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                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT ("Agreement") is made on this 1st day of
February, 2004, by and between Far East Energy Corporation, a Nevada corporation
("Employer"), and Garry R. Ward, a resident of Texas ("Employee").

                                    PREMISES

     WHEREAS, Employer desires to employ Employee since as its Senior Vice
President of Engineering, pursuant to the terms and conditions hereof; and

     WHEREAS, Employee possesses experience as a member of executive management
of companies in the oil and gas industry, and desires to serve as Employer's
Senior Vice President of Engineering; and

     WHEREAS, in consideration for Employee's future services as Senior Vice
President of Exploration and Production of Employer, Employer desires to grant
to Employee non-qualified options to purchase shares of its common stock (the
"Common Stock"), and Employee desires to receive partial payment for his
services in options to purchase shares of Common Stock.

                                   AGREEMENT

     NOW THEREFORE, with the above provisions incorporated herein by this
reference, in consideration of the mutual promises contained herein, the
benefits to be derived by each party hereunder and other good and valuable
consideration, the sufficiency of which is hereby expressly acknowledged, the
parties hereto mutually agree as follows:

     1. Employment.  Employer hereby agrees to employ Employee and Employee
hereby agrees to accept full time employment as Senior Vice President of
Engineering of Employer, upon the terms and conditions set forth in this
Agreement.

     2. Term.  The employment of Employee by Employer pursuant to this Agreement
shall commence on February 1, 2004, and end Five (5) years hereafter, unless
sooner terminated pursuant to Section 4 below (hereinafter referred to as the
"Service Period").

     3. Compensation.  In consideration for the services to be rendered by
Employee, the Employer shall compensate Employee as follows (such compensation
and benefits being hereinafter referred to as "Compensation Benefits"):

          A. Base Salary.  Employer shall pay to Employee a base annual salary
     of $140,000 during the Service Period (such amount, as it may be increased
     from time to time, may sometimes hereinafter be referred to as "Base
     Salary"). Employer shall conduct a review of Employee twelve (12) months
     from the date of this Agreement at which time Employee's Base Salary may be
     increased.

          B. Bonus.  Employee shall be eligible to receive annual bonuses of
     approximately twenty to twenty-five percent of his then current base
     salary, subject to management review.

          C. Insurance.  Employer shall pay the full cost of health care
     insurance for Employee and Employee's immediate family. During the Service
     Period, Employer shall provide Employee with any other benefits that
     Employer makes available to other similarly situated employees.

          D. Common Stock.  As additional compensation, Employer shall grant to
     Employee, pursuant to the Stock Option Agreement attached hereto as Exhibit
     A and incorporated herein by reference, a non-qualified option to purchase
     400,000 shares ("Shares") of Common Stock.

          E. Vacation.  Employee shall be entitled to vacation befitting that of
     a senior executive, which in no event shall be less than four weeks per
     year.
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     4. Termination.  Employee's employment hereunder shall terminate as a
result of any of the following events:

          A. Employee's death;

          B. Employee shall be unable to perform his duties hereunder for a
     continuous period of at least six months or an aggregate of nine months
     during any continuous twelve month period by reason of illness, accident or
     other physical or mental disability, as verified by a licensed physician
     mutually selected by the Employer and Employee ("Disability");

          C. Termination by Employee upon 30 days advance notice in writing to
     Employer; or termination by Employer by giving 30 days advance notice in
     writing to Employee;

          D. Termination by Employer for Cause, where "Cause" shall mean: (i)
     the final non-appealable conviction of Employee of a felony; (ii) gross
     misappropriation or theft of company funds; or (iii) complete and total
     abandonment of duties for thirty (30) consecutive days (other than for
     reason of disability).

     5. Severance Pay.  As a material inducement to Executive to secure his
services as Chief Executive Officer, Company agrees that in the event that
Executive is terminated by Company for any reason (other than for "Cause" as
defined herein below), or is terminated after a Change in Control, Company shall
immediately pay to Executive a single lump-sum severance or separation payment
of One Hundred Thousand Dollars ($100,000). "Cause" shall mean gross
misappropriation or theft of company funds, conviction of a felony, or complete
and total abandonment of duties for thirty consecutive days (other than for
reason of disability). Executive shall retain all of his rights in, and
ownership of, all stock options vested as of the date of termination, or that
would vest within thirty (30) days following the date of termination or
separation, or contractual default. After Employee has been employed for twelve
months, the single lump-sum severance or separation payment shall then and
thereafter become Fifty Thousand Dollars ($50,000) instead of the One Hundred
Thousand Dollars ($100,000) set forth above.

     6. Representations and Warranties.  Employee hereby represents and warrants
to the Employer that (i) the execution, delivery and performance of this
Agreement by Employee does not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Employee is a party or by which Employee is bound, and (ii)
Employee is not a party to or bound by any employment agreement, noncompetition
agreement or confidentiality agreement with any other person or entity which in
any way may restrict, impair or limit the performance of his duties hereunder.

     7. Duties.  During the term of this Agreement, Employee shall initially
serve as the Senior Vice President of Exploration and Production of Employer.
Employee shall perform the tasks and have the rights, powers and obligations
normally associated with the office of Senior Vice President of Exploration and
Production, including such other offices or positions that Employer's board of
directors ("Board of Directors") shall reasonably request.

     8. Covenant Not to Compete.  In exchange for the various consideration
provided herein, during the term of this Agreement and for a period of one (1)
year following the date of termination, in the event Employee leaves or abandons
his position with Employer otherwise than for Good Reason, then Employee will
not compete with Employer through involvement on any project that Employer is
then pursuing, or did pursue within the one hundred twenty (120) days prior to
Employee's departure from Employer (a "Competing Project"). In the event that
Employee is hired as an employee or consultant of an entity that is involved in
a Competing Project, Employee shall recuse himself from and not participate in,
directly or indirectly, any activities of such entity with respect to the
evaluation, development or operation of the Competing Project.

     9. Non-Disclosure of Information.  In exchange for the various
consideration provided herein, Employee will not, directly or indirectly, during
the term of this Agreement and for a period of one (1) year after the
termination of this Agreement, disclose to any person not authorized by Employer
to receive or use such information, except for the sole benefit of Employer, any
of Employer's confidential or proprietary data, information, or techniques, or
give to any person not authorized by Employer to receive any information that is
not
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generally known to anyone other than Employer or that is designated by Employer
as "Limited," "Private," or "Confidential," or similarly designated.

     10. Expenses.  In accordance with Employer's published Expense
Reimbursement Policy, Employee may incur reasonable expenses for promoting or
developing Employer's business, including reasonable expenses for entertainment,
travel, and similar items. In accordance with Employer's published Expense
Reimbursement Policy, Employer will reimburse Employee for all such expenses
upon Employee's periodic presentation of an itemized account of such
expenditures.

     11. Entire Agreement.  This Agreement constitutes the entire understanding
between the parties, and there are no covenants, conditions, representations, or
agreements, oral or written, of any nature whatsoever, other than those herein
contained.

     12. Severability.  If any term, condition, clause, or provision of this
Agreement shall be deemed to be void or invalid, then that term, condition,
clause, or provision shall be stricken from this Agreement to the extent it is
held to be void or invalid, and in all other respects this Agreement shall be
valid and in full force and operation.

     13. Notices.  For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when received at the addresses written below on
(i) the third business day after the date when sent by certified or registered
mail; (ii) the next business day after the date sent by guaranteed overnight
courier; or (iii) the date sent by telecopier or delivered by hand, in each
case, to the addresses set forth below:

If to Employer:   Far East Energy Corporation
                  400 North Sam Houston Pkwy., Suite 205
                  Houston, Texas 77060
                  Attention: Michael R. McElwrath
                  (713) 586-1899

With a Copy to:   Woltjen Law Firm
                  Attn: Kevin S. Woltjen
                  4144 N. Central Expwy., Suite 410
                  Dallas, Texas 75204
                  (214) 742-5555

If to Employee:   Garry R. Ward

or to such other addresses as the parties may specify in writing.

     14. Arbitration.  Any controversy or claim arising out of or relating to
this Agreement or the breach of it, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association, and judgment
on the award rendered may be entered in any court having jurisdiction.

     15. Governing Law and Venue.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas without reference
to the conflict of laws principles thereof. In the event any dispute regarding
this Agreement arises between the Parties and is not resolved at arbitration,
such dispute shall be brought in a proper jurisdiction located within Harris
County, Texas.

     16. Attorney's Fees.  If any action at law or in equity, including an
action for declaratory relief or any form of dispute resolution, is brought to
enforce or interpret the provisions of this Agreement, the prevailing party
shall be entitled to recover actual attorney's fees, court costs, and other
costs incurred in proceeding with the action from the other party. The
attorney's fees, court costs or other costs, may be ordered by the fact finder,
in any decision of any action described in this section or may be enforced in a
separate action brought for determining attorney's fees, court costs, or other
costs. In the event Employer is represented by in-house counsel and Employer
prevails in any such action or dispute resolution, all parties agree that
Employer may recover attorney's fees incurred by that in-house counsel in an
amount equal to that attorney's normal fees for similar matters, or, should that
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attorney not normally charge a fee, by the prevailing rate charged by attorneys
with similar background in that legal community.

     17. Assignment.  This Agreement shall not be assignable by any party to
this Agreement, except upon the written consent of all parties hereto. Employee
shall not have the right to pledge, encumber, or dispose of the right to receive
any Compensation Benefits under this Agreement, which Compensation Benefits and
the right thereto are expressly declared to be non-assignable and
nontransferable and, in the event of any attempted assignment or transfer,
Employer shall have no further liability hereunder.

     18. Counterparts.  This Agreement may be executed in two counterparts, each
of which shall be deemed an original but both of which together shall constitute
one and the same agreement.

     19. Right to counsel:  employee hereby agrees that employer has advised and
encouraged him to retain his own counsel and that he has had full opportunity to
retain such counsel to review this document and advise him of the terms and
conditions set forth herein.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal the day and year first above written.

FAR EAST ENERGY CORPORATION,               GARRY R. WARD,
Employer                                   Employee


By: /s/ Michael R. McElwrath               /s/ Garry R. Ward
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    Michael R. McElwrath, President        Garry R. Ward