SUBORDINATION AND INTERCREDITOR AGREEMENT

THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this “ Agreement ”) is entered into as of this August 19, 2008, by and among the noteholders under the Subordinated Debt Documents (as defined herein) being limited to CASTLERIGG PNG INVESTMENTS LLC. on the date hereof (individually, a “ Subordinated Creditor ” and collectively, the “ Subordinated Creditors ” and, if there is only one such Subordinated Creditor, the term “Subordinated Creditors” and all variations  thereof; e.g. “each Subordinated Creditor,” as and when used hereinbelow, shall mean and refer to that one Subordinated Creditor); PNG VENTURES, INC., a Nevada corporation (the “ Company ”); and FOURTH THIRD LLC, a Delaware limited liability company (“ Fourth Third ”), as Agent for all Senior Lenders party to the Senior Credit Agreements described below and as a Senior Lender.

A.           The Agent, Senior Lenders (as hereinafter defined) and the Company, as “Parent” and a “Loan Party” thereunder, have entered into an Amended and Restated Credit Agreement, dated as of June 26, 2008 (as the same may be amended, supplemented or otherwise modified from time to time as permitted hereunder, the “ Senior Credit Agreement ”), pursuant to which, among other things, Senior Lenders are making certain loans and financial accommodations to New Earth LNG, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“ Borrower ”).  All obligations of Borrower arising under the Senior Credit Agreement are guaranteed by the Company under a Guarantee and Collateral Agreement, dated as of June 26, 2008, executed by the Company (among others) in favor of the Agent (as the same may be amended, supplemented or otherwise modified from time to time as permitted hereunder, the “ Senior Guarantee and Collateral Agreement ”).  All of the obligations of the Company to Agent and Senior Lenders under the Senior Credit Agreement, the Senior Guarantee and Collateral Agreement and the other Senior Debt Documents (as hereinafter defined) are secured by the Collateral (as hereinafter defined).

B.           Pursuant to a Securities Purchase Agreement, dated as of August 19, 2008 (as the same may be amended, supplemented or otherwise modified from time to time as permitted hereunder, the “ Securities Purchase Agreement ”), effective on or about the date hereof,  the Company has issued to the Subordinated Creditors its Subordinated Convertible Notes, aggregating $3,188,235 in principal amount (as the same may be renewed, extended, amended, supplemented or otherwise modified from time to time as permitted hereunder, individually and collectively, the “ Subordinated Notes ”).

C.           Fourth Third and Subordinated Creditors have agreed to enter into this Agreement for the purpose of setting forth the relative rights and priorities of the Agent, Senior Lenders and Subordinated Creditors under the Senior Debt Documents and the Subordinated Debt Documents (as hereinafter defined).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows:

“ Agent ”   shall mean Fourth Third LLC, as Agent for the Senior Lenders, or any other Person appointed by the holders of the Senior Debt as administrative agent for purposes of the Senior Debt Documents and this Agreement.

“ Bankruptcy Code ”   shall mean Chapter 11 of Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder.

“ Business Day ” shall mean “Business Day” as defined in the Senior Credit Agreements.

“ Collateral ” shall mean (i) all real and personal property of the Company in which a lien, security interest or mortgage has been or hereafter may be granted or created in favor or the Agent or any Senior Lender as collateral security for the payment or performance of any Senior Debt or any Subordinated Debt.

“ Collection Action “ shall mean (a) to initiate or join in any suit, action or proceeding against the Company or any Collateral to enforce payment of or make demand for all or any part of the Subordinated Debt, (b) to seek monetary damages against the Company, or (c) to take from or for the account of the Company, by set-off or in any other matter, all or any part of any moneys which may now or hereafter be owing by the Company with respect to the Subordinated Debt.

“ Company ” shall have the meaning given to such term in the preamble.

“ Distribution ” means, with respect to any indebtedness or obligation, (a) any payment or distribution by the Company (including the Company in its capacity as a debtor or debtor-in-possession in a Proceeding) of cash, securities or other property, by set-off or otherwise, on account of such indebtedness or obligation or (b) any redemption, purchase or other acquisition of such indebtedness or obligation by the Company.  The term “ Distribution ” shall expressly not include, however, any Common Stock (as defined in the Securities Purchase Agreement) (i) into which, pursuant to the Securities Purchase Agreement, the indebtedness represented by the Subordinated Note may be converted, and (ii) issued pursuant to the exercise of the Warrants (as defined in the Securities Purchase Agreement).

“ Enforcement Action ” shall mean (a) to take from or for the account of the Company by set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing by the Company with respect to the Subordinated Debt, (b) to sue for payment of, or to initiate or participate with others in any suit, action or proceeding against the Company to (i) enforce payment of or to collect the whole or any part of the Subordinated Debt or (ii) commence judicial enforcement of any of the rights and remedies under the Subordinated Debt Documents or applicable law with respect to the Subordinated Debt, (c) to notify account debtors or directly collect accounts receivable or other payment rights of the Company or (d) take any action under the provisions of any state or federal law, including, without limitation, the UCC, or under any contract or agreement, to enforce against, foreclose upon, take possession of or sell any property or assets of the Company or any Collateral; provided , however , that the term “ Enforcement Action ” shall not include (i) an exercise of rights and remedies for specific performance or equitable relief to compel the Company to comply with any non-payment obligations under the Subordinated Debt Documents so long as it is not accompanied by (a) a Collection Action or (b) a claim for relief or any other Enforcement Action against or with respect to any Collateral, or (ii) any suit or action initiated or maintained by the Subordinated Creditors solely to prevent the running of any applicable statute of limitations or other similar restriction on claims.

“ Fourth Third   Loan Documents ”   shall mean the Senior Credit Agreement and all other agreements, documents and instruments executed from time to time in connection therewith, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

“ Permitted Refinancing ”   shall mean any refinancing of the outstanding Senior Debt under the Fourth Third   Loan Documents provided that the financing documentation entered into by the Company in connection with such Permitted Refinancing   constitutes Permitted Refinancing Senior Debt Documents.

“ Permitted Refinancing Senior Debt Documents ”   shall mean any financing documentation which replaces the Fourth Third Loan Documents and pursuant to which the outstanding Senior Debt under the Fourth Third Loan Documents is refinanced, as such financing documentation may be amended, supplemented or otherwise modified from time to time in compliance with this Agreement, but specifically excluding any such financing documentation to the extent that it contains provisions violating Section 3.1 hereof.

“ Person ”   means any natural person, corporation, general or limited partnership, limited liability company, firm, trust, association, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity.

“ Proceeding ” shall mean any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person.

“ Reorganization Subordinated Securities ” shall mean any debt or equity securities issued in substitution of all or any portion of the Subordinated Debt, in each case that are subordinated in right of payment, performance, liens and otherwise to the Senior Debt (or any debt and/or equity securities issued in substitution of all or any portion of the Senior Debt) to at least the same extent that the Subordinated Debt (and the liens securing the Subordinated Debt) are subordinated to the Senior Debt (and the liens securing the Senior Debt) pursuant to the terms of this Agreement.

“ Secured Claim ” shall mean a “secured claim” within the meaning of such term in Section 506(a) of the Bankruptcy Code (as presently in effect).

“ Senior Debt ” shall mean all obligations, liabilities and indebtedness of every nature of the Company under the Senior Debt Documents from time to time owed to Agent or any Senior Lender under the Senior Debt Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, credit exposure and related obligations arising from any hedging agreements, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under the Bankruptcy Code together with (a) any amendments, modifications, renewals or extensions thereof to the extent not prohibited by the terms of this Agreement and (b) any interest accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest is an allowed claim; provided , however , that in no event shall the principal amount of the Senior Debt (excluding any interest or fees added to principal)  exceed the amount that is the excess of (i) $38,000,000, over (ii) the amount of any prepayments or repayments under the Senior Credit Agreement (specifically excluding, however, any such prepayments or repayments occurring solely as a result of a Permitted Refinancing) (the “ Senior Debt Limit ”).  The sum of (i) the amount of principal outstanding under the Senior Debt Documents that is in excess of the Senior Debt Limit (including pursuant to any refinancing other than a Permitted Refinancing), together with interest on such excess principal and fees attributable to such excess principal shall not be considered Senior Debt for purposes of this Agreement (such amount, “ Excluded Senior Debt ”).

“ Senior Debt Documents ” shall mean the Fourth Third Loan Documents and, after the consummation of any Permitted Refinancing, the Permitted Refinancing Senior Debt Documents.

“ Senior Default ” shall mean any “Event of Default” under the Senior Debt Documents resulting from the failure of the Borrower to pay, on a timely basis, any principal, interest, fees or other obligations under the Senior Debt Documents, including, without limitation, any default in payment of Senior Debt after acceleration thereof.

“ Senior Lenders ”   shall mean the holders of the Senior Debt.

“ Subordinated Debt ” shall mean all of the obligations of the Company under the Subordinated Debt Documents to the Subordinated Creditors or evidenced by or incurred pursuant to the Subordinated Debt Documents.

“ Subordinated Debt Documents ” shall mean (i) the Securities Purchase Agreement, the Subordinated Note, the Warrants and all other documents, agreements and instruments now existing or hereinafter entered into by the Company in connection therewith, and (ii) each document, if any (“ Subordinated Collateral Documents ”) which now or hereafter may be executed and delivered by the Company that creates a lien, security interest or mortgage on any property to secure all or any portion of the obligation, indebtedness or liabilities of the Company under any of the documents referred to in clause (i) of this definition.

“ UCC ” shall mean the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

2.1.   Subordination of Subordinated Debt to Senior Debt .   The Company covenants and agrees, and each Subordinated Creditor by its acceptance of the Subordinated Debt Documents (whether upon original issue or upon transfer or assignment) likewise covenants and agrees, notwithstanding anything to the contrary contained in any of the Subordinated Debt Documents, that the payment of any and all of the Subordinated Debt shall be subordinate and subject in right and time of payment, to the extent and in the manner hereinafter set forth, to the prior payment in full in cash (or other consideration acceptable to Agent in its sole discretion) of all Senior Debt (but not any Excluded Senior Debt).  Each holder of Senior Debt, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Debt in reliance upon the provisions contained in this Agreement.

2.2.   Liquidation, Dissolution, Bankruptcy .   In the event of any Proceeding involving the Company:

(a)   All Senior Debt shall first be paid in full in cash (or other consideration acceptable to Agent in its sole discretion) before any Distribution (other than Reorganization Subordinated Securities), whether in cash, securities or other property, shall be made to  the Subordinated Creditors on account of any Subordinated Debt.

(b)   Any Distribution (other than Reorganization Subordinated Securities), whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to Agent (to be held and/or applied by Agent in accordance with the terms of the Senior Debt Documents) until all Senior Debt is paid in full in cash (or other consideration acceptable to Agent in its sole discretion). Each Subordinated Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions to Agent. Each Subordinated Creditor also irrevocably authorizes and empowers Agent and appoints Agent its attorney-in-fact, in the name of such Subordinated Creditor, to demand, sue for, collect and receive any and all such Distributions, at Company's expense.  This power of attorney is coupled with an interest and is irrevocable.

(c)   Each Subordinated Creditor agrees not to initiate, prosecute or participate in any claim, action or other proceeding challenging the enforceability, validity, perfection or priority of the Senior Debt or any liens and security interests securing the Senior Debt.  Agent agrees not to initiate, prosecute or participate in any claim, action or other proceeding challenging the enforceability, validity, perfection or priority of the Subordinated Debt or any liens and security interests securing the Subordinated Debt.

(d)   Each Subordinated Creditor, in its capacity as the holder of a Secured Claim, agrees that Agent and Senior Lenders may consent to the use of cash collateral or provide (or consent to any other Person providing) financing to the Company (or trustee) on such terms and conditions and in such amounts as Agent and Senior Lenders, in their sole discretion, may decide and, in connection therewith, the Company (or trustee) may grant to Agent and Senior Lenders (or such other Person providing financing) liens and security interests upon all of its property, which liens and security interests (i) shall secure payment of all Senior Debt (whether such Senior Debt arose prior to the commencement of any Proceeding or at any time thereafter) and all other financing provided by Senior Lenders (or such other Persons providing financing) during the Proceeding and (ii) shall be superior in priority to the liens and security interests, if any, in favor of such Subordinated Creditor on the property of the Company, provided, that (A) the financing (x) does not compel such Company to seek confirmation of a specific plan of reorganization for which all or substantially all of the material terms are set forth in the financing documentation or a related document or (y) that the financing documentation or cash collateral order does not expressly require the liquidation of the Collateral prior to a default under the financing documentation or cash collateral order.  Each Subordinated Creditor, in its capacity as the holder of Secured Claim, agrees that it will not object to or oppose, and will consent to, a sale or other disposition of any property securing all of any part of the Senior Debt free and clear of security interests, liens or other claims of such Subordinated Creditor under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if Agent and Senior Lenders have consented to such sale or disposition, provided that such Subordinated Creditor shall have the right to object to the further use of the proceeds of such sale or other disposition unless such proceeds are applied to permanently reduce the amount of Senior Debt outstanding.   Each Subordinated Creditor, in its capacity as the holder of a Secured Claim, agrees not to:  (1) assert any rights, to the extent adverse, in the commercially reasonable opinion of the Agent, to the interests of the Agent and the Senior Lenders, under Sections 362, 363 or 364 of the Bankruptcy Code with respect to the Collateral, including any rights it may have to “adequate protection” of such Subordinated Creditor's interest in any Collateral in any Proceeding or objecting to or opposing any use of cash, financing, security or priority described in clauses (i) and (ii) above; provided , if the Agent or any Senior Lender is granted adequate protection in the form of additional collateral in connection with any cash collateral use or debtor-in-possession financing, then the Subordinated Creditors may seek or request adequate protection in the form of a Lien on such additional collateral, which Lien will be subordinated to the Liens securing the Senior Debt (and such cash collateral use or debtor-in-possession financing on the same basis) as the other Liens securing the Subordinated Debt are so subordinated to the Senior Debt under this Agreement; (2) oppose or object to any adequate protection sought by or granted to Agent or any Senior Lender with respect to the Collateral; (3) initiate or prosecute or join with any other Person to initiate or prosecute any claim, action or other proceeding opposing a motion by Agent to lift the automatic stay; (4)  vote in favor of any chapter 11 plan that seeks confirmation under Section 1129(b)(2)(A) of the Bankruptcy Code, solely to the extent such vote is required to satisfy Section 1129(a)(10) of the Bankruptcy Code (i.e., each Subordinated Creditor agrees not to vote in favor of such plan if its allowed secured claim is deemed impaired and no other impaired class has accepted the plan, determined without including acceptance of the plan by any insider); (5) seek the dismissal or conversion of a Proceeding, (6) seek the appointment of a trustee, receiver or examiner in a Proceeding; or (7) seek to have the automatic stay of Section 362 of the Bankruptcy Code (or any similar stay under any other applicable law) lifted or modified with respect to the Collateral; provided, however, that each Subordinated Creditor may object to any financing under Section 364 in its capacity as the holder of a Secured Claim to the extent that the principal amount, together with the aggregate principal amount of Senior Debt outstanding immediately after giving effect to any payment thereof with the proceeds of such financing, exceeds the Senior Debt Limit.  Any claim of any Subordinated Creditor arising during a Proceeding, including a claim under Section 507(b) of the Bankruptcy Code, shall constitute Subordinated Debt under this Agreement.  Except for any claim based upon a breach of this Agreement, each Subordinated Creditor waives any claim it may now or hereafter have arising out of Agent’s or Senior Lenders’ election, in any Proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of a security interest under Section 364 or use of cash collateral under Section 363 of the Bankruptcy Code by the Company, as debtor in possession.  Notwithstanding anything in this Section 2.2(d) to the contrary but subject to the other provisions of this Agreement (including Section 2.2(c)), in any Proceeding involving the Company, a Subordinated Creditor may exercise rights and remedies generally available to holders of unsecured claims against any of the Company and otherwise in accordance with the Subordinated Debt Documents and applicable law. In furtherance of the foregoing, each Subordinated Creditor shall be entitled to file any pleadings, objections, motions or agreements which assert rights or interests available to unsecured creditors of the Company arising under either the Bankruptcy Code or applicable non-bankruptcy law, in each case if not otherwise in contravention of the express terms of this Agreement, including any right to object to the sale or use of property under Section 363 of the Bankruptcy Code and/or any financing under Section 364 of the Bankruptcy Code solely to the extent such objection could be asserted by the holder of an unsecured claim against the Company.

(e)   Each Subordinated Creditor agrees to execute, verify, deliver and file any proofs of claim in respect of the Subordinated Debt requested by Agent in connection with any such Proceeding and hereby irrevocably authorizes, empowers and appoints Agent its agent and attorney-in-fact to execute, verify, deliver and file such proofs of claim upon the failure of any Subordinated Creditor promptly to do so prior to 10 days before the expiration of the time to file any such proof of claim; provided , that Agent shall have no obligation to execute, verify, deliver, and/or file any such proof of claim.

(f)   The Senior Debt shall continue to be treated as Senior Debt and the provisions of this Agreement shall continue to govern the relative rights and priorities of Senior Lenders and the Subordinated Creditors even if all or part of the Senior Debt or the security interests securing the Senior Debt are subordinated, set aside, avoided, invalidated or disallowed in connection with any such Proceeding and this Agreement shall be reinstated if at any time any payment of any of the Senior Debt is rescinded or must otherwise be returned by any holder of Senior Debt or any representative of such holder.

(g)   The parties acknowledge and agree that (i) the claims and interests of Agent and the Senior Lenders under the Senior Debt Documents are substantially different from the claims and interests of the Subordinated Creditors under the Subordinated Debt Documents and (ii) such claims and interests should be treated as separate classes for purposes of Section 1122 of the Bankruptcy Code.

(h)   It is acknowledged and agreed that this Agreement shall constitute a “subordination agreement” within the meaning of Section 510(a) of the Bankruptcy Code.

2.3.   Subordinated De