First Day of Trading

Green Dragon Gas Ltd
17 August 2006



This announcement is not for release, publication or distribution in or into the
            United States, Canada, Japan, Australia or South Africa.


17 August 2006


                             GREEN DRAGON GAS LTD.
                       ('Green Dragon' or the 'Company')


           DEALINGS COMMENCE ON AIM FOLLOWING US$25.1 MILLION PLACING

                     MARKET CAPITALISATION - US$525 MILLION

Green Dragon Gas Ltd., the Chinese coal bed methane business, today announces
the placing of 4,513,413 new ordinary shares of US$0.0001 per share at a placing
price of US$5.56 per share, raising gross proceeds of $25.1 million, and its
admission to trading on the AIM market of the London Stock Exchange, under the
symbol GDG.

Green Dragon's market capitalisation will be US$525 million following admission
at the Placing Price.

Green Dragon has interests in five coal bed methane ('CBM') production sharing
contracts covering a total of approximately 1.6 million acres in China with
estimated total gas in place of approximately 16.6 trillion cubic feet.

Smith & Williamson Corporate Finance Limited is nominated adviser and broker to
the Company.


ADMISSION STATISTICS

Placing Price per Ordinary Share                                       US$5.56
Number of Placing Shares                                             4,513,413
Number of Ordinary Shares in issue following the Placing            94,513,413
Market capitalisation of the Company at the Placing Price       US$525 million
Gross proceeds of the Placing                                  US$25.1 million
Net proceeds of the Placing                                    US$22.2 million


Commenting on the placing and admission to AIM, Green Dragon's Chairman and
Chief Executive, Randeep Grewal, said:

'2007 promises to be a landmark year for CBM and its contribution to the Chinese
energy supply. Green Dragon is a pioneer, one of the largest foreign partners of
the Chinese government in CBM and ideally positioned to capitalise on the
country's increasing demand for energy. This listing is an important and timely
milestone in our growth driven strategy.

Green Dragon's vision is to be the leader in providing the Chinese population
with environmentally friendly gas resources through the substantial commercial
development of China's CBM resources.'

The Company's admission document (the 'Admission Document') is available from
the offices of Smith & Williamson Corporate Finance Limited. Further information
is available on the Company's website: www.greendragongas.com


For further information, please contact:

Randeep Grewal
Chairman and Chief Executive, Green Dragon Gas Ltd.
[phone]

Tim Thompson/ Mark Edwards/ Nick Melson
Buchanan Communications
0207 466 5000

Dr Azhic Basirov/ David Jones
Smith & Williamson
020 7131 4000

ABOUT GREEN DRAGON

GREEN DRAGON'S BUSINESS
Green Dragon is the parent company of Greka Energy (International) BV ('Greka'),
which was incorporated in 1992. Following Admission, Green Dragon will be 95.2
per cent. owned by Randeep Grewal, Chairman and Chief Executive Officer.

Greka, a pioneer in the appraisal and development of coal bed methane ('CBM')
projects in China, has the benefit of five production sharing agreements ('PSC')
with China United Coal Bed Methane Corporation Limited ('CUCBM') in relation to
CBM blocks in China covering a total of approximately 6,700 km2 (approximately
1.6 million acres). This represents one of the larger areas granted by CUCBM in
China operated by a foreign CBM company and was secured alongside US majors
including Texaco, Phillips and Arco.

Each of the PSCs is for a term of 30 years comprising an exploration period, a
development period and a production period of up to 20 years, save in the case
of Shizhuang South which has a preparation period in place of the exploration
period to take account of the work already conducted by CUCBM in exploring the
blocks covered by the PSC.

Information on the estimated gas in place (taken from Scott Pickford Limited's
report which is contained in the Admission Document) and areas covered by the
PSCs is set out in the table below:

                                    Gas in place            Approximate area
PSC                                          Bcf           km2           acres
                                                                       (million)
Shizhuang South                            2,640           455             0.1
Shizhuang North                            2,660           375             0.1
Fengcheng                                  1,566         1,541             0.4
Qinyuan                                    8,580         3,665             0.9
Panxie East                                1,110           584             0.1
                                          --------      --------         -------
                                          16,556         6,620             1.6


The projects at Shizhuang South and Fengcheng are at a more advanced stage in
terms of CBM reserves than the other three projects and the Company expects to
drill over 20 wells at each of these sites by the end of 2007; gas is currently
being produced at Shizhuang South at a rate of over 265,000 cu ft per day on a
pilot basis.

Greka is the operator of all the PSCs referred to in the table above and has a
60% interest in all of the projects except Fengcheng where its interest is 49%.
As operator of the projects, Greka controls the implementation of the work
programs agreed by the joint management committees and the cash flows.

COAL BED METHANE

Coal bed methane is methane which exists within the carbon lattice of coal at a
molecular level; this differs from conventional gas fields where gas is
generated by hydrocarbon source rocks/materials and then migrates through rock
strata before being trapped in a porous and permeable reservoir rock such as a
sandstone. CBM is generally held in place by water pressure.

Extracting CBM involves drilling wells into the coal seam, perforating and then
fracturing the coal seams to increase local permeability. Water is then pumped
out of the coal seam reducing the pressure and allowing the gas to leave the
coal and migrate through fracture systems into the well.

Historically methane produced by coal seams has been viewed as an unwelcome
by-product of coal mining and used to be treated as a hazardous waste product,
however more recently the increased demand for natural gas, improved extraction
technology and higher gas prices have led to the commercial exploitation of CBM
reserves, for example in the United States where CBM accounted for approximately
8% of domestic gas production in 2004.

THE MARKET

The Chinese economy has been growing strongly for a number of years and in 2005
experienced GDP growth of 9.8%. This growth is expected to continue.

The expansion of the Chinese economy has led to rapidly increasing demand for
energy resources which outstrips supply and the country is dependent on oil
imports to meet its energy needs. Coal accounts for around 68% of China's energy
consumption and is expected to remain the most important source of energy. Gas
currently accounts for around 3% of demand in China.

The Chinese CBM sector is dominated by state-owned firms and China's significant
CBM resources are largely controlled by CUCBM. It has been estimated that total
CBM resources in China are in the range of 1,000 - 1,200Tcf.

In 1998, CUCBM began to sign PSCs for selected blocks in order to attract
foreign technology and expertise to assist in the development of China's CBM. A
total of 26 such contracts have been signed by CUCBM with foreign companies to
date. China's CBM activities accelerated in 2005 when over 300 wells were
drilled.

The Company believes that there is a high level of demand for CBM in the
provinces where its blocks are situated or in adjacent provinces. For example,
Nanchang city (the capital of Jiangxi province) is only approximately 50 km from
the Fengcheng block and has been reported to be facing an energy shortage.

DEVELOPMENT PLAN

Green Dragon's well-drilling programme for 2006 and 2007 is focused on two
projects: Shizhuang South and Fengcheng. In the case of Shizhuang South, the
Company is planning to submit an ODP for approval by the JMC by the end of 2006.
When the ODP is approved by the JMC and the relevant state authorities, the
development period will begin. In the case of Fengcheng future exploration will
be concentrated in the east of the block, the site of most of the area's coal
mining activity. Appraisal work will continue at the other projects through
2006. The drilling programme for 2007 will be determined when the results of the
appraisal work have been evaluated.

PLACING AND USE OF PROCEEDS

The Company has raised approximately US$22.2 million (net of expenses) pursuant
to the Placing. Green Dragon has 94,513,413 Ordinary Shares in issue and a
market capitalisation of approximately US$525 million at the Placing Price.

The Placing is of new Ordinary Shares and no existing Ordinary Shares have been
sold under the Placing.

The net proceeds of the Placing will be applied principally towards the
Company's appraisal, exploration and development program under its five PSCs as
described in the section entitled 'Development plan' above. The Company expects
to fund further appraisal and development work after 2007 from trading cash
inflows, debt funding, farm-in(s) and/or the issue of further Ordinary Shares as
appropriate in the circumstances.

DIRECTORS AND SENIOR MANAGEMENT

Directors

Randeep Grewal (41), Chairman and Chief Executive
Randeep Grewal has been Chairman and Chief Executive Officer of Greka since
2001. He is also Chairman and Chief Executive Officer of Greka Integrated Inc.,
a US-based heavy oil and gas transportation, refining and real estate business
with interests in oil and gas properties and refining assets valued at
approximately US$750 million. From April 1997 to September 1997, Mr Grewal
served as Chairman and Chief Executive Officer of Horizontal Ventures, Inc., an
oil and gas horizontal drilling technology company. In August 1997, Horizontal
Ventures merged with Petro Union Inc. and Mr Grewal became Chairman and Chief
Executive Officer of the reorganised company. This company merged in turn with
Saba Petroleum Corporation in March 1999 to form Greka Energy Corporation. From
1993 to 1996, Mr Grewal was Corporate Vice President for the Rada Electronic
Industries Ltd with principal responsibility for its global expansion and
related operations. He has also been involved in various joint ventures,
acquisitions, mergers and reorganisations since 1986 in the United States,
Europe and the Far East with a range of businesses. Mr Grewal has a BSc in
Mechanical Engineering from Northrop University.

Chen Shong Woo (37), Chief Financial Officer
Chen Shong Woo joined the Company in May 2006. From 2001 to April 2006, he
served as Chief Financial Officer of SHV Gas NV (China), where he led the
finance team in financial planning, budgeting and control. From 1999 to 2000, he
was Finance Director at CTA Makro Commercial Ltd in Beijing and from 1996 to
1998 he was internal audit manager for Makro Cash & Distribution in Malaysia.
From 1994 to 1996 he was Audit Junior/Audit Senior at KPMG Peat Marwick in Kuala
Lumpur. Mr Chen is a Fellow of the Association of Chartered Certified
Accountants, having qualified as an ACCA in 1993. He studied Financial
Accounting at Tunku Abdul Rahman College, Kuala Lumpur, graduating in 1993.

David Turnbull (51), Non-executive Director
David Turnbull is Executive Chairman of Allco Finance (Asia) Limited based in
Hong Kong specialising in asset based financing in shipping, rail, aviation,
property and small ticket leasing. Prior to joining Allco Finance (Asia)
Limited, Mr Turnbull spent 30 years, until January 2006, with the Swire Group
holding a variety of posts, including, more recently, Chairman of Swire Pacific
Limited, Cathay Pacific Airways Limited and John Swire & Sons (H.K.) Limited. Mr
Turnbull is non-executive Chairman of HAECO (Hong Kong Aircraft Engineering
Company Limited) and a non-executive director of Pacific Basin Shipping Limited.
Mr Turnbull has an MA in Economics from Cambridge University.

Stewart John OBE (67), Non-executive Director
Stewart John has over 50 years experience in the aviation industry. He worked
for British Airways (BOAC/ BA) for 22 years, leaving in 1977 to join Cathay
Pacific where he served as engineering director on the main board from 1980
until 1994. Since 1994 he has been a non-executive director of a number of
companies including Rolls-Royce Commercial Aero Engines, British Aerospace
Aviation Services, Airlines of Britain Holdings and Newall Aerospace. Currently,
he is a non-executive director of Taikoo (Xiamen) Aircraft Engineering Company
Limited (which he founded in 1993), a board trustee of Brooklands Museum Trust
and a director of Thrust Logistics Company Limited.

Gong Da Bing (54), Non-executive Director
Gong Da Bing joined Greka in 1999 and has been Senior Advisor since 2001. She
has 27 years of international business experience. From 1992 to 1999 she was
managing director of the Chinese office of Frontanic Co., a private
international trading organisation. From 1989 to 1992 she was the chief
representative in China of Koor Trade Limited. From 1978 to 1989 she was the
manager for joint venture operations and import and export business for
Machinery & Equipment Import & Export Corporation. From 1975 to 1978 she was a
business negotiator for the Beijing Foreign Trade Bureau, Department of
Machinery Import & Export. Madam Gong studied English at the Beijing Second
Foreign Language University and has a Masters Degree in Comparative Law from the
University of Illinois, USA.

Senior management

Wai Ho (Terry) Siu (48), Business Development Director Designate
Terry Siu has served as Business Development Director of Greka Energy Ltd since
2005 and acts as a consultant to Greka. It is intended that he will join Greka
as Business Development Director following Admission. He has 22 years of
experience in the Chinese petrochemical, energy and industrial sectors. From
1989 to 2003 he worked at Atofina (China) Investment Company Ltd as General
Manager and Senior Project Manager. From 1984 to 1989 he was the Assistant
Manager in the Plastics Department of United Oversea Enterprises Ltd, Hong Kong.
Mr Siu has a BSc in Chemistry from the University of Hong Kong, a Diploma in
Management Studies from the Hong Kong Management Association and a Masters
degree in Financial Management from MGSM, Macquarie University.

Mahmood (Mel) Lone (58), Operations Director
Mel Lone joined Greka Energy Corporation in 1999 and has been General Manager
and Chief Representative of Greka in China since 2001. He has been actively
involved in the development of CBM at Greka. From 1995 to 1998 he worked in the
US and Indonesia for Saba Exploration Company and was Vice President of Saba
Exploration and Saba International Limited from 1997. From 1987 to 1995 he
worked in international trading and real estate in Toronto, Canada. Mr Lone has
a BA in Economics and History from University of the Punjab, Pakistan.

Zuo Kefeng (41), Chief Engineer
Zuo Kefeng has been chief engineer at Greka since May 2006. Mr Zuo has 23 years'
experience in the oil sector. He worked for Huabei Petroleum Administration
Bureau for 18 years where his last position was Deputy Administration Manager.
He joined Haubei Emirates Engineering LLC in 2002 and held the positions of
Engineer, Marketing Manager and General Manager. Mr Zuo was approved as an IADC
WellCAP instructor in February 2005.

Zhen An (49), Chief Geologist
Zhen An has worked as a senior geologist since 1994 and joined Greka in April
2006 as chief geologist. Mr An has over 10 years experience in CBM exploration.
He was appointed by the Geology Exploration Institution of Coal Field Geology
Bureau in Sichuan Province as specialist consultant and project supervisor in
2003. He has worked at the Geological Exploration Team No. 107 of Northeast Coal
Geology Bureau in the roles of director of geological department and head of
geological research department. Mr An received a bachelor degree from Jiaozuo
Mineral Industry Institute in 1982.

SUMMARY FINANCIAL INFORMATION

The Grecogas group comprises the Company, its 100% subsidiary Grecogas Limited
and Greka, which is wholly- owned by Grecogas Limited. The Company was formed in
March 2006 to acquire Grecogas Limited and is a holding company with no trading
activity. Set out below is a summary of the financial record of Grecogas Limited
for the three year period ended 31 December 2005 which has been extracted
without material adjustment from the financial information set out in the
admission document.

                                              Year ended 31 December
                                          2005           2004             2003
                                          US$m           US$m             US$m
Profit and loss account
Revenues                                     -              -                -
Loss after taxation                        0.7            0.5              0.2

Balance sheet
Non-current assets                        29.4           24.5             20.2
Current assets                             0.3            0.2              0.1
                                        --------        -------         --------
                                          29.7           24.7             20.3
                                        --------        -------         --------

Non-current liabilities                   29.5           23.2             20.5
Current liabilities                        1.7            2.3              0.0
Equity                                    (1.5)          (0.8)            (0.2)
                                        --------        -------         --------
                                          29.7           24.7             20.3
                                        --------        -------         --------

This announcement does not constitute, or form any part of, any offer or
invitation to sell, allot or issue, or any solicitation of any offer to purchase
or subscribe for, any securities, nor shall it (or any part of it) or the fact
of its distribution form the basis of, or be relied upon in connection with, or
act as any inducement to enter into, any contract or commitment for securities,
which should only be made on the basis of information contained in the admission
document issued in connection with the Placing.

The issuance of securities in the Placing has not been and will not be
registered under the applicable securities laws of the United States, Canada,
Australia or Japan. The distribution of this announcement in other jurisdictions
may be restricted by law and therefore persons into whose possession this
announcement comes should inform themselves about and observe any such
restriction. Any failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdictions.






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