LNGs low impact on the environment and lower cost, combined with the current mature technology, makes it an ideal alternative fuel, especially for long-distance transportation, Yao said.

One sign of Chinas promotion of LNG is the construction of related infrastructure. For example, by the end of 2014, China had 6,502 LNG fueling stations, up 28 percent year-on-year, according to the Chongqing-based China Automotive Engineering Research Institute (CAERI).

LNG is the future, no doubt about it, Zhao Fei, vice general manager at Tongyong Shihua, told Lube Report Asia. Tongyong is a lube supplier based in Xian, Shaanxi province, selling lubes under the Ai Er Te brand name for LNG and compressed natural gas engines.

China is in urgent need of clean energy, which currently means only two options: electricity and natural gas. However, when it comes to cost, natural gas has the ultimate advantage, Zhao said. He added that LNG would replace CNG as the latter is heavier for trucks to carry.

Sales of LNG lubes currently account for about 30 percent of Tongyongs revenue, which in 2014 was around 150 million (U.S. $24 million), but Zhao said in the future the company expects to increase the share to 50 percent.

LNG is a completely dry gas with a much higher ignition point than gasoline and diesel. Therefore LNG engines demand their own lubricants, which should have high lubricity, high thermal stability and better anti-corrosion properties.

We will stay focused on lubes for natural gas because we are confident it will continue to grow fast, Zhao said.

Indeed, while sales of gasoline-powered passenger cars grew only 10.2 percent from 2013 to 2014, sales of LNG-powered vehicles grew 28 percent, according to the CAERI.

Multinationals reacted quickly to the shift toward LNG. Shell, for example, recently launched Rimula R5 NG and R3 NG in China. Swee Chen Goh, vice president of Shell Lubricants for the Asia-Pacific region, said in a written statement that it is vital for the company to supply engine oils that help Chinese customers get the most from the natural gas vehicles, especially as this segment of vehicles is growing exceptionally in China.

Other big players in the market include Sinopec, PetroChina and Total.

However, LNG lubes is no easy business because the buyers are usually automakers and bus fleets, which pose a big challenge for consumer-targeting lube producers like Nanjing-based Lopal, which keeps a minor LNG lube business.

Right now we are just observing the market, said a source at Lopal, who asked not to be identified. Although LNG lube sales are small in our business, we dont want to give it up because we think it has some potential in the future.

While it seems the LNG vehicle sector holds great potential, there are uncertainties, cautioned Yu Qing, analyst at Shanghai-based research firm Enmore.

Among these risks is price, a major advantage of LNG. Take Shandong province as an example. The fall of oil price led to a price cut on gasoline, which now costs 5.9 per liter, compared with 4.97 per cubic meter for local LNG, which experienced a price hike to 5.22 until June before the government intervened.

Also, long-haul trucks, the biggest user of LNG, have been affected by Chinas stagnant transportation industry in recent years, and therefore they are not running as long as before, said Yu. She added that because the Chinese government has not yet made it clear if taxis should all change to LNG engines, most local governments are not pushing it.

However, she is optimistic about the shift to LNG-powered.

We see the growth of LNG buses has been significant in recent years. It may not replace heavy-duty trucks soon in terms of LNG consumption, but it for sure is the rising star in the sector, Yu said.