P.M.I. TRADING LIMITED
--------------------------------------------------------------------------------

                                                                 MARCH 31, 2000.
                                                                    DTIR-010-00.



TO:        PENN  OCTANE  CORPORATION.
ATT'N:     MR.  J.B.  RICHTER.  /  JORGE  BRACAMONTES.
FAX:       (415)368  1505.  /  543  6837

P.M.I.  TRADING  LIMITED, IS PLEASED TO CONFIRM THE "LPG MIX" PURCHASE CONTRACT,
ACCORDING  TO  THE  FOLLOWING  TERMS  AND  CONDITIONS:


(1)  PMI ORDER NO.:     WILL BE INFORMED MONTH BY MONTH IN OUR FAX OPERATION.
                        PLEASE  REFER  IN  ALL DOCUMENTS TO PMI'S ORDER NUMBER.

(2)  BUYER:             P.M.I.  TRADING  LIMITED
                        ------------------------

     ADDRESS:           AV.  MARINA  NACIONAL  No.  329
                        TORRE  EJECUTIVE,  PISO  20
                        COL.  HUASTECA
                        11311  MEXICO,  D.F.


     COMMERCIAL  CONTACT
     -------------------

     NAME:              YURI  CARRENO  /  LUIS FELIPE VACA / ANASOL MUNOZ PUENTE
     TELEPHONE No:      (52-5)  227-0124/227-0159/227-0158
     TELEX  No.:        1773671/1773509
     FAX  No.:          (52-5)  227-0140/(713)  567-0140


     OPERATIONS  CONTACT
     -------------------

     NAME:              VICTOR  GOMEZ  /  ALEJANDRO  RAMIREZ  /  IVAN  ARIZAGA
     TELEPHONE No:      (52-5)  227-0114  /  227-0149/227-0157
     TELEX  No.:        1773671/1773509
     FAX  No.:          (52-5)  227-0111/(713)  567-0111


     FINANCIAL  CONTACT
     ------------------

     NAME:              JUAN  CARLOS  CABALLERO  /  ARMANDO  CONTRERAS  /
                        FRANCISCO  CERVANTES
     TELEPHONE  No:     (52-5)  227-0073
     TELEX  No.:        1773671/1773509
     FAX  No.:          (52-5)  227-0072/(713)  567-0072



--------------------------------------------------------------------------------
AV.  MARINA  NACIONAL  329                                TELEX:  1773669  PMIME
TORRE  EJECUTIVA,  PISO  20                                       FAX:  227-0140
COL.  HUASTECA                                                    Tel:  227-0121
MEXICO,  D.F.  C.P.  11311                                        Tel:  227-0159


<PAGE>
                                                                    DTIR-010-00.
                                                                   Page  no.  2.

(3)  SELLER:            PENN  OCTANE  CORPORATION

     ADDRESS:           77-530  ENFIELD  LANE
                        BUILDING  D
                        92211  PALM  DESERT  CALIFORNIA


     COMMERCIAL  CONTACT
     -------------------

     NAME:              MR.  JORGE  R.  BRACAMONTES.
     TELEPHONE  No:     (525)  687  6513/687  1189.
     FAX  No.:          (525)  543  6837.


     OPERATIONS  CONTACT
     -------------------

     NAME:              MR.  PEDRO  PRADO/HUGO  HERNANDEZ.
     TELEPHONE  No.:    (956)  7930235.
     CARRETERA  LA  ROSITA-LUCIO  BLANCO  KM.  3.4
     LA  GLORIA,  TAMAULIPAS.


     FINANCIAL  CONTACT
     ------------------

     NAME:              MR.  IAN  BOTHWELL
     TELEPHONE  No.:    (562)  929  1984.
     FAX  No:           (562)  929  1921.


(4)  GENERAL  AGREEMENT
     ------------------

     4.1.  SUBJECT TO ALL TERMS AND  CONDITIONS OF THIS  AGREEMENT,  BUYER SHALL
     PURCHASE  "LPG MIX" ( AS HEREIN  DEFINED ) FROM SELLER AND SELLER AGREES TO
     SELL "LPG MIX" TO BUYER UNDER THE TERMS OF THIS AGREEMENT.  AS USED IN THIS
     AGREEMENT,  "LPG MIX" IS A PROPANE/BUTANE  PRODUCT MIXTURE CONSISTING OF 90
     PERCENT VOL PROPANE AND 10 PERCENT VOL COMMERCIAL BUTANE.

     4.2.    COMMERCIAL  TERMS:
             -----------------

     DAF (DELIVERED AT FRONTIER) MATAMOROS,  MEXICO AT PENN OCTANE'S PIPELINE IN
     ACCORDANCE WITH INCOTERMS 2000.


(5)  TERM
     ----

     UNLESS EITHER PARTY BREACHES ITS OBLIGATION UNDER THIS AGREEMENT,  THE TERM
     SHALL BE ONE YEAR  COMMENCING ON APRIL 1, 2000 AND  CONCLUDING ON MARCH 31,
     2001.  WITH AN  ALTERNATIVE TO EXTEND FOR TWO MORE YEARS THIS CONTRACT WITH
     PRIOR NOTICE SIGNED BY BOTH PARTIES.



--------------------------------------------------------------------------------
AV.  MARINA  NACIONAL  329                                TELEX:  1773669  PMIME
TORRE  EJECUTIVA,  PISO  20                                       FAX:  227-0140
COL.  HUASTECA                                                    Tel:  227-0121
MEXICO,  D.F.  C.P.  11311                                        Tel:  227-0159


<PAGE>
                                                                    DTIR-010-00.
                                                                   Page  no.  3.

     IN CASE SELLER  OBTAINS  LEGAL RIGHTS TO IMPORT LPG. MIX INTO MEXICO OR/AND
     IF BURGOS BASIN STARTS PRODUCING, THEN EITHER PARTY SHALL HAVE THE RIGHT TO
     NOTIFY THE OTHER PARTY ITS  INTENTION TO BEGIN A  RENEGOTIATION  PROCESS OF
     THIS CONTRACT. SUCH RENEGOTIATION PROCESS SHALL START NO LATER THAN 10 DAYS
     AFTER THE NOTIFICATION IS GIVEN.  RENEGOTIATION PROCESS CAN NOT ENDURE MORE
     THAN 60 DAYS. IF AN AGREEMENT IS REACHED DURING THE  RENEGOTIATION  PROCESS
     THIS CONTRACT  SHALL BE MODIFIED BY MUTUALLY  AGREEMENT.  OTHERWISE  EITHER
     PARTY SHALL HAVE THE RIGHT TO CANCEL.

(6)  VOLUMES
     -------

     6.1.  BUYER WILL  SCHEDULE,  PURCHASE AND ACCEPT AND SELLER WILL DELIVER AN
     ANNUAL VOLUME OF "LPG MIX" EQUAL TO 108,000,000  GALLONS +/- 10% AT BUYER'S
     OPTION, COMPLYING WITH THE FOLLOWING MINIMUM MONTHLY VOLUMES:

     WINTER  SEASON     MINIMUM  10,000,000  GALLONS  PER  MONTH  +/-  10%
     SUMMER  SEASON     MINIMUM   8,000,000  GALLONS  PER  MONTH  +/-  10%

     SUCH  VOLUMES  TO  BE  REFERRED  HEREIN  AS  "MINIMUM  MONTHLY  VOLUME"
                                                  --------------------------

                   SEASONALITY IS DEFINED AS DESCRIBED BELOW:
                   ------------------------------------------

     WINTER SEASON SHALL MEAN THE PERIOD FROM OCTOBER 2000 THROUGH MARCH 2001.
     -------------

     SUMMER SEASON SHALL MEAN THE PERIOD FROM APRIL 2000 THROUGH SEPTEMBER 2000.
     -------------

     6.2.  BUYER WILL  SCHEDULE  ITS  LIFTING OF "LPG MIX" WITH  SELLER FOR EACH
     DELIVERY  MONTH AT LEAST SEVEN NATURAL DAYS BEFORE THE  BEGINNING  MONTH OF
     DELIVERIES.

     6.3.  BUYER WILL ACCEPT  DELIVERY OF THE "LPG MIX" VIA TRUCK AT TERGAS S.A.
     DE C.V. TERMINAL IN MATAMOROS (THE TERMINAL) AS SCHEDULED BY BUYER, AS LONG
     AS IT MEETS THE SPECS DESCRIBED THE ATTACHMENT "A".

(7)  PRICE  OF  "LPG  MIX"
     ---------------------

     7.1.  PRICE  FORMULA FOR  PROPANE AND BUTANE  SHALL BE BASED ON THE MONTHLY
     AVERAGE OF THE DELIVERY MONTH, AS PUBLISHED BY OPIS (OIL PRICE  INFORMATION
     SERVICE)  UNDER MT.  BELVIEU  NON-TET SPOT POSTINGS FOR 90% PROPANE AND 10%
     NON-BUTANE,  PLUS A SERVICE COST TO BE DETERMINED IN ACCORDANCE WITH CLAUSE
     8 OF THIS AGREEMENT.

     7.2. THE  ESTIMATED  PRICE FOR  TEMPORARY  INVOICING  PURPOSES  WILL BE THE
     POSTING PRICE OF THE FIFTH DAY QUOTATIONS PRIOR TO THE DELIVERY MONTH, PLUS
     THE  SERVICE  COSTS  OF  XXXXX  USD/GAL.  AFTER  DELIVERY  MONTH  ENDS,  AN
     ADJUSTMENT  SHALL BE MADE (AS  DESCRIBED IN  PARAGRAPH  9.2 BELOW) SO AS TO
     REFLECT THE FINAL PRICE COMPUTED AS PER SUBCLAUSE 7.1.

(8)  SERVICE  COST  DETERMINATION
     ----------------------------

     8.1 THE  SERVICE  COST FOR THE  CONTRACTUAL  VOLUME  LIFTED  SHALL BE XXXXX
     USD/GAL.



--------------------------------------------------------------------------------
AV.  MARINA  NACIONAL  329                                TELEX:  1773669  PMIME
TORRE  EJECUTIVA,  PISO  20                                       FAX:  227-0140
COL.  HUASTECA                                                    Tel:  227-0121
MEXICO,  D.F.  C.P.  11311                                        Tel:  227-0159


<PAGE>
                                                                    DTIR-010-00.
                                                                   Page  no.  4.


     8.2.  ALTERNATIVE  DELIVERY  POINT.  BOTH PARTIES AGREE THAT IN CASE OF ANY
           -----------------------------
     OPERATIONAL  PROBLEMS THAT COULD AVERT THE  DELIVERIES  TO  MATAMOROS,  THE
     PRODUCT CAN BE DELIVERED EXW BROWNSVILLE  WITH A DISCOUNT OF XXX CPG TO THE
     SERVICE COST,  THIS DISCOUNT  SHALL BE DECREASED OR INCREASED  ACCORDING TO
     THE FREIGHT PUBLISHED BY PGPB FOR THE ROUTE "BROWNSVILLE TO MATAMOROS",  IN
     AN U.S. CENTS PER GALLON BASIS.

     8.3. IF THE ACTUAL VOLUME LIFTED AT THE END OF ANY MONTH IS HIGHER THAN THE
     MONTHLY  NOMINATED  VOLUME  (PLUS)  +10%,  THEN THE  SERVICE  COSTS FOR THE
     GALLONS EXCEEDING THE "MONTHLY  NOMINATED VOLUME" +10% SHOULD BE NEGOTIATED
     BETWEEN SELLER AND BUYER, SUCH NEGOTIATION SHOULD NOT EXCEED 3 WORKING DAYS
     UPON NOTICE FORM BUYER TO SELLER.


(9)  INVOICING
     ---------

     9.1 SELLER WILL INVOICE BUYER EVERY WEEK FOR THE TOTAL VOLUME LOADED DURING
     THE IMMEDIATELY PRECEDING WEEK.

     9.2 THE PRICE PER GALLON  INVOICED WILL BE ACCORDING TO THE ESTIMATED PRICE
     AS  DESCRIBED IN SUBCLAUSE  7.2.  THE  ADJUSTMENT  FOR THE ACTUAL PRICE AND
     SERVICE COST SHOULD BE INVOICED THROUGH  DEBIT/CREDIT NOTES TO BUYER IN THE
     FIRST WEEK OF THE FOLLOWING MONTH TO DELIVERY MONTH.

     9.3 ALL THE  INVOICES  MUST  COMPLY WITH THE  BUYER'S  TREASURE  DEPARTMENT
     INSTRUCTIONS   AND   SHALL   BE   SENT   TO  THE   ATTENTION   OF   ARMANDO
     CONTRERAS/FRANCISCO CERVANTES.


(10)  PAYMENT  TERMS
      --------------

     FULL NET CASH IN U.S. DOLLARS PAYABLE WITHIN 12 DAYS AFTER ORIGINAL INVOICE
     IN HARD COPY IS RECEIVED BY BUYER IN ITS OFFICES,  TREASURY DEPARTMENT (AV.
     MARINA NACIONAL 329, TORRE EJECUTIVA PISO 20).

     A FAX TRANSMISSION OF THE CORRESPONDING INVOICE WILL BE ACCEPTABLE TO BUYER
     IN ORDER TO REVIEW IT AS SOON AS POSSIBLE AND TO ASSURE  PROMPT  PAYMENT AS
     OUTLINED IN THE ABOVE  PARAGRAPH TO SELLER,  IN ACCORDANCE WITH THE PAYMENT
     TERMS HEREIN AGREED. HOWEVER,  ORIGINAL INVOICE MUST BE RECEIVED AT LEAST 7
     DAYS PRIOR TO PAYMENT DUE DATE.

     IN CASE  THAT THE  PAYMENT  DATE  FALLS ON A SUNDAY  OR  HOLIDAY,  THEN THE
     PAYMENT DATE WILL BE THE NEXT WORKING  DATE.  IN CASE THAT THE PAYMENT DATE
     FALLS ON A SATURDAY, THE PAYMENT DATE WILL BE PRIOR WORKING DATE.

(11) SCHEDULE  OF  SERVICE
     ---------------------

     11.1 SELLER WILL  PROVIDE  LOADING  SERVICES AT THE  TERMINAL  SEVEN DAYS A
     WEEK,  TWENTY-FOUR  HOURS PER DAY, UNLESS BOTH PARTIES DETERMINE THAT IT IS
     NOT  NECESSARY  TO HAVE  PERSONNEL 24 HOURS A DAY,  BASED UPON  OPERATIONAL
     EXPERIENCE  DEVELOPED  ON  SITE.  HOURS OF  SERVICE  SHALL  BE  SUBJECT  TO
     AVAILABILITY OF BUYER'S AUTHORIZED PERSON(S) TO DISPATCH THE "LPG MIX" FROM
     THE TERMINAL.



--------------------------------------------------------------------------------
AV.  MARINA  NACIONAL  329                                TELEX:  1773669  PMIME
TORRE  EJECUTIVA,  PISO  20                                       FAX:  227-0140
COL.  HUASTECA                                                    Tel:  227-0121
MEXICO,  D.F.  C.P.  11311                                        Tel:  227-0159


<PAGE>
                                                                    DTIR-010-00.
                                                                   Page  no.  5.

     11.2.  SELLER WILL PROVIDE BUYER A DAILY  ACTIVITY  REPORT  SPECIFYING  THE
     QUANTITY  (WEIGHT AND VOLUME)  AND  QUALITY OF THE "LPG MIX"  DELIVERED  TO
     BUYER AT THE TERMINAL, AS PER INDEPENDENT INSPECTOR REPORTS. IN ADDITION TO
     THIS, SELLER WILL PROVIDE A MONTHLY BASIS REPORT OF ITS INVENTORIES OF "LPG
     MIX" PRESENT IN THE TERMINAL AT THE END OF EVERY CALENDAR MONTH.


(12) OFFICE  EXPENSE
     ---------------

     SELLER SHOULD PROVIDE TELEPHONE, TELEFAX, CLEANING SERVICES AND SECRETARIAL
     EXPENSES INCURRED BY PEMEX GAS  REPRESENTATIVES  SUPERVISING RECEIPT OF THE
     "LPG MIX" DELIVERIES AT SELLER'S TERMINAL AT BROWNSVILLE,  TX. SELLER SHALL
     INVOICE (A MAXIMUM OF 2,100 USD) EVERY MONTH FOR THOSE  SERVICES AT THE END
     OF EACH MONTH,  AND BUYER SHALL PAY FIFTEEN DAYS AFTER  INVOICE  RECEIPT AS
     PER BUYER'S TREASURY DEPARTMENT INSTRUCTIONS.

     IF THE PAYMENT DATE IS A WEEKEND OR HOLIDAY,  PAYMENT  SHALL BE MADE ON THE
     NEXT BUSINESS DAY.

(13) QUALITY
     -------

     THE "LPG MIX" SHALL MEET THE SPECIFICATIONS ATTACHED AS EXHIBIT "A"

(14) MEASUREMENT
     -----------

     14.1. THE QUANTITY OF PRODUCT  DELIVERED SHALL BE DETERMINED BY NET WEIGHT,
     AND FOR PAYMENT  PURPOSES.  THE WEIGHT OF THE "LPG MIX"  DELIVERED TO BUYER
     WILL BE  CONVERTED  TO VOLUME  (CORRECTED  TO 60 F) VIA ANALYSIS OF SAMPLES
     USING A GAS CHROMATOGRAPH,  THE CHROMATOGRAPH MUST BE CALIBRATED  ACCORDING
     TO THE ASTM AND GPA PROCEDURES.  BUYER AND SELLER WILL CAUSE AN INDEPENDENT
     INSPECTOR,  MUTUALLY AGREED BY THE PARTIES, TO SAMPLE AND ANALYZE EACH LOAD
     OF THE "LPG MIX". THE COST OF SUCH INSPECTIONS WILL BE PAID BY BOTH PARTIES
     EQUALLY.

     14.2.  BEFORE  ENTERING THE TERMINAL,  EMPTY TRUCKS WILL BE WEIGHTED AT THE
     PORT OF BROWNSVILLE  PUBLIC SCALES OR AT THE TERMINAL OF MATAMOROS OR OTHER
     SCALE MUTUALLY AGREED BY BOTH PARTIES. LOADED TRUCK WILL BE WEIGHTED AT THE
     SAME SCALE UPON DEPARTURE.  THE VOLUME OBTAINED BY THE DIFFERENTIAL BETWEEN
     THESE TWO  MEASUREMENTS  SHALL BE THE VOLUME TO BE  INVOICED  BY SELLER AND
     PAID BY BUYER.  THE SCALE WILL BE TESTED AND  ADJUSTED TO ACCURACY AT LEAST
     ONCE EVERY 30 DAYS OR ACCORDING  TO  GOVERNMENT  REGULATIONS.  THE COSTS OF
     WEIGHTING THE TRUCKS BEFORE AND AFTER  LOADING,  AND/OR IF A THIRD PARTY IS
     REQUIRED  TO TEST OR  CALIBRATE  THE SCALE,  WILL BE SHARED BY  SELLER.  IF
     SELLER, AT ANY TIME, INSTALLS SCALES AT THE TERMINAL,  THEY WILL THEREAFTER
     BE THE SCALES FOR ALL TRUCKS RECEIVING "LPG MIX" AT THE TERMINAL,  AND THEY
     SHOULD BE OPERATED AND MAINTAINED IN ACCORDANCE  WITH THE ABOVE  PROVISION,
     THE CHARGE FOR SUCH SCALES SHALL BE 100% FOR SELLERS ACCOUNT.

     IF SELLER'S  SCALE IS USED,  THEN BUYER SHALL HAVE THE RIGHT TO SEND TRUCKS
     TO AN  INDEPENDENT  SCALE IN A RANDOMLY BASIS EVERY WEEK, IN ORDER TO CHECK
     SELLER'S SCALE  ACCURACY,  COSTS OF  INDEPENDENT  SCALE SHALL BE ON BUYER'S
     ACCOUNT.



--------------------------------------------------------------------------------
AV.  MARINA  NACIONAL  329                                TELEX:  1773669  PMIME
TORRE  EJECUTIVA,  PISO  20                                       FAX:  227-0140
COL.  HUASTECA                                                    Tel:  227-0121
MEXICO,  D.F.  C.P.  11311                                        Tel:  227-0159


<PAGE>
                                                                    DTIR-010-00.
                                                                   Page  no.  6.

(15) TITLE  AND  RISK
     ----------------

     TITLE OF THE "LPG MIX" WILL PASS FROM SELLER TO BUYER AT THE U.S. - MEXICAN
     FRONTIER BY THE PIPELINE.

     RISK OF LOSS OF THE "LPG  MIX"  WILL  PASS  FROM  SELLER TO BUYER AT OUTLET
     FLANGE OF THE TRUCK AT THE LOADING RACKS  LOCATED AT THE TERMINAL.  AT SUCH
     POINT, THE "LPG MIX" SHALL BE DEEMED TO BE DELIVERED.

(16) LAW  AND  ARBITRATION
     ---------------------

     THE AGREEMENT  SHALL BE GOVERNED BY AND  INTERPRETED IN ACCORDANCE WITH THE
     LAWS OF THE STATE OF NEW YORK.  ALL DISPUTES  ARISING OUT OF OR RELATING TO
     THE  AGREEMENT  SHALL BE SETTLED BY FINAL  ARBITRATION  IN THE STATE OF NEW
     YORK,  CITY OF N.Y.  CONDUCTED IN ACCORDANCE WITH THE RULES OF CONCILIATION
     AND ARBITRATION OF THE AMERICAN  ARBITRATION  ASSOCIATION IN EFFECT AT SUCH
     TIME. THE NUMBER OF ARBITRATORS SHALL BE THREE.

(17) SPILL/ENVIRONMENTAL  POLLUTION
     ------------------------------

     IN THE  EVENT OF ANY "LPG  MIX"  SPILL  OR  OTHER  ENVIRONMENTAL  POLLUTING
     DISCHARGE OCCURS PRIOR TO DELIVERY, AS THE SAME IS DEFINED IN ARTICLE 15 OF
     THIS  AGREEMENT,  ALL  CLEAN-UP  OPERATIONS  THAT  MAY BE  REQUIRED  BY ANY
     GOVERNMENTAL AUTHORITIES, SHALL BE FOR SELLER'S ACCOUNT.

     IF SUCH SPILL OR ENVIRONMENTAL  POLLUTING  DISCHARGE OCCURS AFTER DELIVERY,
     AS THE SAME AS  DEFINED  IN  ARTICLE  15 OF THIS  AGREEMENT,  ALL  CLEAN-UP
     OPERATIONS THAT MAY BE REQUIRED, SHALL BE FOR BUYER'S ACCOUNT.

     IN THE EVENT THAT SUCH SPILL OR  ENVIRONMENTAL  POLLUTING  DISCHARGE OCCURS
     AFTER  DELIVERY,  AT THE  TERMINAL,  BUYER  AUTHORIZES  SELLER TO  COMMENCE
     CONTAINMENT  OR CLEAN-UP  OPERATIONS AS DEEMED  APPROPRIATE OR NECESSARY BY
     SELLER OR AS MAY BE REQUIRED BY ANY GOVERNMENTAL  AUTHORITIES.  SELLER WILL
     NOTIFY BUYER IMMEDIATELY OF SUCH OPERATIONS. SELLER SHALL HAVE THE RIGHT TO
     DIRECT ALL  CONTAINMENT AND CLEAN-UP  OPERATIONS.  ALL COSTS OF CONTAINMENT
     AND  CLEAN-UP  FOR SUCH  SPILL  WILL BE BORNE BY  BUYER,  AND  BUYER  SHALL
     INDEMNIFY  AND HOLD  SELLER  HARMLESS  FROM ANY AND ALL  EXPENSES,  CLAIMS,
     LIABILITIES,  DAMAGES, PENALTIES, FINES AND OTHER COSTS (INCLUDING, WITHOUT
     LIMITATION,   ATTORNEYS  FEES)  RESULTING  OR  RELATED  TO  SUCH  INCIDENT.
     FOLLOWING  THE  INDEMNITY OF SELLER BY BUYER,  SELLER WILL  COOPERATE  WITH
     BUYER FOR THE  PURPOSE  OF  OBTAINING  REIMBURSEMENT  IN THE EVENT THAT ANY
     NON-AGENT  THIRD  PARTY IS LEGALLY  RESPONSIBLE  FOR ANY COSTS OR  EXPENSES
     BORNE BY BUYER UNDER THIS PARAGRAPH.

     IN THE EVENT THAT SUCH SPILL OR  ENVIRONMENTAL  POLLUTING  DISCHARGE OCCURS
     AFTER  DELIVERY,  OUT THE OF THE TERMINAL,  BUYER MAY  AUTHORIZE  SELLER TO
     COMMENCE  CONTAINMENT  OR  CLEAN-UP  OPERATIONS  AS DEEMED  APPROPRIATE  OR
     NECESSARY BY SELLER OR AS MAY BE REQUIRED BY ANY GOVERNMENTAL  AUTHORITIES.
     SELLER WILL NOTIFY BUYER IMMEDIATELY OF SUCH OPERATIONS.  SELLER SHALL HAVE
     THE RIGHT TO DIRECT ALL CONTAINMENT AND CLEAN-UP  OPERATIONS.  ALL COSTS OF
     CONTAINMENT  AND CLEAN-UP FOR SUCH SPILL WILL BE BORNE BY BUYER,  AND BUYER
     SHALL INDEMNIFY AND HOLD SELLER HARMLESS FROM ANY AND ALL EXPENSES, CLAIMS,
     LIABILITIES, DAMAGES, PENALTIES,



--------------------------------------------------------------------------------
AV.  MARINA  NACIONAL  329                                TELEX:  1773669  PMIME
TORRE  EJECUTIVA,  PISO  20                                       FAX:  227-0140
COL.  HUASTECA                                                    Tel:  227-0121
MEXICO,  D.F.  C.P.  11311                                        Tel:  227-0159


<PAGE>
                                                                    DTIR-010-00.
                                                                   Page  no.  7.

     FINES AND OTHER  COSTS  (INCLUDING,  WITHOUT  LIMITATION,  ATTORNEYS  FEES)
     RESULTING OR RELATED TO SUCH INCIDENT. FOLLOWING THE INDEMNITY OF SELLER BY
     BUYER,  SELLER  WILL  COOPERATE  WITH BUYER FOR THE  PURPOSE  OF  OBTAINING
     REIMBURSEMENT  IN THE  EVENT  THAT ANY  NON-AGENT  THIRD  PARTY IS  LEGALLY
     RESPONSIBLE FOR ANY COSTS OR EXPENSES BORNE BY BUYER UNDER THIS PARAGRAPH.

(18) SAFETY
     ------

     BUYER WILL  COMPLY,  AND WILL CAUSE  BUYER'S  EMPLOYEES,  AGENTS AND OTHERS
     ENTERING  THE  TERMINAL  ON BEHALF OF BUYER TO  COMPLY,  WITH ALL  TERMINAL
     SAFETY AND HEALTH  REGULATIONS.  SELLER WILL EXECUTE IN ITS NAME,  PAY FOR,
     AND FURNISH TO BUYER PRIOR TO ACCEPTING ANY "LPG MIX" AT THE TERMINAL,  ALL
     INFORMATION (INCLUDING APPLICABLE MATERIAL DATA SHEETS), DOCUMENTS, LABELS,
     PLACARDS,  CONTAINERS,  AND OTHER  MATERIALS  WHICH MAY BE  REQUIRED  TO BE
     FURNISHED  BY BUYER BY STATUES,  ORDINANCES,  RULES OR  REGULATIONS  OF ANY
     PUBLIC AUTHORITY RELATING TO THE DESCRIBING, PACKAGING, RECEIVING, STORING,
     HANDLING, OR SHIPPING OF THE "LPG MIX" AT OR FROM THE TERMINAL.

(19) FORCE  MAJEURE
     --------------

     NEITHER  PARTY SHALL BE LIABLE FOR FAILURE OR DELAY IN THE  PERFORMANCE  OF
     THIS  AGREEMENT  DUE  TO  ACTS  OF  GOD,  EARTHQUAKE,   FLOOD,  FIRE,  WAR,
     HOSTILITIES, CIVIL COMMOTIONS,  GOVERNMENTAL ACTS, STRIKES,  TRANSPORTATION
     PROBLEMS,  PIPELINE  STOPPED DUE TO LEAK OR  EXPLOSION  AND ANY OTHER CAUSE
     BEYOND THE CONTROL OF THE EITHER OF THE PARTIES.  ANY PARTY  CLAIMING FORCE
     MAJEURE SHALL  PROMPTLY  NOTIFY THE OTHER OF THE OCCURRENCE OF THE EVENT OF
     FORCE  MAJEURE  RELIED UPON.  EVENTS OF FORCE MAJEURE SHALL NOT RELIEVE ANY
     PARTY FROM ANY  PAYMENT  FOR  PRODUCT  DELIVERED  AND/OR  SERVICE  RENDERED
     HEREUNDER.

(20) LIMITATION  OF  LIABILITY
     -------------------------

     SELLER  SHALL NOT BE LIABLE  FOR MORE THAN THE ACTUAL  COST TO REPLACE  ANY
     "LPG MIX" NOT  DELIVERED  HEREUNDER.  NEITHER  PARTY  SHALL BE  LIABLE  FOR
     SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES.

(21) MISCELLANEOUS
     -------------

     21.1.  AMENDMENTS,  WAIVER.  THIS AGREEMENT MAY NOT BE CHANGED OR MODIFIED,
            --------------------
     EXCEPT IN WRITING BY MUTUAL  AGREEMENT OF BOTH PARTIES.  THE FAILURE OF ANY
     PARTY  TO  ENFORCE  ANY OF THE  PROVISIONS  OF THIS  AGREEMENT  WILL NOT BE
     CONSTRUED TO BE A WAIVER OF THOSE  PROVISIONS,  OR A WAIVER OF THE RIGHT OF
     ANY PARTY TO ENFORCE THEM.

     21.2. SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT IS DETERMINED TO BE
           -------------
     INVALID OR  UNENFORCEABLE,  THE REMAINED OF THIS AGREEMENT  SHALL REMAIN IN
     FULL FORCE AND EFFECT.



--------------------------------------------------------------------------------
AV.  MARINA  NACIONAL  329                                TELEX:  1773669  PMIME
TORRE  EJECUTIVA,  PISO  20                                       FAX:  227-0140
COL.  HUASTECA                                                    Tel:  227-0121
MEXICO,  D.F.  C.P.  11311                                        Tel:  227-0159


<PAGE>
                                                                    DTIR-010-00.
                                                                   Page  no.  8.

     21.3. ASSIGNMENT. NEITHER PARTY MAY ASSIGN THIS AGREEMENT OR ANY PORTION OF
           -----------
     IT WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY.

     21.4.  OTHER  TERMS  AND  CONDITIONS.  THE  UNITED  NATIONS  CONVENTION  ON
            ------------------------------
     CONTRACTS  FOR THE  INTERNATIONAL  SALE OF GOODS  SHALL  NOT  APPLY TO THIS
     CONTRACT.

     21.5.  ENTIRE  AGREEMENT THIS AGREEMENT  CONSTITUTES  THE ENTIRE  AGREEMENT
            -----------------
     AMONG THE PARTIES AND SUPERSEDES ALL PREVIOUS NEGOTIATIONS, COMMITMENTS AND
     WRITING WITH RESPECT TO SUCH SUBJECT MATTER OF THIS AGREEMENT.

(22) OPERATIONAL  PROCEDURE
     ----------------------

     IN ORDER TO COMPLY WITH ALL REGULATIONS  IMPOSED BY THE MEXICAN  GOVERNMENT
     AND ITS ENTITIES, SELLER SHALL BE COMMITTED TO FOLLOW THE PROCEDURE DEFINED
     BY PGPB, WHICH WOULD BE PART OF THIS CONTRACT AS "ATTACHMENT "B".

(23) CONFIDENTIALITY
     ---------------

     BOTH  PARTIES  AGREE TO KEEP ALL TERMS  AND  CONDITIONS  OF THIS  AGREEMENT
     PRIVATE AND CONFIDENTIAL  EXCEPT TO THE EXTENT DISCLOSURE IS REQUIRED UNDER
     ANY DISPUTE RELATING HERETO OR UNDER ANY RULE OR REGULATION TO WHICH EITHER
     PARTY SHALL BE SUBJECT.


     IF THIS MEETS WITH YOUR  UNDERSTANDING  AND  APPROVAL,  PLEASE  SIGN IN THE
     APPROPRIATE SPACE.

          BUYER                                        SELLER


     YURIA  CARRENO                             JORGE  BRACAMONTES
     PMI  TRADING  LIMITED                  PENN  OCTANE  CORPORATION



--------------------------------------------------------------------------------
AV.  MARINA  NACIONAL  329                                TELEX:  1773669  PMIME
TORRE  EJECUTIVA,  PISO  20                                       FAX:  227-0140
COL.  HUASTECA                                                    Tel:  227-0121
MEXICO,  D.F.  C.P.  11311                                        Tel:  227-0159


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