DATED: 1st November,1999

















                     CRUDE OIL SALE AND PURCHASE AGREEMENT



                                    between



                         CLOSED TYPE JSC KARAKUDUKMUNAY



                                      and


                      SHELL TRADING INTERNATIONAL LIMITED.


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THIS AGREEMENT is made this     1st    day of   November, 1999

Between:

1.   CLOSED TYPE JSC  KARAKUDUKMUNAY,  a company  incorporated under the laws of
     the Republic of Kazakhstan,  and having its principal  place of business at
     Microregion 3 Build.82, Aktau 466200, Kazakhstan

     (hereinafter referred to as "Sellers")

2.   SHELL TRADING INTERNATIONAL  LIMITED, a company incorporated under the laws
     of England,  and having its principal  office at Shell  Centre,  London SE1
     7NA,  acting  through its agent SHELL  INTERNATIONAL  TRADING AND  SHIPPING
     COMPANY  LIMITED  ("STASCO"),  a  company  incorporated  under  the laws of
     England and Wales,  and having its  principal  office at  Shell-Mex  House,
     Strand, London WC2R OZA

     (hereinafter referred to as "Buyers")

(Sellers  and Buyers may be  referred  to herein  individually  as a "Party" and
collectively as the "Parties".)

WHEREAS:

A.   Sellers are the lawful  holders of the  Petroleum  Licence No. MG #249(Oil)
     dated 25 June 1995 (as  subsequently  amended)  granted  to  Sellers by the
     Government of the Republic of  Kazakhstan.  Chaparral  Resources,  Inc., as
     borrower,  and Central Asian Petroleum  (Guernsey)  Limited,  Central Asian
     Petroleum,  Inc. and  Sellers,  as  co-obligors,  have entered into certain
     financing  arrangements  relating  to  the  Field  as set  out in the  Loan
     Agreement dated 1 November,  1999 (the "Loan Agreement") with Shell Capital
     Services Limited as arrangers,  and the Facility Agent and the Lenders,  as
     defined in the Loan Agreement.

B.   Chaparral  Resources,  Inc. will service and repay  advances made under the
     Loan Agreement ultimately through investment recovery received from Sellers
     who will finance the payment of such investment  recovery from the proceeds
     of sale of Karakuduk Crude Oil made pursuant to this Agreement.

C.   Buyers are  engaged,  inter alia,  in the  business of trading and shipping
     crude oil.

D.   In accordance with and for the duration of this Agreement:

     i.   until such time as the CPC  Pipeline  Operational  Date,  Sellers  are
          willing to sell and  delivery  to Buyers and Buyers are willing to buy
          and take from Sellers, at certain delivery points, REBCO in quantities
          equal to the total quantity of exportable Karakuduk Crude Oil produced
          during such period;

     ii.  unless  otherwise  agreed  between the Parties,  upon the CPC Pipeline
          Operational  Date,  Sellers are willing to sell and delivery to Buyers
          and Buyers are willing to buy and take from Sellers, FOB CPC Terminal,
          the total quantity of exportable  Karakuduk  Crude Oil produced during
          such period.

IT IS HEREBY AGREED AS FOLLOWS:

                                     PART 1
                                  GENERAL TERMS

                    ARTICLE 1: DEFINITIONS AND INTERPRETATION

1.1  For the  purposes of this  Agreement  and the recitals  hereto,  unless the
     context  otherwise  requires,  the following  terms shall have the meanings
     ascribed to them below:

       "Affiliate" means:

       i.     in the case of Buyers:

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          (a)  N.V.   Koninklijke   Nederlandsche   Petroleum   Maatschappij  (a
               Netherlands Company);

          (b)  The "Shell"  Transport and Trading  Company,  p.l.c.  (an English
               Company); and

          (c)  any  company  (other  than  Sellers)  which is for the time being
               directly  or   indirectly   affiliated   with  N.V.   Koninklijke
               Nederlandsche  Petroleum  Maatschappij and The "Shell"  Transport
               and Trading Company, p.l.c. or with either of them.

          For the purpose of this definition,  a company is directly  affiliated
          with another  company or companies if it holds shares  carrying  fifty
          per  cent  (50%)  or  more  of the  votes  at a  general  meeting  (or
          equivalent)  or fifty per cent (50%) or more of the issued  capital of
          the  first-mentioned  company and a particular  company is  indirectly
          affiliated with a company or companies  (hereinafter in this paragraph
          called the "parent company or companies") if a series of companies can
          be  specified,  beginning  with the parent  company or  companies  and
          ending with the  particular  company,  so related that each company of
          the  series,  except the  parent  company or  companies,  is  directly
          affiliated  with one or more of the  companies  earlier in the series;
          and

     ii.  in the case of Sellers:

          any company or entity which (i) controls either directly or indirectly
          Sellers,  (ii) is directly or  indirectly  controlled  by Sellers,  or
          (iii) is  directly  or  indirectly  controlled  by a company or entity
          which  directly or  indirectly  controls  Sellers,  for which  purpose
          "control" means the right to exercise 50% or more of the voting shares
          of Sellers or other  company or entity in relation to the  appointment
          of the directors of such company or entity.

     "Agreement" means this agreement and all the attachments hereto.

     "Barrel"  means 42 U.S.  standard  gallons  of 231  cubic  inches  at 60(0)
     Fahrenheit.

     "BS&W" means sediment and water.

     "Control"  means the power to  direct  the  management  or  policies  of an
     entity,  directly or  indirectly,  through the ownership of voting  capital
     (provided that the direct or indirect ownership of 50% or more of the share
     capital  or  similar  right of  ownership  in an entity  shall be deemed to
     constitute control of that entity),  and a "Change of Control" when applied
     to Sellers means Central Asian Petroleum (Guernsey) Limited ceasing to own,
     legally and  beneficially in aggregate fifty (50) per cent of the shares in
     Sellers, except with the prior written approval of Buyers.

     "CPC Blend"  means the blend of crude oil  generally  available  at the CPC
     Terminal that complies with a minimum  specification  to be agreed  between
     Sellers and Buyers.

     "CPC  Pipeline"  means  the  pipeline  which  is  being  built  by the  CPC
     consortium, which will run from the Tengiz field to Novorossiisk.

     "CPC Pipeline Operational Date" means the last day of the month in which:

          i.   the completed CPC Pipeline is commissioned;

          ii.  the Field is so connected  with the CPC Pipeline  (via  pipeline,
               rail link or otherwise)  that Karakuduk  Export Crude Oil can and
               will be evacuated  from the Field to the CPC Terminal via the CPC
               Pipeline; and

          iii. CPC Pipeline starts pumping commercial quantities of crude oil
               all as determined by Sellers and Buyers; and

          iv.  if the CPC Pipeline transports crude oil such that only CPC Blend
               will be available  for lifting at the CPC  Terminal,  Sellers and
               Buyers have agreed a minimum specification for the CPC Blend.

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     "CPC Terminal" means the single buoy mooring  terminal which is being built
     by the CPC consortium near Novorossiisk.

     "Delivery  Acceptance  Act" or "DAA"  means in respect of delivery of REBCO
     DAF  Budkovce,  DAF  Fenyeshlitke  or DAF Adamovo,  a set of four  original
     documents  in one of the  formats  set out in  Attachment  5 (or any  other
     format  agreed by the  Parties)  which record the quantity and details of a
     delivery of crude oil at that Delivery Point.

     "Delivery  Month"  or  "Month  M"  means a Month  during  the  term of this
     Agreement  from  the  First  Delivery  Month  to the  Last  Delivery  Month
     (inclusive).

     "Delivery Point" shall have the meaning ascribed to it in Article 6.1.

     "Dollars" or the symbol "$" means the lawful  currency of the United States
     of America.

     "Effective Date" shall have the meaning ascribed to it in Article 2.1.

     "Field"  means  the  Karakuduk  oil  field in the  Mangistau  Oblast of the
     Republic of Kazakhstan as more particularly  described in the Agreement for
     Exploration,  Development  and  Production of Oil in Karakuduk Oil Field in
     Mangistau Oblast of the Republic of Kazakhstan  between the Ministry of Oil
     and Gas  Industries of the Republic of Kazakhstan  for and on behalf of the
     Government of the Republic of Kazakhstan  and Joint Stock Company of Closed
     Type  Karakudukmunay  Joint Venture dated August 30, 1995 (the  "Contract")
     and the Petroleum Licence.

     "First  Delivery  Month" means the month  following  the month in which the
     Effective Date falls.

     "Initial Term" means a period  commencing on the date hereof and concluding
     on the  last  day of the  month  in  which  the  fifth  anniversary  of the
     Effective Date falls.

     "Karakuduk Crude Oil" means crude oil produced from the Field.

     "Karakuduk  Export Crude Oil" means the  quantity of  Karakuduk  Crude Oil,
     expressed  in  tonnes,  as is  produced  and  available  for  export at the
     Delivery  Points  during the term of this  Agreement  less that quantity of
     such crude oil that Sellers are obliged to deliver to the Government of the
     Republic of Kazakhstan in respect of royalty in kind due under the terms of
     the Contract.

     "Last  Delivery  Month"  means the Delivery  Month in which this  Agreement
     terminates howsoever arising.

     "Lenders" has the meaning assigned to it in the Loan Agreement.

     "Loan Agreement" has the meaning assigned to it in the recitals hereto.

     "LTBP" means the London Tanker Brokers Panel.

     "Monthly  Karakuduk Crude Oil Production" means in respect of any month the
     quantity of Karakuduk Crude Oil expressed in tonnes produced in that month.

     "Monthly Karakuduk Crude Oil Export Quantity" means in respect of any month
     the quantity of the Karakuduk Export Crude Oil produced in that month.

     "Nomination"  means in respect of any Delivery Month,  Sellers'  nomination
     made pursuant to Article 7.3.

     "Nomination  Confirmation" shall have the meaning ascribed to it in Article
     7.3.

     "Principal  Period"  means the period  from the  Effective  Date to the CPC
     Pipeline  Operational  Date or the date of termination  of this  Agreement,
     whichever occurs first.

<PAGE>


     "Petroleum Licence" has the meaning assigned to it in the recitals hereto.

     "REBCO" means Russian export blend crude oil.

     "Scheduling  Month" or "Month M-1" means in respect of any  Delivery  Month
     the month immediately before that Delivery Month.

     "Secondary Period" means the period from the CPC Pipeline  Operational Date
     to the date of termination of this Agreement (inclusive).

     Service  Agreement" means the service  agreement between the Parties in the
     form set out in Attachment 4.

1.2 In this Agreement, unless the context otherwise requires:

     i.   headings are for convenience only and do not affect the interpretation
          of this Agreement;

     ii.  an  expression  importing  a  natural  person  includes  any  company,
          partnership,  trust, joint venture, association,  corporation or other
          body corporate and vice versa;

     iii. references to Articles,  Parts and Attachments are, unless the context
          otherwise requires, references to articles or parts of and attachments
          to this Agreement;

     iv.  except as otherwise  provided,  a reference to a document  includes an
          amendment  or  supplement  to, or  replacement  or  novation  of, that
          document, but disregarding any amendment,  supplement,  replacement or
          novation made in breach of this Agreement;

     v.   a reference  to a Party to this  Agreement  and to any other  document
          includes that Party's successors and permitted assigns;

     vi.  words importing the singular include the plural and vice versa;

     vii. the word "including" means "including without limitation";

     viii.a "business  day" means a day (other than Saturday or Sunday) on which
          banks are open for ordinary banking business in London;

     ix.  "tonne" is a metric ton; and

     x.   a "year" means a calendar year, a "quarter"  means a calendar  quarter
          and a "month" means a calendar month.

                         ARTICLE 2: CONDITIONS PRECEDENT

2.1  The  provisions  of this  Agreement  other than this Article 2.1 shall only
     come into effect on the date (the "Effective Date") when:

     i.   disbursement  of the first advance under the Loan Agreement shall have
          occurred;

     ii.  the Service  Agreement  shall have been  executed and delivered by the
          Parties; and

     iii. the  payment of the "First  Annual  Fee" as required by Article 5.1 of
          the  Service  Agreement  shall  have been made by Sellers to STASCO in
          accordance with Article 6.1 of the Service Agreement;

     whereupon  this  Agreement  shall have full force and effect.  In the event
     that the  Effective  Date does not occur prior to 31st January  2000,  this
     Agreement may be terminated forthwith by Buyers with immediate effect.

                                           ARTICLE 3: TERM OF AGREEMENT

3.1  Subject to Articles 2.1 and 10, this  Agreement  shall be effective for the
     Initial  Term  and  thereafter  will  be  extended,  or  further  extended,
     automatically for a period of 12 months, each such extension  commencing at
     the end of the last day of the  Initial  Term or the  relevant  anniversary
     thereof,  unless either Party serves  written  notice of termination on the
     other party at least 60 days prior to the end of the Initial  Term,  or any

<PAGE>

     subsequent  extension,  such notice to expire and be  effective on the last
     day of the Initial Term, or any subsequent extension,  (as the case may be)
     provided  always  that  Sellers  may not serve a notice to  terminate  this
     Agreement  pursuant to this Article 3.1 if sums remain  outstanding  to the
     Lenders under the Loan Agreement (whether or not then due and payable).

3.2  Any notice served by the Parties that does not provide the period of notice
     required  by Article  3.1 or is served by Sellers in breach of Article  3.1
     shall be invalid and of no effect whatsoever.

3.3  Termination of this Agreement  pursuant to Article 3.1 shall not create any
     obligation  on either  Party to pay any  compensation  in  respect  of such
     termination.

                    ARTICLE 4: SALE AND PURCHASE OF CRUDE OIL

4.1  Subject to the terms and conditions set out herein, during the term of this
     Agreement, Sellers agree to sell and deliver to Buyers, and Buyers agree to
     purchase and take delivery of from Sellers:

     i.   in the Principal Period, the quantity of REBCO in tonnes determined in
          accordance  with  Article 7 being equal to that  quantity of Karakuduk
          Export Crude Oil  expressed in tonnes  produced  from the Field during
          the Principal Period; and

     ii.  in the Secondary Period:

          aa.  if  Buyers  determine  that  the  CPC  Pipeline  shall  transport
               Karakuduk  Export  Crude  Oil  in  segregated   parcels  so  that
               Karakuduk  Crude  Oil can be  lifted  at the CPC  Terminal,  that
               quantity  of  Karakuduk  Export  Crude  Oil  expressed  in tonnes
               determined in  accordance  with Article 7 produced from the Field
               during the Secondary Period; or

          bb.  if  Buyers  determine  that  the  CPC  Pipeline  shall  transport
               Karakuduk  Export Crude Oil in  unsegregated  parcels so that CPC
               Blend (rather than Karakuduk  Crude Oil) can be lifted at the CPC
               Terminal,  that  quantity  of CPC Blend in tonnes  determined  in
               accordance  with  Article  7  being  equal  to that  quantity  of
               Karakuduk  Export Crude Oil expressed in tonnes produced from the
               Field during the Secondary Period.

4.2  During the term of this Agreement:

     i.   save in  respect  of those  quantities  of  Karakuduk  Crude  Oil that
          Sellers are obliged to deliver to the  Government  of the  Republic of
          Kazakhstan  in  respect  of royalty in kind due under the terms of the
          Petroleum  Licence,  Sellers  shall not enter  into any  agreement  or
          understanding  with any third party to sell, swap, barter or otherwise
          supply  Karakuduk  Crude  Oil or enter  into any  other  agreement  or
          understanding  for the sale or supply  of any  other  grade or type of
          crude oil based on or connected with the production of Karakuduk Crude
          Oil; and

     ii.  Sellers  shall make and maintain all  necessary  arrangements  for the
          Karakuduk  Export  Crude  Oil to be  exported  from  the  Republic  of
          Kazakhstan  and  transported  to the Delivery  Points such that REBCO,
          Karakuduk  Crude Oil or CPC Blend is available at the Delivery  Points
          for delivery to Buyers as contemplated by this Agreement.

                              ARTICLE 5: - QUALITY

5.1  The Crude Oil to be supplied hereunder:

     i.   in the  Principal  Period  shall  be REBCO of  normal  export  quality
          generally being supplied at the time of delivery at the Delivery Point
          for that  crude oil (as  determined  in  accordance  with  Article  7)
          provided  always that all REBCO  supplied  hereunder  shall comply the
          specification set out in Attachment 1A; and

<PAGE>


     ii.  in the Secondary  Period shall be either Karakuduk Crude Oil complying
          with the specification set out in Attachment 1B or CPC Blend complying
          with the  minimum  specification  to be  agreed  between  Sellers  and
          Buyers.

                              ARTICLE 6: - DELIVERY

6.1  Unless  otherwise  agreed (in which  case  delivery  and price  shall be as
     agreed) between the Parties in the Principal Period, REBCO may be supplied:

     i.   FOB Novorossiisk;

     ii.  FOB Odessa;

     iii. FOB Ventspils;

     iv.  DAF Budkovce;

     v.   DAF Fenyeshlitke; or

     vi.  DAF Adamovo

          and during the Secondary Period,  Karakuduk Crude Oil or CPC Blend (as
          the case may be) shall be  supplied  FOB CPC  Terminal  (each  being a
          "Delivery Point").

6.2  The basis of supply for each  parcel of REBCO,  Karakuduk  Crude Oil or CPC
     Blend (as the case may be) shall be determined  in accordance  with Article
     7.

6.3  Sellers acknowledge that during the Principal Period, Buyers' preference is
     to take  delivery  of REBCO  either  FOB  Novorossiisk;  FOB  Odessa or FOB
     Ventspils and, unless otherwise advised by Buyers,  Sellers shall use their
     best  efforts to  arrange  supplies  on these  terms and  Sellers  may only
     propose  the supply of REBCO on a DAF  Budkovce;  DAF  Fenyeshlitke  or DAF
     Adamovo basis pursuant to Article 7.2 if Sellers can demonstrate to Buyers'
     reasonable  satisfaction  that they are unable to arrange  the  delivery of
     such REBCO on a FOB Novorossiisk; FOB Odessa or FOB Ventspils basis.

6.4  Unless otherwise agreed between the Parties, in respect of:

     i.   any supply of REBCO on a FOB Novorossiisk  basis or of Karakuduk Crude
          Oil or CPC  Blend on a FOB CPC  Terminal  basis,  the  quantity  to be
          supplied  in any one  parcel  shall be in the  range  63,000 - 140,000
          tonnes with a plus or minus 5% tolerance at Buyers' option

     ii.  any  supply  of REBCO on a FOB  Odessa  basis,  , the  quantity  to be
          supplied  in any one  parcel  shall  be in the  range  63,000 - 85,000
          tonnes with a plus or minus 5% tolerance at Buyers' option

     iii. any  supply of REBCO on a FOB  Ventspils  basis,  the  quantity  to be
          supplied  in any one  parcel  shall be in the  range  63,000 - 100,000
          tonnes with a plus or minus 5% tolerance at Buyers' option; and

     iv.  any supply of REBCO on a DAF Budkovce; DAF Fenyeshlitke or DAF Adamovo
          basis, the quantity to be supplied in any one parcel shall not be less
          than 3,000 tonnes with a plus or minus 5% tolerance at Sellers' option

     and in the event  that  pursuant  to  Article 7 Sellers  propose  to supply
     REBCO,  Karakuduk Crude Oil or CPC Blend (as the case may be) in a quantity
     that does not comply  with the  requirements  of this  Article  6.4,  then,
     subject to the provisions of Article 8.2,  Buyers may agree to the proposed
     supply or to buy and take any such quantities of REBCO, Karakuduk Crude Oil
     or CPC Blend (as the case may be) but  shall be under no  obligation  to so
     agree or buy and take.

                            ARTICLE 7: - NOMINATIONS

7.1  On or before the Effective Date in respect of the period from the Effective
     Date to 31 December 2000 and then by no later than the first working day of
     the month proceeding a quarter,  Sellers shall provide to Buyers a forecast
     of the Monthly  Karakuduk Crude Oil Production and Monthly  Karakuduk Crude
     Oil Export  Quantity by month for that quarter and the next three quarters.
     In the event that it could be reasonably anticipated by Sellers at any time

<PAGE>


     that the  forecasts  for any  month  should  be  revised  by more than 10%,
     Sellers shall  promptly so notify  Buyers and shall  provide  Buyers with a
     full and detailed explanation for the forecast revision.

7.2  On or before the Effective  Date in respect of the First Delivery Month and
     then in  respect  of any  subsequent  Month M by no later  that  the  first
     working day of Month M-1 for that Delivery  Month,  Sellers shall notify to
     Buyers the Monthly  Karakuduk  Crude Oil Production  and Monthly  Karakuduk
     Crude  Oil  Export  Quantity  for  that  Delivery  Month  (which  shall  be
     consistent  with the last  forecast  for that  month  provided  by  Sellers
     pursuant to Article 7.1) and, subject to Article 6.4,  depending on whether
     the month is in the Principal Period or the Secondary Period, Sellers shall
     propose to Buyers the quantity in tonnes of REBCO,  Karakuduk  Crude Oil or
     CPC  Blend  as the case  may be,  (which  unless  otherwise  agreed  by the
     Parties,  shall be equal to the Monthly Karakuduk Crude Oil Export Quantity
     for that month),  to be delivered  to Buyers in that month,  together  with
     proposed  parcel  sizes,  Delivery  Points (in  respect of REBCO)  and,  in
     respect of deliveries on a FOB Novorossiisk,  FOB Odessa,  FOB Ventspils or
     FOB CPC Terminal  basis,  indicative  loading date ranges of 3  consecutive
     days.

     As soon  as  reasonably  practical  Buyers  shall  advise  Sellers  whether
     Sellers'  proposal is  acceptable  and if not what  changes are required by
     Buyers.  Sellers and Buyers shall agree a mutually  acceptable schedule but
     if Sellers and Buyers cannot so agree by no later than the twenty third day
     of Month M-1, the proposed  schedule  (complying  with the  requirements of
     Article  7.4) shall be  determined  by  Sellers,  but as far as  reasonably
     practical  Sellers  shall  propose a schedule  as close as  possible to the
     requirements of Buyers.

7.3  Subject to Article 7.4, on or before the  Effective  Date in respect of the
     First Delivery  Month and then in respect of any  subsequent  Month M by no
     later  that the  twenty-fifth  day of Month  M-1 for that  Delivery  Month,
     Sellers  shall  notify  to Buyers  in the form set out in  Attachment  2 (a
     "Nomination Confirmation") :

     i.   the total quantity of REBCO,  Karakuduk Crude Oil or CPC Blend (as the
          case may be) in tonnes to be delivered to Buyers in that month;

     ii.  the size of each parcel of REBCO, Karakuduk Crude Oil or CPC Blend (as
          the case may be) and the Delivery Point for each parcel;

     iii. in  respect of  deliveries,  DAF  Budkovce;  DAF  Fenyeshlitke  or DAF
          Adamovo basis the month of delivery for each parcel and

     iv.  in  respect of  deliveries  on a FOB  Novorossiisk,  FOB  Odessa,  FOB
          Ventspils  or FOB CPC  Terminal  basis the 3  consecutive  day loading
          range for each parcel

     (each such parcel of REBCO,  Karakuduk  Crude Oil or CPC Blend (as the case
     may be) shall be a "Nomination".)

     In respect of any Delivery  Month,  the terms of a Nomination  Confirmation
     shall not deviate  from the  schedule  established  pursuant to Article 7.2
     without  the written  agreement  of the  Parties.  The terms set out in any
     Nomination may be amended with the mutual consent of the Parties.

7.4  Unless otherwise  agreed by Buyers,  schedules made pursuant to Article 7.2
     and Nominations shall not provide for:

     i.   a loading range at any of the Delivery Points within the first 10 days
          of any Delivery Month; and

     ii.  delivery of REBCO on a DAF Budkovce;  DAF  Fenyeshlitke or DAF Adamovo
          basis  unless by no later  than the twenty  third day of the  relevant
          Month M-1, Buyers can advise Sellers of the sales chain from Buyers to
          the  final  receiver  of that  proposed  parcel of oil and are able to
          procure  from the  final  receiver  of that  parcel  of oil a  written
          confirmation  stating  that it will take that oil into its  facilities

<PAGE>

          and that it has  contractual  arrangements  to transport that oil from
          the proposed Delivery Point to such facilities.

7.5  In respect of any Delivery Month, Buyer may but shall not be obliged to:

     i.   agree to any  schedule  pursuant  to Article  7.2 that does not comply
          with the requirements of Article 7.4;

     ii.  buy and take REBCO , Karakuduk Crude Oil or CPC Blend (as the case may
          be) under any Nomination if:

          aa.  the  Nomination  Confirmation  is not  notified  to Buyers by the
               twenty-fifth day of Month M-1;

          bb.  the Nomination  Confirmation  deviates from the schedule made for
               that Delivery Month pursuant to Article 7.2;

          cc.  the Nomination Confirmation does not comply with the requirements
               of Article 7.4.

7.6  In respect of any Delivery Month,  for Nominations to be delivered on a DAF
     Budkovce;  DAF  Fenyeshlitke  or DAF Adamovo  basis,  by not later than the
     first  day of that  Delivery  Month,  Sellers  shall  provide a copy of the
     Routing Cable  (Marshrutnoe  Poruchenie) from AK Transneft  authorising the
     pumping of  quantities  of REBCO for the account of or in the  ownership of
     Sellers  from  Samara,  Russia to each  such  Delivery  Point  equal to the
     quantities  stated in the Nominations to be delivered at each such Delivery
     Point in that month.

                          ARTICLE 8 - PRICE AND PAYMENT

8.1  For the period from the Effective Date to 31 December 2000:

     i.   the price ("P") expressed in Dollars per Barrel net of BS&W payable by
          Buyers to Sellers for REBCO  delivered  in that  period  pursuant to a
          Nomination, shall be calculated as follows:

                            P = R - D

          Where:

               D is the  applicable  discount  calculated by Buyers  pursuant to
               Article 8.1 ii;

               and

               for REBCO delivered under a Nomination on a FOB Novorossiisk
               basis:

                i.  in a parcel size of 63,000 - 85,000 tonnes:

                     R  =   Urals   (Med)   -   [((80Med_Med   +   C)   x
                     A_N-Wsflat)/7.3] x [80,000/A]

               ii.  in a parcel size of 85,001 - 140,000 tonnes:

                     R  =   Urals   (Med)   -   [((130Med_Med   +   C)  x
                     A_N-Wsflat)/7.3] x [130,000/A]

     bb.  for REBCO  delivered  under a  Nomination  on a FOB Odessa  basis in a
          parcel size of 63,000 - 85,000 tonnes:

                     R = Urals  (Med) -  [((80Med_Med  + C) x  A_N-Wsflat
                      t)/7.3] x [80,000/A]

     cc.  for REBCO delivered under a Nomination on a FOB Ventspils basis:

                i.  in a parcel size of 63,000 - 85,000 tonnes:

                     R   =   Urals    (Rdam)    -    [((80UKC_UKC+C)    x
                     V_R-WSflat)/7.3] x [80,000/A]

               ii.  in a parcel size of 85,001 - 100,000 tonnes:

                     R   =   Urals    (Rdam)   -    [((130UKC_UKC+C)    x
                     V_R-WSflat)/7.3] x [130,000/A]

<PAGE>


                     and

                    "Urals  (Med)" is the average of the mean  (high/low) of the
                    Platt's  Crude  Oil  Marketwire  quotes  for  "Urals  (Med)"
                    expressed  in  Dollars  per  Barrel  for  five   consecutive
                    quotations immediately after the Bill of Lading date (B/L=0)

                    "80Med_Med"  is the  average of the  "Platt's  Dirty  Tanker
                    Wire" quotes (expressed as a percentage) for a voyage from a
                    Mediterranean loadport to a Mediterranean  discharge port as
                    published  under the heading  West of Suez for 80kt  tankers
                    for 5  consecutive  quotations  starting  15 days before the
                    middle day of the 3 day delivery range for that Nomination

                    "130Med_Med"  is the average of the  "Platt's  Dirty  Tanker
                    Wire" quotes (expressed as a percentage) for a voyage from a
                    Mediterranean loadport to a Mediterranean  discharge port as
                    published  under the heading West of Suez for 130kt  tankers
                    for 5  consecutive  quotations  starting  15 days before the
                    middle day of the 3 day delivery range for that Nomination

                   "C" is 5 percentage points

                    "A_N-WSflat" is the flat voyage charter freight rate between
                    Augusta and  Novorossiisk  or Odessa (as the case may be) as
                    shown in Worldscale Tanker Nominal Freight Scale

                    "A" is the quantity of REBCO net of BS&W expressed in tonnes
                    delivered pursuant to that Nomination

                    "Urals (Rdam)" is the average of the mean  (high/low) of the
                    Platt's  Crude Oil  Marketwire  quotes  for  "Urals  (Rdam)"
                    expressed  in  Dollars  per  Barrel  for  five   consecutive
                    quotations immediately after the Bill of Lading date (B/L=0)

                    "80UKC_UKC"  is the  average of the  "Platt's  Dirty  Tanker
                    Wire" quotes (expressed as a percentage) for a voyage from a
                    UK/Continent  load port to a UK/Continent  discharge port as
                    published  under the heading  West of Suez for 80kt  tankers
                    for 5 day consecutive quotations starting 15 days before the
                    middle day of the 3 day delivery range for that Nomination

                    "130UKC_UKC"  is the average of the  "Platt's  Dirty  Tanker
                    Wire" quotes (expressed as a percentage) for a voyage from a
                    UK/Continent  load port to a UK/Continent  discharge port as
                    published  under the heading West of Suez for 130kt  tankers
                    for 5 day consecutive quotations starting 15 days before the
                    middle day of the 3 day delivery range for that Nomination

                    "V_R-WSflat"   is  the  flat  rate  between   Ventspils  and
                    Rotterdam  (including  provision  for harbour dues) as it is
                    shown in Worldscale Tanker Nominal Freight Scale
                    "A" is the quantity of REBCO net of BS&W expressed in tonnes
                    delivered pursuant to that Nomination

               dd.  for REBCO delivered on a DAF Budkovce;  DAF  Fenyeshlitke or
                    DAF Adamovo basis:

                    R is the price in  Dollars  per  Barrel  net of BS&W (or its
                    equivalent at the Delivery  Point) at which Buyers sell such
                    REBCO to their buyers.

     ii.  the discount  ("D")  expressed in Dollars per Barrel net of BS&W to be
          applied to REBCO  delivered in that period  pursuant to a  Nomination,
          shall be calculated as follows;

<PAGE>


                                                       Discount D to be applied
                                                         per Barrel of REBCO
                                                         net of BS&W in Dollars:


A On any Barrels being part of the first 5,000,000
Barrels of REBCO net of BS&W  delivered  to Buyers
at any of the  Delivery  Points in that  period in
respect of Karakuduk  Export Crude Oil produced in
that period:                                                       0.15

On any Barrels  being part of the  5,000,001st  to
10,000,000th   Barrels   of  REBCO   net  of  BS&W
delivered to Buyers at any of the Delivery  Points
in that  period in  respect  of  Karakuduk  Export
Crude Oil produced in that  period:                               0.10

On any Barrels being part of the  10,000,001st  or
more  Barrels  of REBCO net of BS&W  delivered  to
Buyers  at any  of the  Delivery  Points  in  that
period in respect of  Karakuduk  Export  Crude Oil
produced in that period:                                          0.05

     iii. in  respect  of any  Nomination  for the  delivery  of  REBCO on a FOB
          Novorossiisk,  FOB Odessa or FOB Ventspils  basis,  the price of REBCO
          determined  pursuant to Article 8.1 i shall be increased by $0.003 per
          Barrel net of BS&W for each full 0.10 API degree  above  32.00  degree
          and  decreased by $0.003 per Barrel net of BS&W for each full 0.10 API
          degree below 32.09 degree API that the REBCO  achieves  when  analysed
          upon delivery;  provided that no price  adjustment  shall occur if the
          API for that REBCO is within the range 32.00-32.09 degrees API;

     iv.  in  respect  of any  Nomination  for the  delivery  of  REBCO on a DAF
          Budkovce; DAF Fenyeshlitke or DAF Adamovo basis, Buyers shall:

          aa.  calculate  the total net  quantity of REBCO  already  supplied to
               Buyers  pursuant to this Agreement in that period at the Delivery
               Points and the discount  calculated pursuant to Article 8.1 ii to
               be applied to the Barrels to be delivered under that Nomination;

          bb.  confirm the price per Barrel in Dollars (or its equivalent at the
               Delivery  Point) at which Buyers have sold the REBCO specified in
               that Nomination to their buyers; and

          cc.  advise  the date on which  Buyers'  buyers  will make  payment in
               respect of such supply

               within 3 working days of making  arrangements to sell such parcel
               of crude oil.

8.2  For the period from the  Effective  Date to 31 December  2000, in the event
     that  Sellers  wish to deliver  and sell to Buyers  REBCO in a parcel  size
     smaller  than 63,000  tonnes,  Buyers shall be obliged to purchase and take
     delivery  of  such a  parcel  and  the  price  formula  applicable  to that
     undersized parcel shall be as set out in Article 8.1.i However,  if Sellers
     are  able to  identify  other  tonnes  of REBCO  which  are  available  for
     purchase,  Sellers may introduce  Buyers to the third party seller of those

<PAGE>


     additional  tonnes,  with a view to Buyers  seeking to agree terms with the
     said third  party  seller to  purchase  some or all of the said  additional
     tonnes.  The Sellers  acknowledge  that the decision whether or not to make
     such a purchase shall be entirely in the discretion of Buyers,  and Sellers
     shall  have no  recourse  to Buyers in the event  that  Buyers  decline  to
     purchase  the  additional  tonnes.  In the  event  that  Buyers do agree to
     purchase the  additional  tonnes,  the parcel size shall be  calculated  by
     adding the quantity of the Sellers' REBCO to the quantity of the additional
     tonnes,  and the  price  for such  parcel  shall be  calculated  on the sum
     thereof.

8.3  In the event  that any index  referred  to in this  Agreement  ceases to be
     published  or if the  publisher  changes  quotation  criteria,  the Parties
     shall,  upon notice from either Party, meet to discuss an alternative index
     which most  closely  replaces the index as it is published on the date this
     Agreement is executed.  If the Parties fail to agree within 30 working days
     after either Party  notifies the other Party,  the issue shall be submitted
     to an expert. To assist the expert in such determination,  each Party shall
     submit one, and only one,  proposed  replacement index and the expert shall
     determine which of the two proposed  indexes most closely  approximates the
     index which is changed or no longer  published.  Pending  resolution by the
     expert,  the prices calculated  pursuant to Article 8.1 shall be determined
     using the  indices  proffered  by  Buyers  and any  payments  based on such
     indices   shall  be  adjusted  (if   necessary)  to  take  account  of  the
     determination  by the expert and following the  determination by the expert
     the price  thenceforth  shall adjusted to take account of the determination
     by the expert.

8.4  During the term of this  Agreement,  by no later than 1 October  2000,  and
     thereafter  by the same date in each  subsequent  year,  the Parties  shall
     convene  a  meeting  to  discuss  the price  of,  and the  appropriate  API
     adjustment for the REBCO, Karakuduk Crude Oil or CPC Blend (as the case may
     be) to be supplied under this Agreement in the year 2001, or the next year,
     (as the case may be). The Parties shall negotiate mutually acceptable terms
     for the price and API adjustment for the REBCO,  Karakuduk Crude Oil or CPC
     Blend (as the case may be) taking  account the  pricing and API  adjustment
     agreed for the then  current  year and the changes in the market.  If by 30
     November 2000, or thereafter by the same date in each subsequent  year, the
     parties are unable to agree the price or API  adjustment per Barrel for the
     REBCO,  Karakuduk  Crude Oil or CPC Blend (as the case may be) for the next
     year, then:

     i.   the price  expressed  in Dollars  per  Barrel  net of BS&W  payable by
          Buyers to Sellers for REBCO,  Karakuduk Crude Oil or CPC Blend (as the
          case may be)  delivered to Buyers at any  Delivery  Point in that next
          year  pursuant  to a  Nomination  shall be the price per Barrel net of
          BS&W (or its  equivalent  at the Delivery  Point ) in Dollars at which
          Buyers sell the REBCO,  Karakuduk  Crude Oil or CPC Blend (as the case
          may be) to their buyers  (provided  always that Buyers shall endeavour
          to obtain the best price  available in the market at that time) less a
          discount which shall be calculated as follows:

                                                    Discount  to be  applied
                                              per Barrel net of BS&W in Dollars:

*    On  any  Barrels  being  part  of  the  first
     5,000,000  Barrels of REBCO,  Karakuduk Crude
     Oil and/or CPC Blend net of BS&W delivered to
     Buyers at any of the  Delivery  Points in the
     year in respect of Karakuduk Export Crude Oil
     produced in that year:                                    0.15

<PAGE>


*    On any Barrels being part of the  5,000,001st
     to 10,000,000th  Barrels of REBCO,  Karakuduk
     Crude  Oil  and  /or  CPC  Blend  net of BS&W
     delivered  to Buyers  at any of the  Delivery
     Points in the year in  respect  of  Karakuduk
     Export Crude Oil produced in that year:                    0.10

*    On any Barrels being part of the 10,000,001st
     or more Barrels of REBCO, Karakuduk Crude Oil
     and /or CPC  Blend net of BS&W  delivered  to
     Buyers at any of the  Delivery  Points in the
     year in respect of Karakuduk Export Crude Oil
     produced in that year:                                     0.05

          For each Nomination in that next year, Buyers shall:

          aa.  calculate  the total net quantity of REBCO,  Karakuduk  Crude Oil
               and/or CPC Blend  already  supplied to Buyers in that year at the
               Delivery Points and the discount  calculated  pursuant to Article
               8.3 i to be applied to the  Barrels  to be  delivered  under that
               Nomination;

          bb.  confirm the price per Barrel in Dollars (or its equivalent at the
               Delivery  Point) at which  Buyers have sold the REBCO,  Karakuduk
               Crude  Oil or CPC Blend  specified  in that  Nomination  to their
               buyers; and

          cc.  advise  the date on which  Buyers'  buyers  will make  payment in
               respect of such supply

          within 3 working  days of making  arrangements  to sell such parcel of
          crude oil;

     ii.  the API adjustment in respect of deliveries on a FOB Novorossiisk, FOB
          Odessa, FOB Ventspils basis or FOB CPC Terminal basis, shall be as set
          out in Article 8.1 iii mutatis mutandis and for the avoidance of doubt
          there shall be no API adjustment for deliveries on a DAF Budkovce, DAF
          Fenyeshlitke or DAF Adamovo basis.

8.5  Whenever  pursuant to this  Agreement  it is  necessary  for the purpose of
     calculating a price or a payment due, to convert a given quantity of REBCO,
     Karakuduk Crude Oil or CPC Blend at a particular Delivery Point from tonnes
     into Barrels (or vice versa), the conversion tables set out in Attachment 6
     shall be used by Buyers to make that conversion and such  conversion  shall
     be conclusive, final and binding on the Parties. In the event that the said
     conversion  tables are updated,  amended or  re-issued  Buyers may use such
     updated,  amended or re-issued  conversion tables instead of the tables set
     out in Attachment 6.

8.6  All prices of REBCO,  Karakuduk Crude Oil and CPC Blend supplied  hereunder
     shall  be  calculated  to  three  (3)  decimal  places  and  the  following
     arithmetic rules shall be applied to do this:

     i.   if the fourth  decimal place is five (5) or greater than five (5) then
          the third decimal place shall be rounded up to the next digit.

     ii.  if the fourth decimal place is four (4) or less than four (4) then the
          third decimal place will be unchanged.

<PAGE>


8.7  Subject to Article 17.6,  Article F.12 of Part 2 and Article D.2 of Part 3,
     all payments to be made by Buyers to Sellers under this Agreement  shall be
     made free of charges  and  without  asserting  at the time of  payment  any
     set-off, counterclaim or right to withhold whatsoever, in Dollars in London
     to such bank  account  as may be  advised  by  Sellers  to  Buyers  quoting
     Sellers' invoice number and Buyers' name.

8.8  Unless  otherwise agreed in writing any amount due from Buyers which is not
     paid within the agreed credit period shall bear simple interest  commencing
     on the day  immediately  after  the date on which it  became  due up to and
     including the date of payment at the rate calculated as an annual rate (360
     day year basis) of one (1) per cent plus the one (1) month London Interbank
     Offered  Rate as quoted by the National  Westminster  Bank PLC at the 11.00
     a.m.  fixing on the first  London  banking  day for each month in which the
     overdue exists.

     The foregoing shall not be construed as an indication of any willingness on
     the part of Sellers to  provide  extended  credit as a matter of course and
     shall be without  prejudice  to any rights and remedies  which  Sellers may
     have under the agreement or otherwise.

8.9  Where the last day for  payment  falls on a Saturday or on any day which is
     not a banking day in London then any such payment shall be made on the next
     following  London  banking day in the same calendar month (if there is one)
     or the nearest preceding London banking day if otherwise.

                          ARTICLE 9: - TERMS OF SUPPLY

9.1  REBCO supplied pursuant to any Nomination shall be supplied under the terms
     set out in this Part 1 together with:

     i.   if the Nomination requires delivery on a FOB Novorossiisk;  FOB Odessa
          or FOB Ventspils basis, the terms set out in Part 2; and

     ii.  if  the  Nomination   requires   delivery  on  a  DAF  Budkovce;   DAF
          Fenyeshlitke or DAF Adamovo basis, the terms set out in Part 3.

9.2  Karakuduk Crude Oil or CPC Blend supplied  pursuant to any Nomination shall
     be supplied  under the terms set out in this Part 1 together with the terms
     set out in Part 2

9.3  In the event of there being any  inconsistency  or conflict  between Part 1
     and Part 2 or Part 3, the terms set out in this Part 1 shall prevail.

                         ARTICLE 10: TERMINATION EVENTS

10.1 If Sellers:

     i.   do not provide the  forecasts  required  pursuant to Article 7.1 for a
          period of 6 consecutive months;

     ii.  do not make  Nomination  Confirmations  in  respect  of 6  consecutive
          months;

     iii. make Nomination Confirmations that do not comply with the requirements
          of Article 7.4. in respect of 3 consecutive months;

     iv.  during the term of this  Agreement  without the written  agreement  of
          Buyers,  except in respect of those  quantities of Karakuduk Crude Oil
          that Sellers are obliged to deliver to the  Government of the Republic
          of Kazakhstan in respect of royalty in kind due under the terms of the
          Petroleum Licence,  enter into any agreement or understanding with any
          third party to sell, swap,  barter or otherwise supply Karakuduk Crude
          Oil or enter into any other agreement or understanding for the sale or
          supply of any other  grade or type of crude oil based on or  connected
          with the production of Karakuduk Crude Oil;

     v.   fails to pay on written demand by Buyers any amounts that are then due
          to Buyers pursuant to this Agreement;

     vi.  purport to sell,  transfer or assign their rights or duties under this
          Agreement in breach of Article 13.3; or

<PAGE>


     vii. undergo a Change of Control,

     then Buyers may  forthwith  terminate  this  Agreement  by serving  written
     notice of termination on Sellers.



10.2   If  either  Party  should  go  into  liquidation  (other  than  voluntary
       liquidation  for  the  purpose  of  corporate  reconstruction),  or  if a
       receiver,  administrator  or  sequestration of the undertaking and assets
       (or any part thereof) of either Party should be  appointed,  or if either
       Party should become  bankrupt or  insolvent,  should enter into a deed of
       arrangement  or a  composition  for the  benefit of their  creditors,  or
       should do or suffer any equivalent act or thing under any applicable law,
       the other Party may terminate  the  Agreement  forthwith by notice to the
       other Party.

10.3 Buyers may terminate this Agreement  forthwith by written notice to Sellers
     if:

     (a)  the Loan  Agreement  shall  terminate,  other than upon payment of all
          sums  payable  thereunder  having  been duly  paid,  or Shell  Capital
          Services Limited,  whether through assignment,  transfer or otherwise,
          has no  remaining  interest  in, or is no longer a party to,  the Loan
          Agreement; or

     (b)  the Service Agreement shall terminate.

10.4 In the event that all sums payable under the Loan  Agreement have been duly
     paid,  either  Party may  terminate  this  Agreement  forthwith  by serving
     written notice on the other Party.

10.5 If Buyers fail to pay on written  demand by Sellers  any  amounts  that are
     then due to Sellers  pursuant  to this  Agreement,  and fail to remedy such
     default within thirty days of notice thereof from Sellers, then Sellers may
     forthwith  terminate the Agreement by serving written notice of termination
     on Buyers.

10.6 This Article 10 is not intended to be an exhaustive  list of  circumstances
     in which either Party shall be entitled to terminate  this Agreement and is
     without  prejudice to either Party's other rights of termination under this
     Agreement or at law.

10.7 Save as expressly set out herein,  the breach by a Party of its obligations
     in respect of any  Nomination  shall not entitle that party to repudiate or
     otherwise terminate this Agreement.

10.8 No  termination of this  Agreement  shall  prejudice any rights or remedies
     under this  Agreement  relating to any period prior to such  termination or
     accrued  before,  at,  or  in  consequence  of  the  termination,   or  any
     proceedings (including arbitration) for determination or enforcement of any
     rights or remedies.

                            ARTICLE 11: FORCE MAJEURE

11.1 Subject to Article 11.3 and except in respect of the obligation to make any
     payment as required by this Agreement (which shall not be subject to relief
     under this Article  11.1), a Party shall not be in breach of this Agreement
     and liable to the other  Party for any  failure  to fulfil  any  obligation
     under  Agreement to the extent any  fulfilment  has been  interfered  with,
     hindered,  delayed or prevented by any circumstance whatsoever which is not
     reasonably  within the control of and is unforeseeable by such Party and if
     such Party exercised due diligence,  including,  acts of God, fire,  flood,
     freezing, landslides, lightning, earthquakes, fire, storm, floods, washouts
     and other natural disasters,  war (declared or undeclared),  insurrections,
     riots, civil disturbances, epidemics, quarantine restrictions, breakdown of
     any of Buyers'  nominated  vessel,  blockade,  embargo,  strike,  lockouts,
     labour disputes or restrictions imposed by any Government.

11.2 The Party  affected  shall be  excused  from the  performance  or  punctual
     performance,  as the case may be,  of such  obligation  for so long as such
     circumstance  continues to exist.  The Party affected shall promptly and at

<PAGE>

     any rate,  within  twenty-four  (24) hours of the  occurrence  of the event
     notify the other Party of the  occurrence  of the  circumstance  and of the
     obligation affected.

11.3 In respect of any Month,  Sellers  shall not be  entitled  to relief  under
     Articles  11.1  and  11.2 in  respect  of any  failure  to  deliver  REBCO,
     Karakuduk Crude Oil or CPC Blend (as the case may be) under a Nomination if
     the Field has produced  Karakuduk  Crude Oil in that month and crude oil is
     being  loaded on to  vessels  or  pumped  (as the case may be)  during  the
     loading  range or that month (as the case maybe) at the Delivery  Point for
     that Nomination save where Sellers can produce evidence,  to the reasonable
     satisfaction  of Buyers,  that such  failure to deliver  has been caused by
     force majeure having been declared by Kazakh Oil, Transneft or Kaztransoil

11.4 If the  performance of the  obligations of a Party under this Agreement has
     been delayed for a period of 3 months, the other Party shall be entitled to
     terminate this Agreement  thereafter by giving notice to that effect to the
     Party claiming relief under this Article 11.

11.5 No circumstance  described in Article 11.1 shall operate to extend the term
     of this Agreement.

                      ARTICLE 12: EXCLUSION OF LIABILITIES

12.1 Neither  Party  shall be liable to the other for any  indirect,  special or
     consequential   losses  or  damages   whatsoever  and  howsoever   arising,
     including,  any loss of production from the Field or damage to or shut down
     of the Field.

                            ARTICLE 13: - ASSIGNMENT

13.1 Subject to Article  13.2,  Sellers may not sell,  transfer or assign  their
     rights or duties under this  Agreement or their  interest in this Agreement
     to any other person  except with the prior  written  approval of Buyers and
     any such  purported  sale,  transfer or assignment  without the approval of
     Buyers shall be invalid and not binding on Buyers.

13.2 Notwithstanding  Article 13.1,  Sellers may transfer or assign their rights
     under or  interest  in this  Agreement  to the Lenders by way of a security
     interest in this Agreement for the benefit of the Lenders.

13.3 Subject to Article  13.4,  Buyers may not sell,  transfer  or assign  their
     rights or duties under this  Agreement or their  interest in this Agreement
     to any other person except with the prior  written  approval of Sellers and
     any such  purported  sale,  transfer or assignment  without the approval of
     Sellers shall be invalid and not binding on Sellers.

13.4 Notwithstanding  Article  13.3,  Buyers  may  delegate  any or all of their
     duties or obligations  under this Agreement to any of their  Affiliates but
     they shall retain  responsibility to Sellers for the proper  performance of
     such duties and obligations so delegated.

                              ARTICLE 14: NOTICES.

14.1 All notices or other  communications  shall be given in writing or by telex
     or facsimile. Any such notice shall be deemed to be given as follows:

     (a)  if in writing, when delivered;

     (b)  if  by  telex,   when  despatched,   but  only  if,  at  the  time  of
          transmission,  the correct  answerback appears at the start and end of
          the sender's copy of the notice; and

     (c)  if by facsimile, when the answerback is received.

     However,  a notice  given in  accordance  with the above but  received on a
     non-working  day or after business hours in the place of receipt shall only
     be deemed to be given on the next working day in that place.

<PAGE>


     If such notice is to Sellers, to:

                     Shell International Trading and Shipping Company Limited
                     Shell Mex House
                     Strand
                     London.  WC2R 0ZA

                     Telephone     :    44 171 546 5000
                     Facsimile     :    44 171 546 4448
                     Telex         :    SHELL LONDON 919651
                     Attention     :    General Manager, Government Accounts

     If such notice is to Buyers, to:

                     Closed Type JSC Karakudukmunay Inc.
                     Microregion 3
                     Building 82, Aktau
                     466200 Kazakhstan

                     Telephone:             7 3292 514814
                     Facsimile:             7 3292 518336
                     Telex:             To be advised
                     Attention:             Nikolai Klinchev, Director General


     With a copy to:

                     Chaparral Resources, Inc.
                     16945 Northcase Drive
                     Suite 1440
                     Houston, Texas 77060
                     USA

                     Telephone:                  1 281 877 7100
                     Facsimile:                  1 281 877 0985
                     Telex:               To be advised
                     Attention:                  Mike Young, KKM Notices


                           ARTICLE 15: REPRESENTATIONS

15.1  Each Party represents to the other Party that:

     i.   it is duly  organised  and  validly  existing  under  the  laws of the
          jurisdiction  of its  organisation or  incorporation  and, if relevant
          under such laws, in good standing;

     ii.  it has the power to execute and deliver this  Agreement  and has taken
          all  necessary  action  to  authorise  such  execution,  delivery  and
          performance;

     iii. such  execution  and delivery do not violate or conflict  with any law
          applicable to it, any provision of its constitutional  documents,  any
          order  or  judgement  of any  court  or  other  agency  of  government
          applicable to it or any of its assets or any  contractual  restriction
          binding on or affecting it or any of its assets;

     iv.  all  governmental  and other  consents which are required to have been
          obtained by it with respect to this Agreement,  have been obtained and
          are in full force and effect and all  conditions  of any such consents
          have been complied with; and

     v.   its obligations under this Agreement  constitute its legal,  valid and
          binding  obligations,  enforceable  in accordance  with its respective
          terms (subject to applicable bankruptcy, re-organisation,  insolvency,
          moratorium or similar laws affecting  creditors'  rights generally and
          subject, as to the enforceability,  to equitable principles of general
          application   (regardless  of  whether  enforcement  is  sought  in  a
          proceeding in equity or at law))
<PAGE>


                       ARTICLE 16: APPOINTMENT OF EXPERTS

16.1 Where  pursuant to any  provisions in the agreement a matter is required to
     be  determined  by an expert,  the expert  shall be a person  fitted by the
     possession of expert  knowledge  for the  determination  of the  particular
     matter in question.  The expert  shall be  appointed  by agreement  between
     Sellers and Buyers, or, in default of such agreement,  by the President for
     the time being of the Institute of Petroleum in London.

16.2 Sellers  and  Buyers  shall  furnish  the expert  with all  written or oral
     information which he may reasonably require for his determination.

16.3 The cost of the  services  of the  expert,  if  appointed,  shall be shared
     equally between Sellers and Buyers.

                           ARTICLE 17: MISCELLANEOUS

17.1 This Agreement constitutes the entire agreement of the Parties with respect
     to the subject  matter of this Agreement and the Parties  acknowledge  that
     they do not  enter  into  this  Agreement  relying  on any of the  previous
     communications between the Parties or their Affiliates.

17.2 No variation of or amendment to any of the terms of this Agreement shall be
     effective unless it is in writing and signed by or on behalf of each of the
     Parties and no waiver of any provision  hereof shall be effective unless it
     is in writing and signed by the Party against whom such waiver is sought to
     be enforced.

17.3 Except as  expressly  provided  herein,  the  rights,  powers and  remedies
     provided in this  Agreement are cumulative and not exclusive of any rights,
     powers and remedies provided by law.

17.4 Except as  expressly  provided  herein no delay or  omission on the part of
     either Party in exercising  any right,  power or remedy  provided by law or
     under this Agreement,  nor any indulgence granted by any Party to any other
     Party,  shall  impair such right,  power or remedy,  or be  construed  as a
     waiver  thereof,  nor shall the  single or partial  exercise  of any right,
     power or remedy provided by law or under this Agreement  preclude any other
     or further  exercise  thereof or the exercise of any other right,  power or
     remedy.

17.5 Nothing in this  Agreement  shall  constitute  or be deemed to constitute a
     partnership, trust or agency. The Parties shall not, and shall procure that
     their  directors,  officers and  employees,  in that  capacity,  shall not,
     represent  themselves or otherwise hold themselves out as an agent or other
     representative  of the other  Party or  otherwise  hold  themselves  out as
     having  any  authority  to bind the other  unless  such  person is  validly
     authorised in writing to do so.

17.6 Buyers  shall  have the right to deduct  from any  monies  due or which may
     become  due to  Sellers  any  monies or sums due and  payable  to Buyers or
     Buyers'  Affiliates  (including  under the Service  Agreement but excluding
     sums due and payable to any Buyers' Affiliates in their capacity as Lenders
     under the Loan  Agreement)  from Sellers or Sellers'  Affiliates,  provided
     always that Buyers shall only be permitted to exercise such right to deduct
     to  the  extent  that  the  Sellers  shall  still  receive,  after  Buyers'
     deduction,  such monies as it requires to deliver to the  Government of the
     Republic  of  Kazakhstan  in respect of royalty  due under the terms of the
     Contract.

17.7 In the  event  that any  provision  of this  Agreement  is  declared  to be
     illegal, invalid or otherwise unenforceable, this Agreement shall terminate
     forthwith  without  obligation on either Party to pay any  compensation  in
     respect of such termination.

17.8 Each Party  acknowledges and agrees to the tape or electronic  recording of
     conversations  between them pursuant to this  Agreement,  whether by one or
     other or both of them,  and that any such  recordings  may be  submitted in
     evidence in any proceedings  relating to the agreement.  Each Party further
     agrees to deliver up a copy or transcript of any such recording retained by
     it upon the written request of the other Party.

<PAGE>


17.9 All exchange of correspondence between the Parties shall be in English.

17.10This Contract  shall be signed in three  originals in the Russian  language
     and three originals in the English  language,  the English language version
     shall be the authoritative text.

17.11This  Agreement  does not confer  rights or remedies  upon any person other
     than Sellers and Buyers.

                    ARTICLE 18: GOVERNING LAW AND ARBITRATION

18.1 The proper law of this  agreement  is English  Law and English Law shall be
     used for  interpreting  the  agreement  and for  resolving  all  claims  or
     disputes arising out of or in connection with the agreement  (whether based
     in  contract  in tort or on any other  legal  doctrine).  Any such claim or
     dispute  not  settled by  negotiation  shall be settled by  arbitration  in
     London before a single  arbitrator agreed upon by both parties or if not so
     agreed  appointed in accordance  with the  Arbitration  Act 1996 as amended
     from time to time.  The  arbitration  shall be  conducted  in  English,  in
     accordance  with the provisions of the Arbitration Act 1996 as amended from
     time to  time,  the  seat  of the  arbitration  shall  be  England  and the
     arbitration award shall be final and binding without appeal to the Courts.

18.2 Sellers  hereby  appoint Law Debenture  Corporation  PLC of Princes  House,
     Gresham  Street,  London EC2 as their  agents in London for the  service of
     process to accept  service of process on their  behalf in  connection  with
     proceedings in the English  Courts.  Sellers may only dismiss their process
     agents or change the process  agent with the prior consent of Buyers (which
     shall not be unreasonably withheld or delayed).

18.3 The UN Convention on Contracts for the  International  Sale of Goods (1980)
     shall not apply.

                                     PART 2

                   TERMS FOR NOMINATIONS REQUIRING DELIVERY ON
     A FOB NOVOROSSIISK; FOB ODESSA, FOB VENTSPILS OR FOB CPC TERMINAL BASIS

ARTICLE A: MEASUREMENT, SAMPLING AND TESTING

A.1  The quantity and quality of each delivery of REBCO,  Karakuduk Crude Oil or
     CPC Blend (as the case may be) shall be determined by measurement, sampling
     and testing in the manner  customary at the loading port and shall  include
     testing that enables a quantity net of BS&W to be calculated. Sellers shall
     prepare and sign  certificates  as to the  quantity  and quality of the oil
     loaded upon completion of loading of the cargo. Sellers shall advise Buyers
     by telex,  cable or facsimile of the quantity and quality  recorded on such
     certificates as soon as possible after completion of loading of the cargo.

A.2  The results of measurement, sampling and testing shall, for the purposes of
     the  agreement,  be treated as  conclusive  as to the  quantity and quality
     loaded, however, the conclusiveness of the results so far as they relate to
     the quantity and quality  loaded may be displaced to the extent that it can
     be shown that the results are incorrect.

A.3  Buyers may appoint a representative  acceptable to Sellers to assist in the
     supervision  of  and  to  inspect  the  loading  of  each  cargo.  If  such
     representative  is  appointed  the  quantity  and  quality  of  the  REBCO,
     Karakuduk  Crude  Oil or  CPC  Blend  (as  the  case  may  be)  as  jointly
     ascertained by Buyers' representative and Sellers'  representative shall be
     the  quantity  and quality for the  purpose of the  certificate(s).  If any
     difference arises between Buyers' representative and Sellers with regard to
     the loaded quantity and quality, it shall be settled by an expert appointed
     under Article 16 of Part 1. The decision of such expert shall

<PAGE>


     be final and  binding  upon both  Buyers  and  Sellers;  but  pending  such
     decision,   the   quantity   and   quality  as   ascertained   by  Sellers'
     representative  shall  be used  for the  purpose  of the  telex,  cable  or
     facsimile referred to in Article A.1 of this Part 2.

     Unless  otherwise  specifically  agreed,  all costs  incurred  by Buyers in
     respect  of their  representative  shall be borne by Buyers  and any delays
     occasioned  by such  inspection  resulting in demurrage at the loading port
     shall be for the sole account of Buyers.

A.4  A  sufficient  quantity of the  relevant  representative  samples  shall be
     correctly   taken  at  each  loading  port  and  kept  in  accordance  with
     internationally recognised methodology and practice.

ARTICLE B: RISK AND PROPERTY

B.1  The risk and  property in the REBCO,  Karakuduk  Crude Oil or CPC Blend (as
     the case may be) supplied  pursuant to this Part 2 of the  Agreement  shall
     pass to Buyers at the loading port as the REBCO, Karakuduk Crude Oil or CPC
     Blend (as the case may be)  passes  the  loading  vessel's  permanent  hose
     connection.

B.2  Any loss of or damage to the  REBCO,  Karakuduk  Crude Oil or CPC Blend (as
     the case may be) during loading, if caused by the vessel or her officers or
     crew, shall be for the account of Buyers.

ARTICLE C: PAYMENT

C.1  Payment in respect  of each  Nomination  shall be made by Buyers to Sellers
     against presentation of the following documents:

     i.   full set of clean original Bills of Lading; and

     ii.  invoice complying with the requirements of this Article C,

     within  thirty  (30) days  after Bill of Lading  date (Bill of Lading  date
     equals  day  zero)  provided  however  that  if any or all of the  required
     documents  are not  available at the time payment is due  hereunder  Buyers
     shall pay  against  Sellers'  Letter of  Indemnity  (in the form set out in
     Attachment 3) for the missing documents.

C.2  Sellers' invoice shall be based on quantities determined in accordance with
     Article  A of this  Part  2.  Where  the  pricing  terms  for the oil to be
     supplied  hereunder do not allow a final  invoice to be  despatched in time
     for payment to be made by the due date,  Sellers  may  invoice  Buyers on a
     provisional  basis. A final invoice will be despatched to Buyers by Sellers
     as soon as is practical  thereafter.  Any resultant additional payment will
     be due immediately by Buyers to Sellers. Any resultant  overpayment will be
     immediately refunded by Sellers to Buyers.

C.3  Unless otherwise agreed the payment of any other costs, expenses or charges
     which  arise  under  the  terms  of the  agreement  shall  be made  against
     presentation of Sellers'  invoice and shall be for immediate  settlement by
     Buyers on or by the date advised thereon.

ARTICLE D: TAXES, DUTIES AND IMPOSTS

D.1  All taxes, duties,  levies or other imposts (other than those levied on the
     vessel)  charged in respect of any REBCO,  Karakuduk Crude Oil or CPC Blend
     (as the case may be) supplied  pursuant to this Part 2 of this Agreement in
     respect of the period prior to title to it passing to Buyers whether in its
     country of origin or in any country  through which it is  transported or is
     loaded  onto  Buyers'  vessel  shall be for the  account of Sellers and all
     taxes,  duties,  levies or other  imposts  charged in respect of any REBCO,
     Karakuduk Crude Oil or CPC Blend (as the case may be) supplied  pursuant to
     this Part 2 of this  Agreement  in respect of the period after title passes
     to Buyers shall be for the account of Buyers.

<PAGE>


ARTICLE E: VESSEL NOMINATION

E.1  Unless  otherwise  agreed,  in respect of any  Nomination,  Buyers shall at
     least five (5) days before the first day of the agreed  loading  date range
     notify  Sellers by telex of the name and summer  deadweight  tonnage of the
     vessel to be used and the  expected  date of that  vessel's  arrival at the
     loading  port,  and shall  provide  Sellers with any other  vessel  details
     necessary for the purpose of implementing the agreement. Sellers shall give
     notice accepting or rejecting any vessel  nomination  within one (1) London
     working day after receipt of such nomination, but shall not reject any such
     nomination  unreasonably.  In case of rejection,  Buyers shall,  as soon as
     possible,  nominate to Sellers an  alternative  vessel for Sellers'  prompt
     acceptance or rejection,  and, in the case of the latter, the parties shall
     negotiate a mutually acceptable nomination.

     Buyers'  nomination  shall be  consistent  with the loading port  authority
     requirements  and shall include,  but shall not be limited to, the vessel's
     name, flag, crew nationality, capacity, length, beam, summer deadweight and
     draught  together  with the quantity of REBCO,  Karakuduk  Crude Oil or CPC
     Blend (as the case may be) to be loaded.  If any of this  detail is unknown
     at the time of  nomination  then such missing  detail  should be advised no
     later than seven days prior to the first day of the agreed loading range.

E.2  Buyers may, or if necessary to perform their  obligations  hereunder  must,
     with Sellers'  prior  agreement,  substitute  any vessel by another  vessel
     which is similar in all material respects to the vessel so replaced. Buyers
     may also,  with Sellers' prior  agreement and by giving Sellers  reasonable
     notice,  amend in other respects any vessel  nomination or series of vessel
     nominations.  If such  amendment is rejected by Sellers,  the parties shall
     negotiate a mutually acceptable alternative vessel nomination. Buyers shall
     not, unless otherwise agreed, be relieved of its  responsibility to perform
     the agreed loading.

E.3  Buyers hereby warrant and undertake that:-

          i.   they are  familiar  with the  latest  vessel  size  restrictions,
               including  but not  limited  to,  deadweight,  draught,  beam and
               overall  length  limitations  of the  loading  port  and will not
               nominate a vessel exceeding such limitations;

          ii.  they are familiar  with,  and shall instruct the vessel to comply
               with,  all  applicable  regulations in force at the loading port,
               including,  but without  limitation,  those  relating to fires on
               board vessels; and

          iii. they shall instruct each vessel nominated hereunder,  at the time
               of loading:

               (a)  to  comply  with  all  applicable  rules,   regulations  and
                    directions of governmental,  local and port authorities (and
                    of the loading  terminal)  and shall conform in all respects
                    to all relevant international regulations and agreements;

               (b)  to have  hull,  machinery,  boilers,  tanks,  equipment  and
                    facilities  which are in good order and condition,  in every
                    way fit for the service  required  and fit to load and carry
                    the cargo specified; and

               (c)  have a full and efficient complement of master, officers and
                    crew.

E.4  Buyers  warrant and  undertake  that (for each vessel  nominated to carry a
     cargo)  the  vessel  is  owned  or  demise  chartered  by a  member  of the
     International Tanker Owners Pollution Federation Ltd (ITOPF).

     Buyers shall exercise reasonable efforts to ensure that:

     i.   the  vessel  carries  on board a valid  certificate  of  insurance  as
          described in the 1969 Civil  Liability  Convention  for Oil  Pollution
          Damage and the  International  Convention  on Civil  Liability for Oil
          Pollution Damage 1992;

<PAGE>


     ii.  the vessel has in place  insurance  cover for oil pollution no less in
          scope and amounts  than the highest  available  under the Rules of P&I
          Clubs entered into the International Group of P&I Clubs.

E.5  Buyers  shall  exercise  reasonable  efforts  to  ensure  that  any  vessel
     nominated to Sellers has on board a valid safety management certificate for
     the vessel issued pursuant to the  International  Safety  Management  (ISM)
     code and a certified copy of the vessel's  manager's document of compliance
     issued pursuant to the SOLAS convention 1974 as amended.

ARTICLE F: LOADING CONDITIONS

F.1  Buyers  shall  give  Sellers as far in  advance  as  Sellers  require  full
     instructions  consistent  with the loading port  regulations  regarding the
     loading of each vessel and the making up and  destination of  documentation
     covering the cargo(s).  Sellers shall use reasonable  endeavours to arrange
     for such  instructions  to be carried  out but they shall not be obliged to
     arrange for an instruction to be carried out which is inconsistent with any
     provision, express or implied, in the agreement.

F.2  Buyers shall arrange for each vessel  nominated by Buyers to cable or telex
     to the agent of  Sellers  and to the agent of the ship owner at the port of
     loading  the  vessel's  expected  time of arrival at the port of loading at
     least 96 hours prior to that time specifying deadweight,  flag, and draught
     of the tanker,  volume of clean and dirty  ballast on board.  Buyers  shall
     instruct the vessel shall also give to Sellers notice of its estimated time
     of arrival at the port of loading 48, 24 and 12 hours prior to arrival.

F.3  Sellers  shall  provide or shall cause to be  provided,  free of charge,  a
     berth or berths  which the vessel  can safely  reach and leave and at which
     she can lie and load always safely  afloat.  All port costs,  including the
     expense,  if any, of shifting  berth at the loading port (unless such shift
     is for Sellers' purposes), shall be for Buyers' account.

F.4  Sellers shall at all material times and at no expense to Buyers provide and
     maintain or cause to be provided and  maintained  in good working order all
     necessary flexible hoses,  connections,  pipelines,  tankage facilities and
     other accommodation for such loading of the vessel.

F.5  The time allowed for loading each cargo under the agreement shall be thirty
     six (36)  running  hours  (weather  permitting  and  Sundays  and  holidays
     included) and shall begin to run at each loading port either:-

     i.   at the expiry of six (6) hours after  notice of  readiness to load has
          been received by Sellers,  or by any other party nominated by Sellers,
          from the Master or his  representative  (which notice of readiness may
          be  tendered  only after the vessel has arrived  within the  customary
          anchorage  or  waiting  place  of the  port or,  if the  vessel  moves
          directly  to the  berth,  when the  vessel is  securely  moored to the
          loading berth); or

     ii.  if the vessel moves directly to the berth, when the vessel is securely
          moored at the loading berth,

     whichever occurs first, except that:-

          (a)  if the vessel  arrives before the first day of the agreed loading
               date  range   nominated  and  accepted  in  accordance  with  the
               provisions  of Article 7 of Part 1,  laytime  shall not  commence
               until  06.00  hours on the first day of the agreed  loading  date
               range or the time loading commences whichever is the earlier; or

          (b)  if the vessel  arrives  after the last day of the agreed  loading
               date  range   nominated  and  accepted  in  accordance  with  the
               provisions of Article 7 of Part 1, laytime shall  commence at the
               time loading commences.

F.6  Laytime  shall  cease on  disconnection  of cargo  hoses on  completion  of
     loading.

F.7  Time shall not count  against  laytime,  or, if the vessel is on demurrage,
     for demurrage when spent or lost:-

<PAGE>


     i.   on an inward  passage  moving  from her  waiting  place to the loading
          place nominated by Sellers; or

     ii.  whilst  the  vessel is  handling  or  preparing  to handle  ballast or
          bunkers,  unless this is carried out concurrent  with loading or other
          normal cargo  operations such that no loss of time is involved,  or is
          carried out to comply with shore restrictions; or

     iii. by any delay due to fault, failure or inefficiency of the vessel; or

     iv.  awaiting  tide, tug boats,  pilot,  daylight,  immigration/customs  or
          pratique, unless any or all of these delays are occasioned by shifting
          berth for  Sellers'  account as defined in Article F.3 of this Part 2;
          or

     v.   as a result of strike, lockout, stoppage or restraint of labour.

F.8  If the laytime  allowance as provided  under  Article F.5 of this Part 2 is
     exceeded Sellers shall, except as hereinafter  provided in this Clause, pay
     to Buyers  demurrage for all such excess time at the full rate specified in
     Article  F.9 of this Part 2. If however  all or part of such  demurrage  is
     incurred due to fire or explosion or by breakdown of machinery or equipment
     at the port of loading in or about the loading terminal or berth (not being
     first caused by the  negligence or the wilful act or omission of Sellers or
     the terminal operator, their servants or agents), or arises or results from
     act of God, act of war, riot,  civil  commotion,  or arrest or restraint of
     princes,  rulers or peoples,  the rate of demurrage shall be reduced to one
     half for the period of such demurrage or part thereof.

F.9  If in respect  of any  Nomination,  the  laytime  allowance  at the port of
     loading is exceeded and demurrage incurred,  Sellers shall pay demurrage to
     Buyers at the demurrage rate established by reference to the LTBP award for
     the particular voyage in question.

F.10 If the  nominated  vessel is loaded by Sellers and other  suppliers  at the
     same port,  demurrage  will be divided in  proportion  to quantity of goods
     covered  by the  bill of  lading  of  each  supplier  provided  that if any
     demurrage is caused by only one of the suppliers  demurrage will be totally
     for that party's account.

F.11 Any  claim  for  demurrage  must be sent by  Buyers  to  Sellers  with full
     supporting  documentation  within  60 days  after  the  date of the bill of
     lading (or if all documents are not available to Buyers,  Buyers may submit
     the claim with an estimate of amount),  otherwise  claims will be deemed to
     have been waived.

F.12 Buyers may deduct and  set-off  the  amount of any  demurrage  agreed  with
     Sellers or other  agreed  costs and  expenses due to Buyers from any amount
     due to Sellers from Buyers  provided that if no such  deduction and set-off
     is made,  such demurrage  shall be immediately due and payable and shall be
     paid  forthwith by Sellers to Buyers in Dollars free of charges and without
     asserting  at the time for payment any  set-off,  counterclaim  or right to
     withhold  whatsoever in New York to Buyers' account number  9492604708 with
     Chase  Manhattan  Bank, New York . For Further Credit to STASCO USD Receipt
     Account.  SWIFT address  CHASUS33 or CHIPS  Participant  Number 0002 or Fed
     Wire  Routing  Number  021000021  (or to such other bank  account as may be
     advised by Buyers to Sellers  from time to time ) quoting  Buyer's  invoice
     number and Sellers' name.

F.13 Sellers agree to reimburse Buyers for the cost of any time lost and for any
     bunkers used on behalf of Buyers to raise the  temperature  above or reduce
     the temperature below the temperature at which cargo was loaded in order to
     meet the  temperature  range agreed  separately  between Sellers and Buyers
     provided that:

     i.   the vessel  loading  such cargo  arrives at the loading  port ready to
          load  during  the  agreed  loading  date  range  and  failure  to meet
          requirements of the  temperature  range is not due to fault or failure
          of the vessel or to suspension of loading for vessel's purposes; or

<PAGE>


     ii   the vessel  loading  such cargo  arrives at the loading  port ready to
          load during the agreed  loading date range,  and Sellers elect to load
          the vessel  with oil at a  temperature  not within  the  specified  or
          agreed temperature range.

     In respect of each claim,  Buyers shall  furnish  Sellers  with  reasonable
     evidence of the costs which have been incurred.

ARTICLE G: CLAIMS

G.1  Any claim in respect of a shortage  in quantity or defect in the quality of
     oil will only be  considered  by Sellers if notice in writing of such claim
     is received by Sellers  within one hundred and twenty  (120) days after the
     date of the Bill of Lading  (Bill of Lading  date  equals day zero) for the
     Nomination  and such notice is followed by a fully  documented  claim to be
     received by Sellers within one hundred and eighty (180) days after the date
     of the Bill of Lading (Bill of Lading date equals day zero). If Buyers fail
     to give  notice of or to submit  any such  claim  within  the time  limits,
     Buyers'  claim is  deemed  to be waived  and any  liability  on the part of
     Sellers extinguished.

ARTICLE H. TERMS AND CONDITIONS

H.1. Incoterms 1990 are  incorporated  into and form part of this Part 2. In the
     event of any  conflict or  inconsistency  between the terms set out in this
     Agreement and the Incoterms 1990, the terms set out in this Agreement shall
     prevail.

                                     PART 3

                   TERMS FOR NOMINATIONS REQUIRING DELIVERY ON
              A DAF BUDKOVCE; DAF FENYESHLITKE OR DAF ADAMOVO BASIS

ARTICLE A: DELIVERY

A.1  Delivery of REBCO made in respect of any  Nomination  shall be made in pipe
     at the Delivery Point  specified in the Nomination  upon the duly completed
     DAA for that REBCO  (being all or part of the  quantity in the  Nomination)
     being delivered by the Delivering Party to the Receiving Party.

ARTICLE B: MEASUREMENT, SAMPLING AND TESTING

B.1  In  respect  of each  Nomination  the  quantity  and  quality  of the REBCO
     delivered shall be determined by  measurement,  sampling and testing in the
     manner  customary at the Delivery  Point which shall  include  testing that
     enables a quantity net of BS&W to be  calculated.  The quantity and quality
     so determined  shall be stated on the DAA for that REBCO and the results of
     measurement,  sampling  and  testing  obtained  at the  Delivery  Point  in
     accordance  with this Clause  shall be treated,  in the absence of fraud or
     manifest error, as conclusive and binding as to the quantity and quality of
     the oil delivered.

ARTICLE C: RISK AND PROPERTY

C.1  Risk and  property in REBCO  delivered in respect of any  Nomination  shall
     pass from Sellers to Buyers at the Delivery Point stated in that Nomination
     at [24:00 hours local time] on the date stated upon the duly  completed DAA
     for that REBCO

C.2  Sellers  hereby  warrant to Buyers  that at the time  property in the REBCO
     delivered under the Agreement  passes to Buyers,  Sellers have the right to
     sell that crude oil to Buyers and Sellers have  unencumbered  title to that
     crude oil.  Without  prejudice  to any other  remedy  available  to Buyers,
     Sellers  hereby  irrevocably  and  unconditionally  undertake  to indemnify
     Buyers and hold Buyers  harmless  against  any and all claims made  against
     Buyers by anyone and all loss,  costs  (including  but not limited to legal
     costs),  damages,  and expenses which Buyers may suffer, incur or be put to
     as a result of a breach of the warranty set out in this Article C.2.

<PAGE>


ARTICLE D: PAYMENT

D.1  In respect of each Nomination:

     i.   Sellers'  invoice  shall be for the  quantity  of REBCO net of BS&W as
          stated on the DAA(s) for that  Nomination and the total amount payable
          shall be stated in Dollars  and  calculated  on the basis of the price
          per Barrel and  applicable  discount  advised  by Buyers  pursuant  to
          Article 8.1 of Part 1;

     ii.  payment for REBCO  delivered shall be made by Buyers to Sellers on the
          day that Buyers have agreed with their  buyers of the REBCO  delivered
          under that Nomination, or the day that falls 45 days after the date of
          the original  DAA for that  Nomination  (whichever  is the earlier) as
          being the payment  date  against  presentation  by Sellers of Sellers'
          commercial  invoice  (telex  invoice  acceptable)  complying  with the
          requirements  of Article D.1i of this Part 3 and the  original  DAA(s)
          for that  Nomination  complying  with the  requirements  set out below
          together  with  the  delivery  of  any  other  delivery  documents  as
          stipulated in the instructions issued by the Buyers prior to delivery.

          In respect of each  original DAA  presented  by Sellers,  in order for
          Buyers to be obliged to make payment  against such  document,  the DAA
          must:

     i.   be in one of the formats set out in Attachment 5;

     ii.  have a serial number;

     iii. state the date of pumping;

     iv.  state the number of Routing Cable (Marshrutnoe Poruchenie);

     v.   state the number of the Customs Declaration for the oil;

     vi.  state the number of the Measuring Station;

     vii. state the name of the Delivering Party Representative;

     viii. state the name of the Receiving Party Representative;

     ix.  state the owner of REBCO as being Sellers;

     x.   state the exporter of the REBCO as being  [either]  Sellers [or Kazakh
          Oil];

     xi.  state the chain of buyers starting with Buyers and listing every buyer
          in the chain and  finishing  with the final  receiver  as  advised  by
          Buyers pursuant to Article 7.4.ii.(a) of Part 1;

     xii. states the quality as being REBCO  conforming  with the  specification
          set out in Attachment 1A;

     xiii. states the gross and net quantity of REBCO in tonnes;

     xiv. bear  the  signatures  and  legible   impressions  of  the  stamps  of
          Delivering    Party's    Representative    and    Receiving    Party's
          Representative.

D.2  Buyers may deduct and set-off the amount of any and all costs and  expenses
     incurred by Buyers and agreed with Sellers in connection  with the delivery
     of a  Nomination  due  to  the  Sellers'  performance,  non-performance  or
     mis-performance  under  this  Agreement  from  any  amount  due to  Sellers
     provided that if no such  deduction and set-off is made, all such costs and
     expenses  claimed by Buyers shall be immediately  due and payable and shall
     be paid  forthwith  by  Sellers to Buyers in  Dollars  free of charges  and
     without  asserting  at the time for payment any  set-off,  counterclaim  or
     right  to  withhold  whatsoever  in New  York  to  Buyers'  account  number
     9492604708  with Chase  Manhattan  Bank,  New York . For Further  Credit to
     STASCO USD Receipt  Account.  SWIFT address  CHASUS33 or CHIPS  Participant
     Number 0002 or Fed Wire  Routing  Number  021000021  (or to such other bank
     account as may be advised by Buyers to Sellers  from time to time ) quoting
     Buyers' invoice number and Sellers' name.

<PAGE>


ARTICLE E: TAXES AND DUTIES

E.1  All taxes, duties,  levies or other imposts charged in respect of any REBCO
     supplied  pursuant  to this Part 3 of this  Agreement  prior to title to it
     passing  to Buyers  whether  in its  country  of  origin or in any  country
     through which it is  transported or is delivered to Buyers shall be for the
     account of Sellers and all taxes,  duties,  levies or other imposts charged
     in respect of any REBCO supplied  pursuant to this Part 3 of this Agreement
     in respect of the period  after  title to it passes to Buyers  shall be for
     the account of Buyers.

ARTICLE F: CLAIMS

F.1  Any claim in respect of a shortage  in quantity or defect in the quality of
     oil will only be  considered  by Sellers if notice in writing of such claim
     is received by Sellers  within one hundred and twenty  (120) days after the
     date of the DAA or last DAA for the  particular  Nomination and such notice
     is followed by a fully  documented  claim to be received by Sellers  within
     one hundred and eighty (180) days after the date of the DAA or last DAA for
     the  particular  Nomination.  If Buyers fail to give notice of or to submit
     any such claim within the time limits, Buyers' claim is deemed to be waived
     and any liability on the part of Sellers extinguished.

ARTICLE G: TERMS AND CONDITIONS

G.1  Incoterms 1990 are  incorporated  into and form part of this Part 3. In the
     event of any  conflict or  inconsistency  between the terms set out in this
     Agreement and the Incoterms 1990, the terms set out in this Agreement shall
     prevail.




IN WITNESS  WHEREOF,  the Parties hereto have caused this Agreement to be signed
by their duly authorised representatives on the dates shown below.

SIGNED
for and on behalf of
SHELL INTERNATIONAL TRADING AND SHIPPING COMPANY LIMITED
as agents for
SHELL TRADING INTERNATIONAL LIMITED


By     :
          -------------------------------------------
Name   :
          -------------------------------------------
Title  :
          -------------------------------------------
Date   :
          -------------------------------------------
SIGNED
for and on behalf of
CLOSED TYPE JSC KARAKUDUKMUNAY


By     :
          ------------------------------------------
Name   :
          ------------------------------------------
Title  :
          ------------------------------------------
Date   :
          ------------------------------------------

<PAGE>


By     :
          ------------------------------------------
Name   :
          ------------------------------------------
Title  :
          ------------------------------------------

<PAGE>



                                  ATTACHMENT 1A



                Specification for Russian Export Blend Crude Oil



Density at 20 degr. C, g/cm cub., mx             0.8700

Sulphur Content, pct, weight max.                1.8

Paraffin content, pct, weight max.                              6.0

Water and Sediments content, pct, max. (vol)                    1.2

Distillation, pct, volume:

       up to 200 degree C   .                    21

       up to 300 degree C   .                    41

       up to 350 degree C                        50

Salts content, mg/l, .                           100



                                  ATTACHMENT 1B



                      Specification of Karakuduk Crude Oil


Density at 15 degr. C, KG/L                      0.816

API gravity 60 degr. F                           41.9

KIN.VISC. at 40 degr. C MM2/S                    6.61

KIN.VISC. at 60 degr. C MM2/S                    3.55

Sulphur content % M/M                            0.04

Reid vapour pressure PSI/KPA                     4.3/30

Pour point ASTM(MIN/MAX) degr. C                 15/27

Exist H2S content MG/KG                          less 1

Potent H2S content MG/KG                         less1

Potent HCL content MG/KG                         9

Calc gross cal value KJ/KG                       46040





<PAGE>


                                  ATTACHMENT 2

                             Nomination Confirmation





                            "Nomination Confirmation



To: STASCO
London

Attention:    [                    ]

We are please to make the following Nomination  Confirmation pursuant to Article
7.3 of the Crude Oil Sale and Purchase Agreement dated [ ] for the month of [ ]:

1.     Total Quantities to be supplied:

       A REBCO:                        [             ] tonnes

       A Karakuduk Crude Oil:          [             ] tonnes

       A CPC Blend:                    [             ] tonnes

1.     Nominations:
<TABLE>
<CAPTION>

<S>                        <C>                             <C>                     <C>               <C>
--------------------------------------------------------------------------------------------------------------------------
       Nomination          Grade of crude oil to be        Delivery Point          Quantity         Delivery Period
          Ref.                    delivered
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------


Regards,

[                    ]"
</TABLE>


<PAGE>

                                  ATTACHMENT 3

                               Letter of Indemnity



                              "LETTER OF INDEMNITY



FROM:  [                                             ]



TO:           SHELL INTERNATIONAL TRADING  AND SHIPPING COMPANY LIMITED

              (For and on behalf of Shell Trading International Limited)

IN  CONSIDERATION  of your paying for the cargo  of..............U.S.  Barrels /
Metric Tons of (type of crude oil and/or  product).............which sailed from
(Port)  ............on  (vessel  and  date)  loaded  with  such  cargo  when the
(document)  ................for  such cargo has not been delivered to you at the
time payment is due under our contract dated.................  we hereby warrant
to you that at the time  property  passed  as  specified  under the terms of the
above  contract  we had the  right  to sell  the  said  cargo  to you and we had
unencumbered title to the said cargo.

We hereby  irrevocably and  unconditionally  undertake to indemnify you and hold
you harmless  against any claim made against you by anyone as a result of breach
by us of any  of our  warranties  as  set  out  above,  and  all  losses,  costs
(including,  but not limited to costs as between  attorney or solicitor  and own
client),  damages,  and expenses which you may suffer,  incur or be put to which
are not too remote as a result of our failure to deliver  the above  document(s)
in accordance with the contract.

This indemnity  shall  terminate on delivery by us of the aforesaid  document(s)
and their acceptance by you.

This indemnity shall be governed by and construed in accordance with English law
and all disputes,  controversies or claims arising out of or in relation to this
indemnity or the breach,  termination or validity hereof shall be decided by the
English courts.

SIGNED for
[                                         ]

By     :      ...................................
Name   :      ...................................
Title  :      ...................................
Date   :      ...................................


<PAGE>



                                  ATTACHMENT 4
                               Service Agreement.

                            Dated: 1St November,1999











                          Commercial Services Agreement








                       Shell Trading International Limited
                                       and
                         Closed Type JSC Karakudukmunay


<PAGE>



THIS COMMERCIAL SERVICES AGREEMENT is made the 1st day of November, 1999

BETWEEN:

(1)  SHELL TRADING INTERNATIONAL  LIMITED, a company incorporated under the laws
     of England and having its  principal  office at Shell Centre London SE1 7NA
     ("STIL"), acting through its agent SHELL INTERNATIONAL TRADING AND SHIPPING
     COMPANY  LIMITED,  a company  incorporated  under the laws of England,  and
     having its principal  office at Shell-Mex  House,  Strand,  London WC2R OZA
     (hereinafter referred to as "STASCO"). and

(2)  CLOSED TYPE JSC KARAKUDUKMUNAY a company incorporated under the laws of the
     Republic of  Kazakhstan,and  having its principal  office at Microregion 3,
     Building 82, Aktau 466200  Kazakhstan  (hereinafter  referred to as "KKM").
     (STASCO  and KKM may be referred  to herein  individually  as a "Party" and
     collectively as the "Parties".)

WHEREAS:
A.   KKM is the lawful holder of the Petroleum Licence No. MG #249(Oil) dated 25
     June 1995 (as subsequently amended) granted to KKM by the Government of the
     Republic of Kazakhstan.
B.   STASCO provides to its Affiliates certain services relating to the sale and
     marketing  of crude oils and KKM wishes to receive  similar  services  more
     particularly  described  herein  in  relation  to its  business  activities
     undertaken pursuant to the Petroleum Licence.
C.   KKM and STIL, acting through its agent,  STASCO, are parties to a crude oil
     sale and purchase  agreement  even dated  herewith  regarding  the sale and
     purchase of crude oil being, or being  equivalent to, the total quantity of
     exportable   Karakuduk   Crude  Oil  (the  "Crude  Oil  Sale  and  Purchase
     Agreement") and the Crude Oil Sale and Purchase Agreement shall only become
     effective,  inter alia,  upon the execution and delivery of this agreement.

THEREFORE IT IS AGREED AS FOLLOWS:-

                             ARTICLE 1 - DEFINITIONS

1.1  In this Agreement and the recitals  hereto,  save as set out in Article 1.2
     below, or unless the context otherwise requires,  any term which is defined
     in the Crude Oil Sale and  Purchase  Agreement  shall have the same meaning
     when used herein as is  ascribed  to it in the Crude Oil Sale and  Purchase
     Agreement.
1.2  The  following  terms  shall have the  meaning  set out  below,  unless the
     context otherwise requires:
     "Agreement" means this agreement.
     "Confidential Information" means any knowledge, data and information at any
     time disclosed to one Party ('the receiving  Party') by or on behalf of the
     other Party ('the disclosing Party') in writing,  in drawings,  in computer
     programs,  or in any other way, or acquired  directly or  indirectly by the
     receiving Party from the disclosing Party.
     "Crude Oil Sale and Purchase  Agreement" shall have the meaning ascribed to
     it in Recital C hereto.
     "Effective Date" shall have the meaning ascribed to it in Article 2.1.
     "Fee" shall have the meaning ascribed to it in Article 5.1.
     "First Annual Fee" shall have the meaning ascribed to it in Article 5.1.
     "Gross  Negligence or Wilful  Misconduct" means any act or omission done or
     omitted to be done  intentionally or with deliberate or reckless  disregard
     for the reasonably  foreseeable  consequences of such act or omission,  but
     does not include any good faith error of judgement or mistake.
     "Services" shall have the meaning set out in Article 4.1.
1.3  In this Agreement, unless the context otherwise requires:
     (a)  headings are for convenience only and do not affect the interpretation
          of this Agreement;
     (b)  an  expression  importing  a  natural  person  includes  any  company,
          partnership,  trust, joint venture, association,  corporation or other
          body corporate and vice versa;

<PAGE>


     (c)  references to Articles,  unless the context  otherwise  requires,  are
          references to articles of this Agreement;
     (d)  except as otherwise  provided,  a reference to a document  includes an
          amendment  or  supplement  to, or  replacement  or  novation  of, that
          document, but disregarding any amendment,  supplement,  replacement or
          novation made in breach of this Agreement;
     (e)  a reference  to a Party to this  Agreement  and to any other  document
          includes that Party's successors and permitted assigns;
     (f)  words importing the singular include the plural and vice versa;
     (g)  the word "including" means "including without limitation";
     (h)  a "business  day" means a day (other than Saturday or Sunday) on which
          banks are open for ordinary banking business in London;
     (i)  a "year" means a calendar year, a "quarter"  means a calendar  quarter
          and a "month" means a calendar month.

                        ARTICLE 2: - CONDITIONS PRECEDENT

2.1  The provisions of this Agreement  other than this Article 2.1,  Article 5.1
     and  Article  6.1 shall only come into  effect on the date (the  "Effective
     Date") when:
     (a)  disbursement  of the first advance under the Loan Agreement shall have
          occurred;
     (b)  the Crude Oil Sale and Purchase Agreement shall have been executed and
          delivered by the parties thereto; and
     (c)  the  payment  required  by Article  5.1 shall have been made by KKM to
          STASCO in accordance with Article 6.1

     whereupon  this  Agreement  shall have full force and effect.  In the event
     that the  Effective  Date does not occur prior to 31st January  2000,  this
     Agreement may be terminated forthwith by Buyers with immediate effect.

                         ARTICLE 3: - TERM OF AGREEMENT

3.1  Subject to Articles 2.1 and 10, this  Agreement  shall be effective for the
     duration  of the Crude  Oil Sale and  Purchase  Agreement  and  subject  to
     earlier  termination  pursuant to Articles 2.1 and 10 shall only  terminate
     upon the termination of the said Crude Oil Sale and Purchase Agreement.
3.2  Termination of this Agreement  pursuant to Article 3.1 shall not create any
     obligation  on either  Party to pay any  compensation  in  respect  of such
     termination.

                              ARTICLE 4: - SERVICES

4.1  Subject to Article  4.4,  STASCO  shall  provide  the  services  set out in
     Article 4.2 (the "Services") to KKM.
4.2  The Services shall comprise:

     (a)  The provision of information regarding international crude oil markets
          to assist KKM gain a better  understanding of international  crude oil
          markets and how REBCO,  Karakuduk  Crude Oil or CPC Blend (as the case
          may be) is placed against the competitors. This information may either
          be of a general  nature or  specific  to a  particular  area or market
          environment.
     (b)  The preparation and delivery of  presentations  (not exceeding two per
          year) at the request of KKM on international  crude oil markets to the
          government  departments,  the national oil company and other  official
          entities in the Republic of Kazakhstan.
     (c)  The  provision  (to the extent STASCO is free to disclose the same) of
          information  pertaining  to meetings and contacts  with members of the
          oil industry around OPEC meetings.
     (d)  If requested by KKM, the  provision of advice to KKM on ways and means
          to upgrade  crude oil  deliverability  (cargo size,  timing) by KKM of
          crude  oil to be  supplied  under  the  Crude  Oil Sale  and  Purchase
          Agreement.
     (e)  If requested by KKM, the  provision of  assistance to obtain access to
          public country data (including competitor  information,  if available)
          and crude  evaluation of the different crudes produced in the Republic
          of Kazakhstan.

<PAGE>


     (f)  If requested by KKM, the review of crudes oil grades that compete with
          REBCO, Karakuduk Crude Oil or CPC Blend (as the case may be) and their
          pricing range  vis-a-vis  REBCO,  Karakuduk Crude Oil or CPC Blend (as
          the case may be).
     (g)  If  requested,  the provision of  information  to  independent  market
          assessors (e.g.  Platts,  Argus)  regarding the true and fair value of
          REBCO, Karakuduk Crude Oil or CPC Blend (as the case may be).
     (h)  The provision of the services of a "non-dedicated"  account manager to
          assist  with the  marketing  and sale of  Karakuduk  Crude Oil to such
          extent as STASCO  considers to be  appropriate  and  reasonable  which
          shall include not more than two visits per year to KKM in the Republic
          of  Kazakhstan  by the STASCO  account  manager  (the total  aggregate
          duration  of which  shall not exceed six  working  days),  save in the
          first year of this  Agreement  in which no more than five visits shall
          be made to KKM in the  Republic of  Kazakhstan  by the STASCO  account
          manager.
     (i)  The  provision  (to the extent STASCO is free to disclose the same) of
          information  pertaining to meetings and contacts made at international
          oil industry  meetings (e.g. IP, API, APEC) in so far as it relates to
          the marketing of REBCO,  Karakuduk Crude Oil or CPC Blend (as the case
          may be).

4.3  The Services may be varied by the mutual agreement of the parties.
4.4  STASCO shall use its reasonable  endeavours to fulfil its  obligations  and
     discharge  its  responsibilities   hereunder  with  all  due  care  and  in
     accordance  with  good  commercial  practice  but  always  subject  to  the
     provisions of Article 9.

                     ARTICLE 5: - REMUNERATION AND EXPENSES

5.1  In consideration of the provision of the Services,  KKM shall pay an annual
     fee (the  "Fee") to STASCO of  $100,000  in respect of the period  from the
     date  hereof  until  31st  December  2000  (the  "First  Annual  Fee")  and
     thereafter  $50,000 in respect  of each year (or part  thereof)  during the
     term of this Agreement.
5.2  Save as set out in Article 5.1, all costs and expenses incurred in relation
     to the provision of the Services shall be solely for the account of STASCO.


                          ARTICLE 6: - TERMS OF PAYMENT

6.1  KKM shall pay the First Annual Fee upon the execution of this Agreement and
     the Fee in respect  of each year  after the year 2000,  shall be paid by 31
     December each year for the following year.
6.2  STASCO shall invoice KKM for the First Annual Fee and the Fee for each year
     including  and after the year 2000 and any value added tax payable  thereon
     and KKM shall pay each invoice free of charges and without asserting at the
     time  for  payment,   any  set-off,   counterclaim  or  right  to  withhold
     whatsoever,  in Dollars in New York to STASCO's  account number  9492604708
     with Chase  Manhattan  Bank,  New York . For  Further  Credit to STASCO USD
     Receipt Account. SWIFT address CHASUS33 or CHIPS Participant Number 0002 or
     Fed Wire Routing Number  021000021 (or to such other bank account as may be
     advised by STASCO to KKM from time to time) quoting STASCO's invoice number
     and KKM's name.
6.3  All payment  under this  Agreement  will be made  without any  deduction or
     withholding  for or on  account  of any tax,  levies or  impost  whatsoever
     unless such  deduction or  withholding is required by any applicable law in
     which case KKM shall pay in  addition  to the  payment to which  STASCO are
     otherwise  entitled  under  this  Agreement  such  additional  amount as is
     necessary  to ensure that the net amount  actually  received by STASCO will
     equal the full amount that STASCO would have received had no such deduction
     or withholding been required.
6.4  Unless  otherwise  agreed in  writing  any  amount  due from KKM under this
     Agreement  which is not paid by the due date  shall  bear  simple  interest
     accruing on a daily basis commencing on the day immediately  after the date
     on which it became due up to and  including the date of payment at the rate
     calculated  for each  Month on the  basis of an  annual  rate (360 day year
     basis) of three percent plus the one Month London Interbank Offered Rate as

<PAGE>


     quoted by the National Westminster Bank PLC at the 11.00 a.m. fixing on the
     first  London  banking  day for each Month in which the amount due from KKM
     remains  unpaid.  The foregoing  shall not be construed as an indication of
     any  willingness  on the part of STASCO  to  provide  extended  credit as a
     matter of course and shall be without  prejudice to any rights and remedies
     which STASCO may have under this agreement or otherwise.
6.5  Where the due day for  payment  falls on a Saturday  or on a weekday  other
     than  Monday  which is not a banking day in New York or at such other place
     as may be designated by STASCO for payment,  then any such payment shall be
     made on the nearest  preceding  banking day. Where the last day for payment
     falls on a Sunday or a Monday  which is not a banking day in New York or at
     such other place so designated,  then any such payment shall be made on the
     next following banking day.

                  ARTICLE 7: - RELATIONSHIP BETWEEN THE PARTIES

7.1  In performing its obligations under this Agreement STASCO is an independent
     contractor  to KKM.  STASCO shall make it clear in all dealings  that it is
     not an agent of KKM and  unless  expressly  authorised  in  writing by KKM,
     STASCO  shall have no  authority  whatsoever  to make any  legally  binding
     commitment on behalf of KKM.
7.2  Nothing  herein shall be construed as creating a partnership or trust or an
     agency between KKM and STASCO.
7.4  Nothing in this Agreement shall prevent STASCO from providing services of a
     similar  nature  as the  Services  to any  other  party  whether  or not an
     Affiliate of STASCO.

               ARTICLE 8: - EXCLUSIVITY AND CONFLICT OF INTERESTS

8.1  During the term of this  Agreement,  KKM shall not  procure  services  of a
     similar or comparable nature to the Services from any of STASCO's major oil
     company  competitors in the business of international  trading of crude oil
     and petroleum products.
8.2  Title and access to,  copyright  and all  intellectual  property  rights to
     (including the right to patent any new invention),  the right to possession
     of and the free right of use of all things  created under or arising out of
     the Services  shall be retained or shall vest  immediately  in (as the case
     may be) STASCO.

                      ARTICLE 9: - LIABILITY AND INDEMNITY

9.1  Except  as  provided  in  Article  9.5,  neither  STASCO,  nor  any  of its
     Affiliates,  nor any  person  appointed  by or acting on behalf of  STASCO,
     shall have any liability to KKM whatsoever (whether or not arising from the
     negligence of STASCO,  any of its Affiliates or any person  appointed by or
     acting on behalf of  STASCO)  for any loss,  liability,  damages,  costs or
     expenses whatsoever suffered or incurred by KKM arising out of or connected
     with  the  performance,  non-performance  or  mis-performance  of  STASCO's
     obligations and duties hereunder except in respect of any loss,  liability,
     damages,  costs or expenses  suffered or incurred by KKM as a direct result
     of STASCO's Gross Negligence or Wilful Misconduct.
9.2  In no case whatsoever shall STASCO be responsible for any indirect, special
     or  consequential  losses  or  damages,  including  in  respect  of loss of
     production, loss of profit, business interruption,  field shut in or damage
     to the Field.
9.3    KKM  shall  indemnify  and  hold  STASCO,  any of its  Affiliates,  their
       respective directors,  officers and employees and any person appointed by
       or acting on behalf of STASCO harmless against all actions,  proceedings,
       claims,  demands,  losses,  fines,  damages,  settlements,  expenses  and
       liabilities  whatsoever (including those arising out of or connected with
       the  negligence  of  STASCO,  any of  its  Affiliates,  their  respective
       directors,  officers and employees and any person  appointed by or acting
       on behalf  of  STASCO)  suffered  or  incurred  by  STASCO,  any of their
       Affiliates,  their respective  directors,  officers and employees and any

<PAGE>


       person  appointed  by or acting on  behalf  of STASCO  arising  out of or
       connected with the performance,  non-performance  or  mis-performance  of
       STASCO's  obligations and duties  hereunder  except (i) in respect of any
       such  actions,  proceeding,  claims,  demands,  losses,  fines,  damages,
       settlements,  expenses and liabilities that directly result from STASCO's
       Gross  Negligence or Wilful  Misconduct;  and (ii) as provided in Article
       9.5.
9.4  For the  purpose  of  obtaining  the  benefit  of this  Article  9,  STASCO
     contracts  as  agents  of or  trustees  for  any of its  Affiliates,  their
     respective directors, officers and employees and any person appointed by or
     acting on behalf of STASCO.
9.5  STASCO represents,  warrants and covenants that it has all necessary right,
     title and  authority  to provide the Services to KKM, and to deliver to KKM
     any information,  data and analyses provided or to be provided as a part of
     the  Services.  STASCO shall  indemnify  and hold  harmless KKM, any of its
     Affiliates,  their  respective  directors,  officers and  employees and any
     person  appointed  by or  acting on behalf  of KKM  against  any  liability
     arising out of or connected with any breach of the representation, warranty
     and covenant set out in the first sentence of this Article 9.5

                         ARTICLE 10: - EARLY TERMINATION

10.1 If KKM:
     (a)  during the term of this  Agreement  without the written  agreement  of
          STASCO enters into any agreement or understanding with any third party
          for the  procurement of services of a similar or comparable  nature to
          the Services from any of STASCO's major oil company competitors in the
          business of international trading of crude oil and petroleum products;
     (b)  fails to pay on written demand by STASCO any amounts that are then due
          to STASCO pursuant to this Agreement;
     (c)  purports to sell,  transfer or assign its rights or duties  under this
          Agreement in breach of Article 13; or
     (d)  undergoes  a Change of Control  STASCO may  forthwith  terminate  this
          Agreement by serving written notice of termination on KKM.

10.2 If  either  Party  should  go  into   liquidation   (other  than  voluntary
     liquidation for the purpose of corporate reconstruction), or if a receiver,
     administrator  or  sequestration of the undertaking and assets (or any part
     thereof) of either  Party  should be  appointed,  or if either Party should
     become bankrupt or insolvent,  should enter into a deed of arrangement or a
     composition for the benefit of their creditors,  or should do or suffer any
     equivalent  act or thing  under any  applicable  law,  the other  Party may
     terminate the Agreement forthwith by notice to the other Party.
10.3 STASCO may terminate this Agreement forthwith by written notice to KKM if:
     (a)  the Loan  Agreement  shall  terminate,  other than upon payment of all
          sums  payable  thereunder  having  been duly  paid,  or Shell  Capital
          Services  Limited  through  assignment,  transfer or otherwise  has no
          remaining interest in, or is no longer a party to, the Loan Agreement;
          or
     (b)  the Crude Oil Sale and Purchase Agreement shall terminate.

10.4 In the event that all sums payable under the Loan  Agreement have been duly
     paid,  either  Party may  terminate  this  Agreement  forthwith  by serving
     written notice on the other Party.
10.5 This Article 10 is not intended to be an exhaustive  list of  circumstances
     in which either Party shall be entitled to terminate  this Agreement and is
     without  prejudice to either Party's other rights of termination under this
     Agreement or at law.
10.6 No  termination of this  Agreement  shall  prejudice any rights or remedies
     under this  Agreement  relating to any period prior to such  termination or
     accrued  before,  at,  or  in  consequence  of  the  termination,   or  any
     proceedings (including arbitration) for determination or enforcement of any
     rights or remedies.

<PAGE>


                           ARTICLE 11: CONFIDENTIALITY

11.1 Subject to the further  provisions of this Article 11, each Party shall use
     its best efforts to maintain in  confidence  any  Confidential  Information
     supplied to it pursuant to the terms hereof.
11.2 Notwithstanding Article 11.1, the receiving Party may disclose Confidential
     Information if and to the extent:
     (a)  required by law;
     (b)  required by any securities exchange or regulatory or governmental body
          to which such Party is subject or submits, wherever situated,  whether
          or not such requirement for information has the force of law;
     (c)  disclosed  to the legal  advisers or  auditors of such Party  provided
          that such Party procures that such persons  protect such  Confidential
          Information on the same terms as, and agrees to be bound as if it were
          a Party to, this  Article 11 or are  otherwise  bound to maintain  the
          confidentiality   of  the   Confidential   Information  by  applicable
          standards of professional responsibility;
     (d)  the  Confidential  Information is already in the public domain through
          no fault of such Party;
     (e)  the  disclosing   Party  has  given  prior  written  approval  to  the
          disclosure;
     (f)  it is disclosed to any Affiliate of the receiving  Party provided that
          such Party  procures  that the Affiliate  protects  such  Confidential
          Information on the same terms as, and agrees to be bound as if it were
          a Party to, this Article 11;
     (g)  the  information  was lawfully,  validly and properly  received by the
          receiving Party,  whether through any licence or permission granted by
          the disclosing  Party, or otherwise and disclosure of such information
          is permitted pursuant to such licence or permission.
11.3 The receiving Party shall:
     (a)  procure that  Confidential  Information is not disclosed to any of its
          employees,  officers  or agents by any  persons  other than  personnel
          employed by it or acting on its behalf who are required to have access
          to such  information  in order to enable this  Agreement to be carried
          into effect;
     (b)  be liable for and shall  indemnify  the  disclosing  Party against any
          losses or damages suffered by the disclosing Party arising from any of
          the  receiving  Party's  employees,  officers  and agents to whom such
          Confidential  Information is or has been disclosed disclosing or using
          any such Confidential Information contrary to the requirements of this
          Article; and
     (c)  not at any time make or assist any other person whatsoever to make any
          unauthorised  disclosure or use of any such  Confidential  Information
          and will  procure and ensure that every  person who, as its  employee,
          officer  or agent  or  otherwise,  through  or from  it,  acquires  or
          receives any  Confidential  Information at any time, shall not make or
          assist any other person whomsoever to make any unauthorised disclosure
          or use of that information.
11.4 The receiving  Party may not use  Confidential  Information for any purpose
     other than in direct connection with the performance of its obligations and
     exercise of its rights  hereunder  or under the Crude Oil Sale and Purchase
     Agreement.
11.5 The direct or indirect disclosure by STASCO of any Confidential Information
     or other  information  shall not be construed as granting to KKM any rights
     therein or any licence  under any patents or industrial  property  right or
     any application  for a patent or industrial  property right which STASCO or
     its  Affiliates  may now or  hereinafter  own in any country or under which
     STASCO or its Affiliates may hereinafter hold licensing rights.
11.6 The  Confidential  Information  shall remain the property of the disclosing
     Party and that party may demand the return  thereof at any time upon giving
     written  notice to the receiving  Party.  Within 30 days of receipt of such
     notice,  the receiving Party shall return all of the original  Confidential
     Information  and shall destroy all copies and  reproductions  (both written
     and electronic) in its possession.

<PAGE>

                           ARTICLE 12: - FORCE MAJEURE

12.1   Except in respect of the  obligation  to make any  payment as required by
       this  Agreement  (which shall not be subject to relief under this Article
       12.1),  a Party shall not be in breach of this Agreement or liable to the
       other Party for any failure to fulfil any obligation under this Agreement
       to the extent any fulfilment has been interfered with, hindered,  delayed
       or  prevented  by any  circumstance  whatsoever  which is not  reasonably
       within  the  control  of and is  unforeseeable  by such Party and if such
       Party exercised due diligence.
12.2 The Party  affected  shall be  excused  from the  performance  or  punctual
     performance,  as the case may be,  of such  obligation  for so long as such
     circumstance  continues to exist.  The Party affected shall promptly and at
     any rate,  within  twenty-four  (24) hours of the  occurrence  of the event
     notify the other Party of the  occurrence  of the  circumstance  and of the
     obligation affected.
12.3 No circumstance  described in Article 12.1 shall operate to extend the term
     of this Agreement.

                            ARTICLE 13: - ASSIGNMENT

13.1 Subject to Article 13.2, KKM may not sell, transfer or assign its rights or
     duties under this  Agreement or its interest in this Agreement to any other
     person  except  with the prior  written  approval  of  STASCO  and any such
     purported sale, transfer or assignment without the approval of STASCO shall
     be invalid and not binding on STASCO.
13.2 Notwithstanding  Article 13.1,  KKM may transfer or assign its rights under
     or interest in this Agreement to the Lenders by way of a security  interest
     in this Agreement for the benefit of the Lenders.
13.3 Subject to Article 13.4, STASCO may not sell, transfer or assign its rights
     or duties under this  Agreement  or its  interest in this  Agreement to any
     other  person  except with the prior  written  approval of KKM and any such
     purported sale, transfer or assignment without the approval of KKM shall be
     invalid and not binding on KKM.
13.4 Notwithstanding  Article 13.3, STASCO may delegate any or all of its duties
     or  obligations  under this Agreement to any of its Affiliates but it shall
     retain  responsibility to KKM for the proper performance of such duties and
     obligations so delegated.

                              ARTICLE 14: NOTICES.

14.1 All notices or other  communications  shall be given in writing or by telex
     or facsimile. Any such notice shall be deemed to be given as follows:
     (a)  if in writing, when delivered;
     (b)  if  by  telex,   when  despatched,   but  only  if,  at  the  time  of
          transmission,  the correct  answerback appears at the start and end of
          the sender's copy of the notice; and
     (c)  if by facsimile,  when the answerback is received.  However,  a notice
          given in accordance  with the above but received on a non-working  day
          or after  business  hours in the place of receipt shall only be deemed
          to be given on the next working day in that place.

              If such notice is to Sellers, to:
                     Shell International Trading and Shipping Company Limited
                     Shell Mex House
                     Strand
                     London.  WC2R 0ZA
                     Telephone     :        44 171 546 5000
                     Facsimile     :        44 171 546 4448
                     Telex         :        SHELL LONDON 919651
                     Attention     :        General Manager, Government Accounts
              If such notice is to Buyers, to:
                     Closed Type JSC Karakudukmunay Inc.
                     Microregion 3
                     Building 82, Aktau
                     466200 Kazakhstan
                     Telephone:             7 3292 514814
                     Facsimile:             7 3292 518336
                     Telex:               To be advised
                     Attention:             Nikolai Klinchev, Director General
<PAGE>


              With a copy to:
                     Chaparral Resources, Inc.
                     16945 Northcase Drive
                     Suite 1440
                     Houston, Texas 77060
                     USA
                     Telephone:             1 281 877 7100
                     Facsimile:             1 281 877 0985
                     Telex:               To be advised
                     Attention:             Mike Young, KKM Notices

                           ARTICLE 15: REPRESENTATIONS

15.1 Each Party represents to the other Party that:
     (a)  it is duly  organised  and  validly  existing  under  the  laws of the
          jurisdiction  of its  organisation or  incorporation  and, if relevant
          under such laws, in good standing;
     (b)  it has the power to execute and deliver this  Agreement  and has taken
          all  necessary  action  to  authorise  such  execution,  delivery  and
          performance;
     (c)  such  execution  and delivery do not violate or conflict  with any law
          applicable to it, any provision of its constitutional  documents,  any
          order  or  judgement  of any  court  or  other  agency  of  government
          applicable to it or any of its assets or any  contractual  restriction
          binding on or affecting it or any of its assets;
     (d)  all  governmental  and other  consents which are required to have been
          obtained by it with respect to this Agreement,  have been obtained and
          are in full force and effect and all  conditions  of any such consents
          have been complied with; and
     (e)  its obligations under this Agreement  constitute its legal,  valid and
          binding  obligations,  enforceable  in accordance  with its respective
          terms (subject to applicable bankruptcy, re-organisation,  insolvency,
          moratorium or similar laws affecting  creditors'  rights generally and
          subject, as to the enforceability,  to equitable principles of general
          application   (regardless  of  whether  enforcement  is  sought  in  a
          proceeding in equity or at law)).

                            ARTICLE 16: MISCELLANEOUS

16.1 This Agreement constitutes the entire agreement of the Parties with respect
     to the subject  matter of this Agreement and the Parties  acknowledge  that
     they do not  enter  into  this  Agreement  relying  on any of the  previous
     communications between the Parties or their Affiliates.
16.2 No variation of or amendment to any of the terms of this Agreement shall be
     effective unless it is in writing and signed by or on behalf of each of the
     Parties and no waiver of any provision  hereof shall be effective unless it
     is in writing and signed by the Party against whom such waiver is sought to
     be enforced.
16.3 Except as  expressly  provided  herein,  the  rights,  powers and  remedies
     provided in this  Agreement are cumulative and not exclusive of any rights,
     powers and remedies provided by law.
16.4 No delay or omission on the part of either Party in  exercising  any right,
     power or remedy provided by law or under this Agreement, nor any indulgence
     granted by any Party to any other Party,  shall impair such right, power or
     remedy,  or be  construed  as a waiver  thereof,  nor shall  the  single or
     partial  exercise  of any right,  power or remedy  provided by law or under
     this  Agreement  preclude  any other or  further  exercise  thereof  or the
     exercise of any other right, power or remedy.

<PAGE>


16.5 Nothing in this  Agreement  shall  constitute  or be deemed to constitute a
     partnership, trust or agency. The Parties shall not, and shall procure that
     their  directors,  officers and  employees,  in that  capacity,  shall not,
     represent  themselves or otherwise hold themselves out as an agent or other
     representative  of the other  Party or  otherwise  hold  themselves  out as
     having  any  authority  to bind the other  unless  such  person is  validly
     authorised in writing to do so.
16.6 In the  event  that any  provision  of this  Agreement  is  declared  to be
     illegal, invalid or otherwise unenforceable, this Agreement shall terminate
     forthwith  without  obligation on either Party to pay any  compensation  in
     respect  of such  termination;  except  that  KKM  shall be  entitled  to a
     pro-rata  (based on actual days  remaining in the relevant  year) refund of
     Fees for the year of termination.
16.7 Each Party  acknowledges and agrees to the tape or electronic  recording of
     conversations  between them pursuant to this  Agreement,  whether by one or
     other or both of them,  and that any such  recordings  may be  submitted in
     evidence in any proceedings relating to the agreement.
16.8 All exchange of correspondence between the Parties shall be in English.
16.9 This Contract  shall be signed in three  originals in the Russian  language
     and three originals in the English  language,  the English language version
     shall be the authoritative text.
16.10This  Agreement  does not confer  rights or remedies  upon any person other
     than KKM and STASCO.

                    ARTICLE 17: GOVERNING LAW AND ARBITRATION

17.1 The proper law of this  agreement  is English  Law and English Law shall be
     used for  interpreting  the  agreement  and for  resolving  all  claims  or
     disputes arising out of or in connection with the agreement  (whether based
     in  contract  in tort or on any other  legal  doctrine).  Any such claim or
     dispute  not  settled by  negotiation  shall be settled by  arbitration  in
     London before a single  arbitrator agreed upon by both parties or if not so
     agreed  appointed in accordance  with the  Arbitration  Act 1996 as amended
     from time to time.  The  arbitration  shall be  conducted  in  English,  in
     accordance  with the provisions of the Arbitration Act 1996 as amended from
     time to  time,  the  seat  of the  arbitration  shall  be  England  and the
     arbitration award shall be final and binding without appeal to the Courts.

17.2 KKM hereby appoint Law Debenture  Corporation PLC of Princes House, Gresham
     Street,  London,  EC2 as its agents in London for the service of process to
     accept service of process on its behalf in connection  with  proceedings in
     the English  Courts.  KKM may only dismiss its process agents or change the
     process  agent  with the  prior  consent  of  STASCO  (which  shall  not be
     unreasonably withheld or delayed).




<PAGE>




IN WITNESS  WHEREOF,  the Parties hereto have caused this Agreement to be signed
by their duly authorised representatives on the dates shown below.


SIGNED by
for and on behalf of
SHELL INTERNATIONAL TRADING AND SHIPPING COMPANY LIMITED
as agents for SHELL TRADING INTERNATIONAL LIMITED


By     :      ...................................
Name   :      ...................................
Title  :      ...................................
Date   :      ...................................

SIGNED by
for and on behalf of
CLOSED TYPE JSC KARAKUDUKMUNAY


By     :      ...................................
Name   :      ...................................
Title  :      ...................................
Date   :      ...................................


By     :      ...................................
Name   :      ...................................
Title  :      ...................................
Date   :      ...................................








<PAGE>



                                  ATTACHMENT 5

                Acceptable formats for Delivery Acceptance Acts.


<PAGE>


                                  ATTACHMENT 6

                                Conversion Tables