BEIJING -- China Gas signed a loan agreement Tuesday with the Asian Development Bank (ADB) for $450 million, to finance natural gas use in transportation.

Aiming to cut the polluting effects of vehicles and ships, the loan will help China Gas establish 600 compressed natural gas stations and 200 liquefied natural gas (LNG) stations along major highways with 20 LNG stations for inland water transport.

"More use of new energy is the key to protecting the environment," China Gas's chairman Zhou Si said. "If natural gas replaces diesel, China will cause much less pollution."

China has the world's largest inland water network with huge potential for transportation development using green energy.

ADB support will help diversify China's energy mix, with the country's per capita natural gas consumption at a low level in world terms.

The ADB expects the loan to attract further private capital for natural gas development.