Exhibit 10.4
AMENDMENT, CONSENT, WAIVER AND RELEASE
     This AMENDMENT, CONSENT, WAIVER AND RELEASE (this “Agreement”) is made and
entered into as of the 9th day of February, 2007 by and among Tethys Petroleum
Limited, a company incorporated and existing in the Island of Guernsey (“TPL”)
(formerly known as Tethys Petroleum Investments Limited), Tethys Kazakhstan
Limited, a company incorporated and existing in the Island of Guernsey (“TKL,”
and together with TPL, each a “Company” and collectively the “Companies”), and
the individuals and entities who or which are signatories hereto.
     WHEREAS, CanArgo Energy Corporation, a Delaware corporation (“CanArgo”),
and certain persons (the “Subordinated Noteholders”) have entered into a Note
Purchase Agreement, as amended (the “Note Purchase Agreement”), pursuant to
which CanArgo issued $13,000,000 in aggregate principal amount of Senior
Subordinated Convertible Guaranteed Promissory Notes due September 1, 2009 (the
“Subordinated Notes”); and
     WHEREAS, each of the Companies is a party to that certain Subordinated
Subsidiary Guaranty Agreement dated as of March 3, 2006 (the “Guaranty
Agreement”) by and among the Companies and the other Guarantors named therein in
favor of the Subordinated Noteholders, pursuant to which the Companies and such
other Guarantors guaranteed the payment of the Subordinated Notes;
     WHEREAS, CanArgo and certain persons (the “Senior Noteholders”) have
entered into a Note Purchase Agreement dated as of July 25, 2005, as amended,
pursuant to which CanArgo issued $25 million in aggregate principal amount of
senior secured promissory notes due July 25, 2009 (the “Senior Secured Notes”)
and, on or about the date of this Agreement, the Senior Noteholders have entered
into a security interest agreement pursuant to which the Senior Noteholders have
been granted a share pledge over the interest in TPL held by CanArgo Limited, a
company incorporated and existing in the Island of Guernsey and wholly owned by
CanArgo (“CanArgo Limited”);
     WHEREAS, TPL is contemplating raising a minimum of US$10 million dollars in
additional capital by means of an issue of equity;
     WHEREAS, CanArgo, the Companies and the Subordinated Noteholders wish to
amend the Note Purchase Agreement and the Guaranty Agreement such that neither
TKL nor TPL shall be a Guarantor under the Guaranty Agreement in order to
facilitate such equity offering; and
     WHEREAS, in order to induce the Subordinated Noteholders to agree to amend
the Note Purchase Agreement and the Guaranty Agreement and thereby facilitate
the proposed equity issue by TPL, CanArgo is prepared to cause CanArgo Limited
to grant a subordinated security interest in CanArgo Limited’s interest in TPL
to the Subordinated Noteholders.

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     NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency or which is hereby
acknowledged and confirmed, the parties hereto, intending to be legally bound,
hereby agree as follows:
     1. Definitions. Capitalized terms used herein but not otherwise defined
have the meanings assigned to them in the Note Purchase Agreement.
     2. Consent, Waiver and Release. Notwithstanding the provisions of any Loan
Document to the contrary provided, in accordance with Section 19 of the Note
Purchase Agreement and Section 19 of the Guaranty Agreement, the Subordinated
Noteholders hereby irrevocably and unconditionally:
          (a) consent to, and waive any rights they may have under the Note
Purchase Agreement or any other Loan Documents in connection with, (i) the
amendment of the Note Purchase Agreement to delete any reference to the
Companies from Schedules 6.11 and 7.4 thereto and (ii) the amendment of the
Guaranty Agreement to delete any reference to the Companies from the definition
of “Guarantor” or “Guarantors” therein and to release both Companies from their
obligations as Guarantors thereunder. The consents, releases, amendments and
waivers granted in this Section 2 only apply to the matters described in clause
(i) and (ii) above, and do not constitute a waiver of, or consent to, any other
amendment to or waiver of any other provisions of the Loan Documents;
          (b) hereby release each of the Companies and their respective
successors, assigns, officers, directors, shareholders, agents and employees
from any and all claims, damages, losses or liability, which they now have or
may in the future acquire from this date until the end of time, in respect of,
or attributable to any and all obligations of the Companies arising under or in
connection with the Note Purchase Agreement and the Guaranty Agreement; and
          (c) hereby release CanArgo and its successors, assigns, officers,
directors, shareholders, agents and employees from any all claims, damages,
losses or liability, which they now have or may in the future acquire from this
date until the end of time, arising under or attributable to the release of the
Companies of their obligations under the Note Purchase Agreement and the
Guaranty Agreement.
     3. Amendment of the Note Purchase Agreement.

  (a)   Schedules 6.11 and 7.4 to the Note Purchase Agreement are hereby amended
nunc pro tunc to delete therefrom any reference to the Companies.     (b)  
Section 11.7(a) to the Note Purchase Agreement is hereby amended nunc pro tunc
by adding the following language at the end thereof:-         “For the avoidance
of doubt, in the event that the holders of the Notes elect to convert their
Notes into Tethys Common Stock pursuant to this Section 11.7(a), the shares of
Tethys Common Stock which the

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      relevant Noteholders shall be entitled to receive upon conversion pursuant
to this Section shall be satisfied by the transfer of such number of shares of
Tethys Common Stock by CanArgo Limited, a company incorporated under the laws of
the Island of Guernsey, to the relevant Noteholder.”

     4. Amendment of the Guaranty Agreement. The Guaranty Agreement is hereby
amended nunc pro tunc by deleting any reference to either of the Companies as a
“Guarantor” thereunder.
     5. Minimum Proceeds. The parties hereby acknowledge that the consent and
waiver granted by the Purchasers pursuant to this Agreement is conditional upon
TPL receiving a minimum of US$10 million of aggregate gross proceeds from the
issue of ordinary shares of £0.01 each in the capital of TPL in connection with
a proposed investment in TPL to be completed on or about the date of this
Agreement.
     6. TPL Share Pledge. CanArgo hereby agrees that it shall use its reasonable
endeavors to procure that TPL and CanArgo Limited enter into a further security
interest agreement pursuant to which the Subordinated Noteholders shall be
granted a second ranking lien over CanArgo Limited’s interest in TPL
subordinated in right of payment to the Senior Indebtedness, including, without
limitation, to the indebtedness of CanArgo under the Senior Secured Notes.
     7. Effect on Loan Documents. This Agreement and the amendments set forth
herein are limited to the specific purpose for which it is entered into and,
except as specifically set forth above, (a) shall not be construed as a consent,
waiver, amendment or other modification with respect to any other term,
condition or other provision of any Loan Document and (b) each of the Loan
Documents shall remain in full force and effect and are each hereby ratified and
confirmed.
     8. Miscellaneous.
          (a) Successors and Assigns; Headings; Choice of Law, etc. This
Agreement shall be binding on and shall inure to the benefit of CanArgo, each
Company and the Subordinated Noteholders and their respective successors and
assigns, heirs and legal representatives; provided that neither CanArgo nor any
Company may assign its rights hereunder without the prior written consent of the
Company and the Required Holders. The headings in this Agreement have been
inserted for convenience purposes only and shall not be used in the
interpretation or enforcement of this Agreement. The Agreement shall be
interpreted and enforced in accordance with the laws of the State of New York,
United States of America, applicable to contracts made in and to be performed in
such State. There shall be no third party beneficiaries of any of the terms and
provisions of this Agreement.
          (b) Entire Agreement; Amendments. This Agreement, including all
documents attached hereto, incorporated by reference herein or delivered in
connection herewith, constitute the entire agreement of the parties with respect
to the

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subject matter hereof and supersede all other prior understandings, oral or
written, with respect to the subject matter hereof and may not be amended, or
any provision thereof waived, except by an instrument in writing signed by the
parties hereto.
          (c) Severability. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
          (d) Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
or by their representatives, thereunto duly authorized, as of the day and year
first above written.

            TETHYS PETROLEUM LIMITED
      By:   /s/ Dr David Robson         Name:   Dr David Robson        Title:  
Chairman & Managing Director   

            TETHYS KAZAKHSTAN LIMITED
      By:   /s/ Elizabeth Landles         Name:   Elizabeth Landles       
Title:   Director   

            CANARGO ENERGY CORPORATION
      By:   /s/ Dr David Robson         Name:   Dr David Robson        Title:  
Chairman & CEO   

     
SUBORDINATED NOTEHOLDERS:
   
 
   
THOMAS L. GIPSON
   
 
   
/s/ Thomas O. Boucher Jr.
         
Thomas O. Boucher Jr., Attorney-in-fact
   

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ROBERT L. GIPSON
     
/s/ Robert L. Gipson
         
Robert L. Gipson
   

          PENRITH LTD.    
 
       
By:
  /s/ Yvonne Koenig    
 
        Name: Yvonne Koenig     Title:    
 
        PERSISTENCY    
 
       
By:
  /s/ Andrew J. Morris    
 
        Name: Andrew J. Morris     Title: Director    
 
        AGREED AND ACKNOWLEDGED    

            CANARGO LIMITED
      By:   /s/ Dr David Robson         Name:   Dr David Robson        Title:  
Director   

            CANARGO LTD.
      By:   /s/ Dr David Robson         Name:   Dr David Robson        Title:  
Director   

            CANARGO NORIO LIMITED
      By:   /s/ Elizabeth Landles         Name:   Elizabeth Landles       
Title:   Director   

            CANARGO (NAZVREVI) LIMITED
      By:   /s/ Elizabeth Landles         Name:   Elizabeth Landles       
Title:   Director   

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            NINOTSMINDA OIL COMPANY LIMITED
      By:   /s/ Dr David Robson         Name:   Dr David Robson        Title:  
Director   

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