China is the world's second largest oil market but is also the largest growth market for natural gas.  The demand in China for this clean and economically attractive fuel has far exceeded all expectations, particularly for use in households, factories and vehicles.  China has large domestic reserves of conventional gas but it has been only over the past decade that the necessary field developments and pipeline infrastructure have been installed to bring this gas to the major cities such as Beijing.  China is also beginning to import gas as shipped LNG (Liquefied Natural Gas) and is planning to import piped gas from its neighbours.  However a vital future source will be the vast domestic reserves of unconventional gas such as coal bed methane (CBM). Fortune Oil's strategy is to create an independent integrated gas company: developing our own resources of unconventional gas; sourcing gas from other producers; distributing this gas through pipelines, LNG or CNG; and then retailing this gas to end-users through our city gas companies or CNG vehicle stations.  We already have many necessary pieces of the jigsaw in place, such as China's first LNG production plant and the largest CNG station in Beijing.  Currently there are no companies in China with a regionally integrated gas business. Fortune Oil's investments in gas were initially through Fu Hua, an 80% owned joint venture with the PetroChina affiliate which operates the pipelines supplying Beijing.  Gas from these trunk pipelines is supplied by our spur pipelines or our CNG operations to our city gas companies.  In 2007 we acquired a 51% interest in Henan Fortune Green Energy Development Company which operates an LNG manufacturing plant, CNG retail stations and a fleet of LNG/CNG tankers and has a gas supply guarantee from Sinopec. In Shanxi Province we have a joint venture with the provincial government as a platform for collecting and marketing coal seam gas.  Shanxi has one of the world's largest sources of coal and coal seam gas, including the coal bed methane block controlled by Fortune Oil at Liulin.  The government has a clear policy of encouraging private and foreign investment in the extraction and proper utilisation of gas from coal seams, particularly as there is increasing emphasis on improving coal mine safety, utilising domestic clean energy resources and protecting the environment.