply.

Shenzhen natural gas (601139.SS) is located in the economically developed special economic zones, the future development potential: 1) in 2010, industrial and commercial users of residents consumption growth is expected to more than 40%: Shenzhen city has a population of about 8900000, the current pipeline gas gasification population of only about 2500000, the gasification rate is about 27%.

2) we believe that the Shenzhen area has a strong price affordability: Shenzhen per capita GDP has more than $13000, Shenzhen in 2009 per capita disposable income is expected to be 30000 yuan, per capita consumption of gas volume of 210 cubic meters / year estimates, increased by 0.5 and 1 yuan / cubic respectively, the gas consumption of disposable income was no proportion change, still maintained at about 3%.

3) natural gas price adjustment in Shenzhen area more timely, and alternative energy prices are relatively reasonable, is conducive to the stability of natural gas industry profit. In the second half of 2009 as an example, 1 yuan to buy the gas calorific value is about 73% of fuel oil, equivalent to LPG, we think that a more reasonable.