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

                                                                 MARCH 31, 2000.
                                                                    DTIR-011-00.



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-011-00.
                                                                   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-011-00.
                                                                   Page  no.  3.

     IN CASE SELLER OBTAINS LEGAL RIGHTS TO IMPORT L.P.G. MIX INTO MEXICO OR/AND
     IF BURGOS BASIN STARTS PRODUCING,  THE 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  60,000,000  GALLONS +/- 10% AT BUYER'S
     OPTION, COMPLYING WITH THE FOLLOWING MINIMUM MONTHLY VOLUMES:

     WINTER  SEASON     MINIMUM   6,000,000  GALLONS  PER  MONTH  +/-  10%
     SUMMER  SEASON     MINIMUM   4,000,000  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 THE TERMINAL
     IN SALTILLO (THE  TERMINAL) AS SCHEDULED BY BUYER,  AS LONG AS IT MEETS THE
     SPECS DESCRIBED IN 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 XXX 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



--------------------------------------------------------------------------------
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-011-00.
                                                                   Page  no.  4.

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

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

     8.2  ALTERNATIVE  DELIVERY  POINT.  BOTH PARTIES  AGREE THAT IN CASE OF ANY
          -----------------------------
     OPERATIONAL  PROBLEMS  THAT COULD AVERT THE  DELIVERIES  TO  SALTILLO,  THE
     PRODUCT  CAN BE  DELIVERED  DAF  MATAMOROS  WITH A NET  DISCOUNT OF XXX CPG
     (DISCOUNT OF XXX CPG TO THE SERVICE COST PLUS A PREMIUM  EQUAL TO THE LOCAL
     FREIGHT IN SALTILLO OF XXX CPG).  THE NET  DISCOUNT  SHALL BE  DECREASED OR
     INCREASED  ACCORDING TO THE FREIGHT  PUBLISHED BY PEMEX-GAS Y  PETROQUIMICA
     BASICA  ("PGPB") FOR BOTH THE ROUTE  "SALTILLO TO MATAMOROS'  AND THE LOCAL
     FREIGHT TO SALTILLO,  CALCULATED  ON AN U.S.  CENTS PER GALLON  BASIS.  FOR
     EXAMPLE THE TOTAL SERVICE COTS EXW DAF MATAMOROS  WOULD BE EQUAL TO XXX CPG
     MINUS XXX CPG PLUS XXX CPG EQUALS XXX CPG.

     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 NET  DISCOUNT  OF XXX CPG  (DISCOUNT  OF XXX CPG TO THE
     SERVICE COST PLUS A PREMIUM OF EQUAL TO THE LOCAL  FREIGHT IN SALTILLO OF X
     CPG).  THE NET DISCOUNT  SHALL BE  DECREASED OR INCREASED  ACCORDING TO THE
     FREIGHT PUBLISHED BY PGPB FOR BOTH THE ROUTE  "BROWNSVILLE TO SALTILLO" AND
     THE LOCAL  FREIGHT  TO  SALTILLO,  CALCULATED  ON AN U.S.  CENTS PER GALLON
     BASIS, FOR EXAMPLE THE TOTAL SERVICE COST EXW BROWNSVILLE WOULD BE EQUAL TO
     XXX CPG MINUS XXX CPG PLUS XXX CPG EQUALS XXX CPG.


(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  TREASURY  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).



--------------------------------------------------------------------------------
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-011-00.
                                                                   Page  no.  5.

     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.

     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 PGPB  REPRESENTATIVES  SUPERVISING RECEIPT OF THE "LPG
     MIX" DELIVERIES AT SELLER'S  TERMINAL AT SALTILLO.  THESE SERVICES (MAXIMUM
     1,050 USD) SHALL BE  INVOICED  EVERY  MONTH 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.



--------------------------------------------------------------------------------
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-011-00.
                                                                   Page  no.  6.

     14.2.  BEFORE  ENTERING THE TERMINAL,  EMPTY TRUCKS WILL BE WEIGHTED AT THE
     TERMINAL OF SALTILLO OR BROWNSVILLE  OR 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.


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

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

     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  SALTILLO,
     MEXICO. 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 A ACCORDANCE WITH THE
     LAWS OF THE STATE OF NEW YORK.  ALL DISPUTES  ARISING OUT OF OR RELATING OT
     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.



--------------------------------------------------------------------------------
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-011-00.
                                                                   Page  no.  7.

     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, 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.



--------------------------------------------------------------------------------
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-011-00.
                                                                   Page  no.  8.

     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 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.

     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".



--------------------------------------------------------------------------------
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-011-00.
                                                                   Page  no.  9.

(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


<PAGE>
                                                                    DTIR-011-00.
                                                                   Page  no. 10.



                                   EXHIBIT "A"

LPG  MIX  CHARACTERISTICS               MAX     TEST  METHODS

COMPOSITION
PROPANE/BUTANE 90/10 PCT OF VOL

ETHANE                                 2.0     PCT.  VOL.  OF  PROPANE
PROPYLENE                              5.0     PCT.  VOL.  OF  PROPANE
PENTANES  &  HEAVIES                   2.0     PCT.  VOL.  OF  BUTANE
VAPOR  PRESSURE                        190     ASTM  D-1267-75
CHROMATOGRAPH  ANALYSIS                        ASTM  D-2163
SPECIFIC  GRAVITY                              ASTM  D-1657
CORROSION COPPER STRIP AT 100
F.  DEG.                                1B     ASTM  D-1638-74
OTHER DELETERIONS SUBSTANCES           NON
                                       E



Note:  Product  shall be odorized (STENCHED) as per Mexican Official Regulations



--------------------------------------------------------------------------------
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>