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                                                                    EXHIBIT 10.4

                                                                  EXECUTION COPY

                          PETROLEUM FEEDSTOCK AGREEMENT

            This PETROLEUM FEEDSTOCK AGREEMENT (this "Agreement"), dated as of
October 31, 1997, by and between BHP Petroleum Americas Refining Inc., a Hawaii
corporation ("BHP Refining"), and Citizens Utilities Company, a Delaware
corporation ("Citizens").

                                    RECITALS

      A.    BHP Hawaii Inc., a Hawaii corporation, and Citizens have entered
            into a Stock Sale Agreement, dated as of January 9, 1997, as amended
            (the "Acquisition Agreement"), providing for the sale by BHP Hawaii
            Inc., the parent of BHP Refining, to Citizens of all of the
            outstanding capital stock of Gasco, Inc., a Hawaii corporation.

      B.    BHP Refining wishes to supply petroleum feedstock to the synthetic
            natural gas plant operated by Citizens (the "SNG Plant") from the
            petroleum refinery owned and operated by BHP Refining (the
            "Refinery"), and Citizens wishes to obtain a long term supply of
            petroleum feedstock for the SNG Plant from the Refinery, effective
            upon the Closing Date and on the terms and subject to the conditions
            set forth herein.

      C.    BHP Refining and Citizens wish to make arrangements for the supply
            of certain other materials and services between the SNG Plant and
            the Refinery after the Closing Date.

                                    AGREEMENT

           In consideration of the premises and the respective covenants and
obligations set forth herein the parties agree as follows:

            1. Term. The term of this Agreement shall commence on October 31,
1997 (the "Closing Date") and terminate on the date which is ten (10) years
after the Closing Date, and shall automatically be extended for one (1) ten-year
term unless cancelled by either party by giving written notice to the other of
such cancellation not less than ninety (90) days prior to the end of the initial
term.

            2. Feedstock Quality. BHP Refining shall provide Naphtha, SNG Feed,
and Enrichment LPG to Citizens exclusively for Citizens' production of synthetic
natural gas at the SNG Plant, (collectively, the "Feedstock"), with the
specifications set forth on Exhibit A attached hereto and incorporated herein by
this reference (individually and collectively, the "Specifications").

            3. Feedstock Price. The price per therm of Feedstock shall be
calculated pursuant to the formula set forth in Exhibit B attached hereto and
incorporated herein by this reference (the "Feedstock Pricing Formula");
PROVIDED, THAT: (i) on each anniversary of the Closing Date and at any time
that, pursuant to the formula on Exhibit B, the average crude

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index factor for the previous two months minus $12.12 is greater than $5/bbl or
less than $5/bbl, the parties shall review and revise the Feedstock Pricing
Formula as may be mutually agreed, and (ii) the Feedstock Pricing Formula shall
be amended to include any increase in compliance costs or expenses incurred by
the Refinery as a result of new legal or regulatory requirements imposed on, or
affecting, the production, transport, delivery or sale of the Feedstock, or the
source material(s) thereof. Upon request, BHP Refining shall provide
documentation to support the price per therm calculations used for invoicing.

      4.    BTU/Quality/Quality/Measurement.

            (a)   SNG Feed and Enrichment LPG

                  (1) BTU/Quality. Citizens shall take duplicate samples of the
SNG Feed and Enrichment LPG three (3) times each week from the SNG Plant's feed
lines. Citizens and BHP Refining shall mutually agree to the sampling procedures
and times at which such samplings shall occur. BHP Refining shall have the right
to have a representative present at each sampling event. After the duplicate
samples are taken, one set of such samples will be immediately transferred to
BHP Refining for analysis using standard BHP Refining test methods for BTU
content and product specifications. BHP Refining will use these results to
calculate the BTU content for billing purposes. BHP Refining will retain the
analytic results for a three (3) month period and will make such results
available for Citizens' review upon request during that period. If over a one
(1) month billing period, the average of Citizens' analytic results for BTU
content of either the SNG Feed or Enrichment LPG samples vary by greater then 3%
from the average of BHP Refining's analytic results, then, upon written notice
from Citizens, the parties shall review all pertinent data and information
relating to the BTU measurements and shall negotiate in good faith and make
appropriate adjustments, if necessary, for the SNG Feed and/or Enrichment LPG
delivered during the one (1) month billing period.

                  (2) Quantity. All measurements of SNG Feed and Enrichment LPG
delivered shall be made by BHP Refining meters.

            (b) Naphtha.

                  (1) BTU/Quality. BHP Refining will take a composite sample
from the Naphtha tank used to provide Citizens with its Naphtha requirements
each time Naphtha is batch loaded into the tank. Each composite sample will be
analyzed, using standard BHP Refining test methods, for BTU content and product
specifications, with the exception of total chlorides and metals (i.e., lead,
arsenic, iron and vanadium). The latter shall be analyzed once each calendar
quarter. The C/H ratio specification shall be mathematically calculated using
the product specification results for each composite sample. BHP Refining will
retain the analytic results for a three (3) month period and will make such
results available for Citizens' review upon request during that period. At
Citizens' request, a duplicate sample will be taken and made available to
Citizens.

                  (2) Quantity. All measurements of Naphtha delivered shall be
made by BHP Refining meters.

            (c) Volume Corrections/Materially Off-Specification Feedstock. The
net volume of Feedstock delivered shall be determined by adjusting the volume
measurement obtained from meters to 60 degrees Fahrenheit, in accordance with
Standard Abridged Volume Correction Table for Petroleum Oils ASTM-1P, and the
latest revision thereof after deducting the amount consumed by Citizens'
interruptible customers pursuant to the Interruptible Supply Agreement (Schedule
91/92) between BHP Refining and Citizens dated the date hereof. As soon as
either party becomes aware that the Feedstock is materially off-specification
such that

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significant costs are likely to be incurred that would not otherwise have been
required had such Feedstock conformed with the Product Specifications provided
for herein, then that party shall immediately notify the other of the situation
and take all necessary steps to mitigate any resulting costs or damages. Upon
receipt of notice, the parties shall review all pertinent data and information
relating to such nonconformance and shall, in good faith, negotiate any
appropriate adjustments, if necessary. Notwithstanding the foregoing, neither
party shall be liable to the other for any indirect or consequential damages.

            (d) Meter Calibrations. Citizens shall be kept advised of any
repairs, calibrations or adjustments of BHP Refining' s meter equipment. Meters
shall be calibrated at least annually. Citizens may witness such meter
calibrations, and BHP Refining shall provide three (3) days notice of meter
calibrations. Meter readings shall be done by employees or agents of BHP
Refining. All records and readings pertaining to the meters shall remain the
property of BHP Refining and shall be kept on file by BHP Refining for a period
of one (1) year. Upon request of Citizens, BHP Refining shall make available to
Citizens during normal business hours, copies of such reports and readings,
together with a record of repairs, calibrations or adjustments made, and
calculations thereof, for Citizens' inspection and verification, subject to
return within twenty (20) days.

            (e) Meter Accuracy. Citizens at any time shall have the right to
challenge the accuracy of said meter and when challenged, the meter shall be
tested promptly for sufficiency and accuracy by a procedure acceptable to both
Citizens and BHP Refining. If the meter is found on any such test to be
inaccurate more than plus or minus one and one-half (1 1/2%) percent, then the
quantities indicated in all invoices for Feedstock delivered since the date of
the test shall be adjusted by one-half of the determined inaccuracy. The meter
factor determined by such test shall remain in effect until the time of BHP
Refining's next meter calibration.

      5. Delivery. The Feedstock shall be delivered via pipeline from BHP
Refining's Barbers Point Refinery into the SNG Plant. BHP Refining will use
reasonable commercial efforts to supply the Feedstock in ratable quantities or,
with the mutual agreement of both parties, in a manner as shall be requested by
Citizens.

      6. Feedstock Quantity. Citizens shall have the right of first refusal with
respect to produced volumes of SNG Feed and Naphtha, and Enrichment LPG in the
following amounts:

            (i) up to 2,700,000 therms per month in the form of SNG Feed,
Naphtha or a combination of the two, at the discretion of BHP Refining; PROVIDED
HOWEVER, that approximately 300,000 therms per month of such 2,700,000 therms
shall be provided in the form of Naphtha on a ratable basis, through existing
piping for SNG Plant fuel, and

            (ii) up to 600,000 therms per month in the form of Enrichment LPG.

      7. Quantity Commitment and Alternative Supply. Except as provided in
Section 12(a), Citizens shall purchase all of its SNG Feed from BHP Refining, to
the extent it is available; PROVIDED THAT, if Citizens receives a bona fide
offer from an unrelated third party then willing and logistically able to sell
feedstock which is substantially the same as the Feedstock at a lower price in
the same quantities on an as-delivered basis for a period not less than the
remaining term of this Agreement and commencing within thirty (30) days of the
date of such bona fide offer, Citizens shall provide to BHP Refining evidence
satisfactory to BHP Refining of such offer and price, and BHP Refining shall
have thirty (30) days after receipt of such notice to elect to meet such lower
price. If BHP Refining elects to meet such price, Citizens

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shall purchase its feedstock from BHP Refining. If BHP Refining elects not to
meet such price, this Agreement shall terminate.

          8. Emergency and Other Special Services.

            (a) Use of Refinery Flare System. During the period this Agreement
is in effect. Citizens shall have the right to share use of the flare system
owned by BHP Refining and located on Refinery property, subject to the following
conditions:

                  (i) Citizens shall provide two (2) days' prior written notice
      of any planned use of the flare, except for emergency use under upset
      conditions, in which case notice must be given as soon as possible;

                  (ii) BHP Refining shall make commercially reasonable efforts
      to accommodate Citizens, planned or upset use of the flare, but in the
      event of conflicting needs to use the flare, BHP Refining's needs will
      have priority;

                  (iii) BHP Refining maintains the flare system for its own use.
      Citizens acknowledges and agrees that the flare is being provided in an
      "as is" condition and that BHP Refining does not warrant the condition or
      maintenance of the flare system for Citizens' use;

                  (iv) BHP Refining shall provide Citizens with one (1) year
      notice of any plan to abandon said flare system without replacement, and,
      provided that the parties can reach agreement on mutually acceptable
      terms, Citizens shall have the right to acquire said flare on terms to be
      negotiated at that time.

                  (v) Citizens' entry onto BHP Refining's premises and the use
      of the flare is at Citizens' risk and BHP Refining shall not be liable to
      Citizens, its employees, contractors or agents for personal injury,
      property damage, costs, losses or liabilities arising from such entry or
      use, except to the extent caused by BHP Refining's gross negligence or
      intentional misconduct, and Citizens will indemnify BHP Refining for any
      such injury, damage, costs, losses or liabilities to Citizens or its
      employees, contractors or agents: and

                  (vi) Citizens will defend, indemnify and hold harmless BHP
      Refining for any environmental liabilities, costs, claims, or penalties
      attributable to Citizens' use of the flare. BHP Refining shall maintain
      required air permits, if any, related to the operation of the flare.

            (b) Use of Radio Repeater. During the period this Agreement is in
effect and while BHP Refining continues to operate the radio repeater equipment,
Citizens shall have the right to use the BHP Refining radio repeater for
communications purposes; PROVIDED THAT, Citizens shall only use radios with a
single crystal which are tuned to a frequency different than the frequency used
by BHP Refining. BHP Refining shall maintain required licenses and permits, if
any, related to the operation of the radio repeater.

            (c) Emergency Supplies. In the event of emergency needs, the
parties, upon receipt of notice, shall use reasonable commercial efforts to
provide each other with the following on an emergency, as needed, as available
basis, at a price equal to the cost to the supplying party plus 10%, or the
applicable tariff, if any:

                  (1) Steam, in volumes and at pressures appropriate for the
            receiving facility;

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                        (2) Fuel gas, to start up boilers, etc. (fuel gas shall
                  be provided prior to any deliveries of products to Citizens'
                  interruptible customers);

                        (3) Demineralized water; and

                        (4) Hydrogen with the specifications set forth on
                  Exhibit A.

            (d) Perimeter Lighting. With respect to the perimeter lighting
system that is currently owned by BHP Refining and located at the Refinery and
the SNG Plant (the "Perimeter Lighting"), during the period this Agreement is in
effect, BHP Refining shall continue to own, operate and maintain the Perimeter
Lighting in accordance with its operating practice, which may change from time
to time at the sole discretion of BHP Refining.

            (e) Fire Water System. During the period this Agreement is in
effect, with respect to the fire water system that is currently owned by BHP
Refining and located at the Refinery and the SNG Plant (the "Fire Water
System"), the parties hereby agree that each shall be solely responsible for
performing necessary maintenance and repairs to and conducting testing and
inspection of the portions of the Fire Water System located within their
respective properties as necessary to keep or bring the Fire Water System in
compliance with applicable fire and life safety regulations, and any mutually
agreed upon safety or maintenance standards that have been established and put
into effect by the parties. The parties shall promptly notify each other of any
problems discovered within their respective portions of the Fire Water System
which might affect the use and operation of the entire Fire Water System. Each
party shall have the right to access the other party's facility for the purpose
of inspecting, testing or verifying proper maintenance and repair of the Fire
Water System upon one (1) day notice, or in the case of emergency without
notice. Citizens shall cooperate with any system-wide testing or inspection
conducted by BHP Refining. Citizens expressly acknowledges that BHP Refining
shall have no liability to Citizens for any damages resulting from any failure
of the Fire Water System unless caused by the gross negligence of BHP Refining.

      9. Payments. BHP Refining or Citizens, as the case may be, shall provide
invoices as of the 15th and the last day of each month. The other party shall
pay such invoices within five (5) business days of receipt by wire transfer to:
BHP Refining's Account No. 40643342 at Citibank, New York, ABA No. 021000089 or
to such other account as BHP Refining shall direct on at least five (5) business
days prior written notice to Citizens; or to Citizens' Account No. 322-001846 at
The Chase Manhattan Bank, New York, New York, ABA No. 021000021, ACH Wire ABA
No. 021000128 or to such other account as Citizens shall direct on at least five
(5) business days prior written notice to BHP Refining, as applicable.

      10. Resale. Resale of Feedstock and other materials purchased pursuant to
this Agreement is prohibited.

      11. Force Majeure. (a) As used in this Agreement, an event or act of
"force majeure" is defined as including: act of God, fire, riot, accident, war,
act of any government, partial or total interruption or loss, or shortage of
transportation facilities or supplies, shortage of feedstock or other substances
due to shortage in the supply of available crude oil, natural gas or other
substances, curtailment of business (including unscheduled shutdowns of any
manufacturing facility or any part thereof for any reason whatsoever), or by
other causes beyond the reasonable control of the parties, whether similar or
not to the events, acts or causes specified.

            (b) Citizens' obligations under this Agreement shall be suspended
for any period in which an event or act of force majeure exists as to Citizens.
However, nothing herein excuses Citizens from making payments on money
obligations already incurred under this

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Agreement. BHP Refining's obligations under this Agreement shall be suspended
for any period in which an event or act of force majeure exists as to BHP
Refining.

            (c) The party claiming force majeure agrees to give the other party
notice of an act or event of force majeure as soon as practicable after the
occurrence and a confirmation in writing as soon as practicable thereafter. The
party claiming benefit of this provision shall attempt in good faith to resume
performance as soon as reasonably possible: PROVIDED THAT, no party shall be
obligated to settle a dispute or otherwise take any action which is not
commercially reasonable to terminate an event of force majeure. There shall be
no charge for supplies not in fact delivered or services not performed during an
act or event of force majeure.

            (d) The party claiming excuse of performance by force majeure shall
give the other party prompt notice after the act or event of force majeure has
terminated. Upon termination of the event or act of force majeure, performance
hereunder shall be resumed.

      12. Inability to Supply or Take Feedstock.

            (a) If BHP Refining is unable to supply Feedstock, Citizens may
procure such feedstock from another supplier. If the reason for non-supply is
other than because of an event of force majeure, and the price of the
replacement feedstock exceeds the price of the Feedstock hereunder, BHP Refining
shall pay Citizens an amount equal to the difference, if any, between the price
paid by Citizens to the other supplier and the price that Citizens would have
paid hereunder.

            (b) If Citizens is unable to accept delivery of a "Minimum" amount
of Feedstock (as defined below) during a calendar month other than because of an
event of force majeure, Citizens shall nevertheless pay BHP Refining an amount
equal to the value of the Minimum, provided however, that in lieu of such
payment by Citizens, BHP Refining may sell such Feedstock to other parties. In
such event, if the sale price is less than the price of the Feedstock hereunder,
Citizens shall pay BHP Refining an amount equal to the difference, if any,
between the price paid to BHP Refining by such other parties and the price BHP
Refining would have received from Citizens hereunder. In the event that BHP
Refining has not identified a third party purchaser for the Feedstock, Citizens
shall have the right to do so on or before five (5) days prior to the date the
Feedstock would otherwise have been delivered to the SNG Plant; PROVIDED THAT,
Citizens shall not designate any existing customer of BHP Refining or
prospective customers of BHP Refining that are being actively pursued to
purchase products that are equivalent or similar in use to the Feedstock. To the
extent that no other purchaser offering equivalent or better terms is available
and the purchaser identified by Citizens is a bona fide purchaser willing to pay
upon delivery and to accept delivery at the Refinery by the date the Feedstock
would otherwise have been delivered to the SNG Plant, BHP Refining shall sell
the Feedstock to such purchaser. In any case, if the sale price to any such
purchaser is less than the price of Feedstock hereunder, Citizens shall pay BHP
Refining an amount equal to the difference, if any, between the price paid to
BHP Refining by such party and the price BHP Refining would have received from
Citizens hereunder. For the purposes of this section, the "Minimum" shall mean
the quantity of Feedstock equal to seventy-five (75%) of the average monthly
quantity of Feedstock purchased by Citizens in the last 12 months in which a
force majeure condition was not in effect for either party at any time during
such months.

            (c) Amounts payable under this Section 12 shall be paid within five
(5) business days after receipt of invoice. Each party will use best efforts to
minimize the liability of the other party through cooperation, exchange, or
other means; PROVIDED HOWEVER, that BHP Refining will not be expected to take
action in a manner that has the potential to adversely affect

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its general business interests, including existing customer relationships,
ongoing sales and marketing activities, and general financial performance.

      13. Risk of Loss/Title. Risk of loss and title to Feedstock and other
substances provided hereunder will pass at the property line between the
Refinery and the SNG Plant. Citizens and BHP Refining agree that each party's
ownership and responsibility for maintenance and repair of the pipelines
associated with the Feedstock and other substances addressed by this Agreement
shall divide at the property line, with each party holding ownership and
responsibility for maintenance and repair of the pipelines on its property.

      14. Disputes. If a party, within fifteen (15) days after receipt or
delivery of an invoice, disputes any charge set forth therein, such party shall
notify the other party in writing. The parties shall use reasonable commercial
efforts to promptly resolve any such dispute. If either party determines that
the dispute cannot be resolved in a mutually agreeable manner, the dispute shall
be submitted within five (5) days of notification to the other party to an
independent public accountant mutually acceptable to the parties (the
"Accountant"), or, if more appropriate, to another expert mutually agreeable to
both parties (the "Expert"). The Accountant or Expert shall make such
investigation of the charges as it deems necessary and shall finally determine
the amount of the charges. The cost of the Accountant or Expert shall be borne
by the invoiced party if the charges are determined to be correct and shall be
borne by the invoicing party if the charges are determined to be incorrect.
Notwithstanding the foregoing, Citizens shall pay any disputed charges in
accordance with the payment schedule set forth in Section 9 above, with
appropriate adjustments, if necessary, to be made by the parties following a
final determination of the dispute under this Section 14.

      15. Foreign Trade Zone. BHP Refining and Citizens shall each use
commercially reasonable efforts to maintain Foreign-Trade Subzone status for its
respective Foreign-Trade Subzone and prevent revocation or cessation of such
status or the benefits thereof, including payment of administrative fees to the
State of Hawaii and compliance with all applicable statutes, laws, regulations
and governmental orders (including those of the U.S. Customs Service, the State
of Hawaii, the Foreign-Trade Zones Board and the City and County of Honolulu
with respect to duties, quotas, recordkeeping and administration of its
respective Foreign-Trade Subzone). Notwithstanding the foregoing, neither BHP
Refining nor Citizens shall be obligated to maintain Foreign-Trade Subzone
status if material changes, whether with respect to applicable law, statutes,
regulations, or relating to the operation of each party's business, make it
commercially unreasonable for such party to maintain such status.

      16. Compliance with Law. The parties shall conduct all operations
hereunder in compliance with all applicable laws, ordinances, and regulations of
governmental authorities. In the performance of this Agreement each party is
independently engaged as a separate business from the other party, and nothing
herein contained shall be construed as reserving to either party any right to
control the other party with respect to its physical conduct in the performance
of this Agreement. It is further understood and agreed that neither BHP Refining
nor Citizens reserves any right to exercise control over any of the other
party's employees and that all employees of Citizens shall be entirely under the
control and direction of Citizens and the employees of BHP Refining shall be
entirely under the control and direction of BHP Refining, each of which shall be
responsible for their own employees' actions and omissions.

      17. Taxes. Any tax, tariff, duty, toll, fee, impost, charge or other
exaction, or the amount equivalent thereto, and any increase thereof, now or
hereafter imposed, levied or assessed by any governmental authority upon,
measured by, incident to or as a result of the matters covered by this
Agreement, or the transportation, importation, production, manufacture,
delivery, use or ownership of the Feedstock, and other materials to be provided
hereunder, or

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the source materials thereof, whether payable by Citizens or BHP Refining shall
be borne by Citizens.

      18. Insurance. BHP Refining and Citizens undertake and agree, at their own
expense, during the term hereof, to maintain in full force and effect, with
reputable and responsible insurance companies or associations, insurance in
amounts sufficient for their own business and assets and in such amounts and
covering such risks as are usually carried by companies engaged in similar
businesses with similar properties and operations, including without limitation,
workman's compensation insurance with statutory limits of coverage, covering all
persons employed by and working for each party in connection with the
performance of this Agreement, comprehensive or commercial general liability,
fire, and theft. Upon request each party shall furnish the other with
satisfactory evidence of the maintenance of such insurance.

      19. Indemnification. Except as otherwise provided herein, the parties
shall indemnify, defend and hold each other harmless from and against any and
all expense (including reasonable attorneys' fees and costs), liability and
claims of whatsoever kind and nature for damage to property, or for injury to or
death of any person directly or indirectly arising or alleged to arise out of
any negligent act or omission of such party or its agents or employees in the
performance of this Agreement, except to the extent that the negligence or the
willful misconduct of the other parry, its agents or employees is determined to
be the cause of any such damages and injuries. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOSS OF
PROFITS OR OPPORTUNITIES, OR ANY EXEMPLARY OR PUNITIVE DAMAGES ARISING OUT OF
THIS AGREEMENT, REGARDLESS OF WHETHER BASED ON CONTRACT, TORT (INCLUDING
NEGLIGENCE OR STRICT LIABILITY) WARRANTY. OR ANY OTHER BASIS FOR CAUSE OF
ACTION.

      20. Confidentiality. The parties agree to keep confidential any and all
information and data received or generated pursuant to this Agreement except for
information and data which is generally available to the public from sources
other than government and regulatory agencies. Notwithstanding the foregoing,
the parties may make such disclosures which are required by law or other
governmental authority.

      21. Termination. (a) BHP Refining may suspend deliveries or, at its
option, terminate this Agreement if: (i) Citizens fails to make any payment on
or before fifteen (15) days after the due date; or (ii) Citizens becomes
insolvent, becomes subject to any bankruptcy or reorganization proceedings,
whether voluntary or involuntary, or is placed in a receivership.
Notwithstanding the foregoing, neither a suspension nor a termination by BHP
Refining shall affect the obligations of Citizens to make payments due
hereunder.

            (b) Citizens may terminate this Agreement if: (i) BHP Refining fails
to make any payment on or before fifteen (15) days after the due date; or (ii)
BHP Refining becomes insolvent, becomes subject to any bankruptcy or
reorganization proceedings, whether voluntary or involuntary, or is placed in a
receivership. Notwithstanding the foregoing, a termination by Citizens shall not
affect the obligations of BHP Refining to make payments due hereunder.

            (c) For either party to exercise its termination rights pursuant to
this agreement, the party desiring the termination must provide notice of its
intent to terminate the agreement. The party so notified has ten (10) days to
cure the reason given for the termination. If the reason is not cured then the
agreement shall terminate.

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      22. Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), or
sent by facsimile transmission, (confirmation received) to the parties at the
following addresses and facsimile transmission numbers (or at such other address
or number for a party as shall be specified by like notice), except that notices
after the giving of which there is a designated period within which to perform
an act and notices of changes of address or number shall be effective only upon
receipt:

               If to BHP Refining:

                                      BHP Petroleum Americas Refining Inc.
                                      P. O. Box 3379
                                      Honolulu, Hawaii 96842
                                      Attention:   Vice President Marketing
                                      Telecopier: (808) 547-3796

               If to Citizens:

                                      Citizens Utilities Company
                                      P. O. Box 433
                                      Harvey, LA 70058
                                      Attention:   Vice President Energy Supply
                                      Telecopier: (504) 374-7685

      23. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Hawaii, without regard to any conflict
of law principle thereof.

      24. Arbitration. Except as set forth in Section 14 or elsewhere herein,
any dispute, controversy or claim between the parties relating to, arising out
of or in connection with this Agreement (or any subsequent agreements or
amendments thereto), including as to its existence, enforceability, validity,
interpretation, performance or breach or as to indemnification or damages,
including claims in tort, whether arising before or after the termination of
this Agreement (any such dispute, controversy or claim being herein referred to
as a "Dispute"), shall be settled without litigation and only by use of the
following alternative dispute resolution procedure:

            (a) At the written request of a party, each party shall appoint a
knowledgeable, responsible representative to meet and negotiate in good faith to
resolve any Dispute. The discussions shall be left to the discretion of the
representatives. Upon agreement, the representatives may utilize other
alternative dispute resolution procedures such as mediation to assist in the
negotiations. Discussions and correspondence among the parties' representatives
for purposes of these negotiations shall be treated as confidential information
developed for the purposes of settlement, exempt from discovery and production,
and without the concurrence of both parties shall not be admissible in the
arbitration described below or in any lawsuit. Documents identified in or
provided with such communications, which are not prepared for purposes of the
negotiations, are not so exempted and may, if otherwise admissible, be admitted
in the arbitration.

            (b) If negotiations between the representatives of the parties do
not resolve the Dispute within sixty (60) days of the initial written request,
the Dispute shall be submitted to binding arbitration by a single arbitrator
pursuant to the Commercial Arbitration Rules, as then amended and in effect, of
the American Arbitration Association (the "Rules"). Either

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party may demand such arbitration in accordance with the procedures set out in
the Rules. The arbitration shall take place in Honolulu, Hawaii. The arbitration
hearing shall be commenced within sixty (60) days of such party's demand for
arbitration. The arbitrator shall control the scheduling (so as to process the
matter expeditiously) and any discovery. The parties may submit written briefs.
At the arbitration hearing, each party may make written and oral presentations
to the arbitrator, present testimony and written evidence and examine witnesses.
The arbitrator shall have the authority to award equitable remedies (but only
after the party seeking the same shall establish that it would be entitled to
such remedies under applicable law), including injunctive relief and specific
performance. No party shall be eligible to receive, and the arbitrator shall not
have the authority to award, exemplary or punitive damages. The arbitrator shall
rule on the Dispute by issuing a written opinion within thirty (30) days after
the close of hearings. The arbitrator's decision shall be binding and final.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction.

            (c) Each party will bear its own costs and expenses in submitting
and presenting its position with respect to any Dispute to the arbitrator;
PROVIDED, HOWEVER, that if the arbitrator determines that the position taken in
the Dispute by the non-prevailing party taken as a whole is unreasonable, the
arbitrator may order the non-prevailing party to bear such fees and expenses,
and reimburse the prevailing party for all or such portion of its reasonable
costs and expenses in submitting and presenting its position, as the arbitrator
shall reasonably determine to be fair under the circumstances. Each party to the
arbitration shall pay one-half of the fees and expenses of the arbitrator and
the American Arbitration Association.

            (d) If (i) BHP Refining is unable to supply Feedstock of a quality
enabling Citizens to manufacture synthetic natural gas and, as a result, BHP
Refining is in material breach of this Agreement, (ii) Citizens is unable to
procure such feedstock in a timely manner from another supplier, (iii) as a
result of such clauses (i) and (ii) Citizens is unable to or likely to become
unable to fulfil any material obligation, imposed upon it, either by Hawaii law
or Hawaii's Public Utilities Commission, as a regulated public utility to
provide synthetic natural gas to the residents of the Island of Oahu, and (iv)
Citizens otherwise is not then in breach of this Agreement, then Citizens may
institute expedited arbitration under the Rules as then in effect.

      25. Mutual Drafting. This Agreement is me joint product of the parties
hereto and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of each of the parties and shall not be construed for
or against any party hereto.

      26. Interpretation. References herein to Sections or Exhibits shall be to
a Section or Exhibit to this Agreement unless otherwise indicated. The words
"include," "including" and "includes" when used herein shall be deemed in each
case to be followed by the words "without limitation." The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Terms used herein and not
defined herein shall have the meanings assigned to them in the Acquisition
Agreement.

      27. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the greatest extent possible.

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<PAGE>

      28. Assignment. Neither party shall assign, or transfer, or delegate the
performance of its rights or obligations hereunder without the prior written
consent of the other party; PROVIDED HOWEVER, that BHP Refining may make such an
assignment, transfer or delegation to any direct or indirect subsidiary of
Broken Hill Proprietary Company Limited (or any successor thereto), and that
Citizens may make such an assignment, transfer or delegation to any direct or
indirect subsidiary of Citizens Utilities Company (or any successor thereto).
This Agreement shall be binding upon and shall inure to the benefit of the
parties, their successors and permitted assigns.

      29. No Waivers. The failure of either party at any tune to enforce or
require performance or the strict compliance with any provision hereof shall in
no way operate as a waiver or affect the right of such party to enforce the
same. No waiver by either party of any condition or the breach of any provision
of this Agreement shall be deemed to be or construed as a further or continuing
waiver of any such condition or breach, or a waiver of any other condition or of
any breach of any other provision of this Agreement.

      30. Entire Agreement. This Agreement contains the entire understanding and
agreement between the parties hereto as to the operations to be performed
hereunder and terminates and supersedes all prior contracts and agreements for
the purchase and sale of Feedstock, PROVIDED THAT, any accrued obligations of
either party under any such prior agreement shall be performed by such party at
the time of the closing of the Acquisition Agreement, or pursuant to any
post-closing account settlement procedure provided therein, if any. This
Agreement may not be amended or modified except by a writing signed by each of
the parties and which references this Agreement.

      31. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

BHP PETROLEUM AMERICAS                CITIZENS UTILITIES COMPANY
REFINING INC.

By /s/ Henry G. Neal                  By /s/ J. Michael Love
   -----------------------------         --------------------------------------
    Henry G. Neal                        J. Michael Love
    President                            Vice President Citizens Public Services

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