Exhibit 10.7

                              ON THE LETTERHEAD OF
                                 KAZKOMMERTSBANK

# 7179                                                                   046735
                                                                         ------
August 16, 2002

                                                           Mr. N. D. Klinchev
                                                           General Director
                                                           Karakudukmunay JSC

                                                           Mr. U. B. Khairov
                                                           Executive Director
                                                           Karakudukmunay JSC

                                                           Mr. Jonathan Wood
                                                           Financial Coordinator
                                                           Karakudukmunay JSC

                                   Gentlemen,

     Further to a telephone conversation between Ms. D. Nurmagambetova with Mr.
Jonathan Wood on August 13, 2002, and a meeting with Mr. Richard Moore on August
14, 2002, in which your company asked for confirmation and clarification on the
pledge provided as a security for its obligations to Kazkommertsbank OJSC under
the Agreement for establishing a credit line No. 250 dated May 6, 2002, please
be advised of the following:

     On May 2, 2002, the Commercial Management of Kazkommertsbank OJSC made a
resolution to finance your project to the total amount of 33,000,000 (thirty
three million) US dollars on the following terms:

o    Total financing limit amount - 33,000,000 US dollars;

o    Revolving part of the credit line - 3,000,000 US dollars;

o    Non-revolving part of the credit line - 30,000,000 US dollars;

o    Term of the credit line:

     -    on the revolving part of the credit line - 4 years, including: period
          of availability on the revolving part of the credit line - 3 years,
          term of each facility - not more that 1 year;

     -    on the non-revolving part of the credit line - 3 years, with an option
          of a prolongation for 2 years upon a mutual written agreement of the
          parties (KKM and KKB), period of availability - 1 month;

o    Interest rate on the credit line - 14% per annum;

o    Purpose of financing - refinancing of debt to Central Asian Petroleum
     (Guernsey);

o    Terms of repayment:

     -    on the revolving part of the credit line, repayment of the interest
          and the principal debt shall be effected at the expiry of each
          facility;

     -    on the non-revolving part of the Credit line, repayment of the
          interest and the principal debt shall be effected quarterly under the
          established schedule subject to the grace period on payment of the
          interest - 9 months from the date of signing the Agreement for
          establishing a credit line, and on repayment of the principal debt -
          12 months from the date of signing the Agreement for establishing a
          credit line;

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o    Security for the credit line:

     -    guarantee of Chaparral Resources Inc., term of execution of the
          guarantee shall be within 30 days of the date of signing the Agreement
          for establishing a credit line;

     -    shares of Karakudukmunay JSC belonging to Central Asian Petroleum
          (Guernsey) Limited, term of execution shall be within 30 days of the
          date of signing the Agreement for establishing a credit line.

          As to your written inquiry regarding prolongation of the credit line,
     with the total term of both revolving and non-revolving part of the credit
     line being 5 years. This issue has been resolved positively; the altered
     terms of the credit line will be formulated in an additional agreement to
     the Agreement for establishing a credit line No. 250 of May 6, 2002, and
     executed within the next week. Please find the altered terms below:

     -    term of the revolving part of the credit line shall be 5 years, period
          of availability - 4 years, term of each facility - not more that 1
          year;

     -    term of the non-revolving part of the credit line shall be 5 years,
          first four repayments of the principal debt of 1,000,000 US dollars
          each, the remaining ones of 2,000,000 US dollars each (to be paid
          quarterly as before);

     the other terms of the credit line remain unchanged.

          We look forward to our further fruitful cooperation and wish you and
     your company success and prosperity!


     Best regards,

     First Deputy
     Chairman of the Board                           N. A. Zhusupova