EXHIBIT 10.2



                               SKY PETROLEUM, INC
                               108 Wild Basin Road
                               Austin, Texas 78746

                                  May 17, 2005


Parasaevski Ltd.
P.O. Box 400
Sharjah, U.A.E.


          RE: Compensation Agreement for Sky Petroleum for assisting in the
 negotiations of the terms and introduction for the Mubarek Concession (the
 "Agreement")

Ladies and Gentlemen:

This letter agreement, when accepted by you in the manner set forth below, shall
identify the terms and conditions under which  Parasakevi Ltd.  ("PARA") will be
compensated for advisory  services in connection with a participation  agreement
between  Buttes  Gas and  Oil Co.  International  Inc  and Sky  Petroleum,  Inc.
("SKPF') (the "Participation Agreement").

In  consideration  of the services and assistance to SKPI, SKPI hereby agrees to
issue PARA shares of SKPI's common stock,  $0.001 par value per share,  upon the
following terms and conditions:

     1.   SKPI shall issue PARA Five Hundred Thousand (500,000) shares of SKPI's
          restricted   common   stock  upon  the   signing  of  the   definitive
          Participation agreement

     2.   In  addition,  SKPI shall issue PARA Five Hundred  Thousand  (500,000)
          shares of SKPI's restricted common stock upon SKPI meeting the minimum
          funding  requirement  of  $12.5mm  to  Buttes  Oil  and Gas as per the
          Participation Agreement

SKPI will instruct its transfer agent to issue stock  certificates  representing
the  shares to be issued and  delivered  pursuant  to 1 and 2 above the  "Common
Stock") within two (2) business days of meeting the milestones above and use its
reasonable best efforts to have such  certificates  delivered to Parasakevi Ltd.
within ten (10) business days.

PARA warrants that

     A.   It (i)  has  its  place  of  business  at the  address  set  forth  in
          information  supplied to SKPI and has no current intention of becoming
          domiciled in any other state or  jurisdiction  prior to the expiration
          of this  Agreement;  (ii)  understands  the  Common  Stock  may not be
          liquid; (iii) can bear the economic risk of its investment,  including
          the  possibility  of  losing  its  entire  investment;  (iv)  has such
          knowledge and experience in business and financial  matters,  alone or
          with its representatives,


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          that it is capable of evaluating  the relative risks and merits of its
          investment; and (v) understands the speculative nature and uncertainty
          of the possible investment contemplated hereby.

     B.   It would be  acquiring  the  Common  Stock  for its own  account,  for
          investment  purposes  only  and not  with a view to  resale  or  other
          distribution  thereof,  although  any  decision  to sell  would  be in
          Parasakevi Ltd.'s sole discretion; and it acknowledges that the Common
          Stock may be sold in the United  States only if such  Common  Stock is
          registered  under the U.S.  Securities  Act of 1933, as amended,  (the
          "Act") or an exemption from such registration is available.

     C.   It  (i)  has  reviewed  this  Agreement  and  has  been  afforded  the
          opportunity  to  ask  questions  of  and  receive  answers  from  SKPI
          concerning the terms and conditions of this Agreement and the business
          of SKPI and to obtain any additional  information which SKPI possesses
          or could  acquire  without  unreasonable  effort  or  expense  that is
          necessary to verify the accuracy of information contained herein; (ii)
          desires no  additional  information  from SKPI;  and (iii) has had the
          opportunity   to  consult  with  such  legal,   accounting  and  other
          professional  advisors  as it has  deemed  appropriate,  and all  such
          advisors have been given access to information to their satisfaction.

     D.   It is (i) through its representatives and advisers,  familiar with the
          definition  of  "Accredited  Investor" as that term is defined in Rule
          501 (a)  under  the Act  and,  in  light  of  such  definition,  is an
          "Accredited  Investor" and (ii) has such  knowledge and  experience in
          financial and business  matters that it is capable of  evaluating  the
          risks and merits of the intended purchase/receipt of the Common Stock.

     E.   It fully  understands  and  agrees  that (i) the  Common  has not been
          registered  under the Act, or the  securities  laws of any state,  and
          therefore,  cannot be sold, pledged, assigned or otherwise disposed of
          unless  subsequently  registered  under the Act and/or qualified under
          applicable   state   securities   laws  or  an  exemption   from  such
          registration  and/or  qualification  is available,  (ii) it will sell,
          pledge,  transfer or  otherwise  dispose of the Common  Stock,  in the
          absence  of (A) an  effective  registration  statement  for the Common
          Stock  under  the Act  and/or  qualification  under  applicable  state
          securities  laws or (B) an opinion of counsel to the effect that there
          is an exemption  available  for sale of the Common Stock  without such
          registration and/or qualification, (iii) the information or conditions
          necessary to permit sales of  securities  of SKPI under Rule 144 under
          the Act may not be  available  in the  future,  and  (iv)  each of the
          certificates  representing  the Common Stock pursuant hereto will bear
          in substance the following legend:


<PAGE>

          "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933.  THEY  MAY NOT BE  SOLD  OR  TRANSFERRED  IN THE  ABSENCE  OF AN
          EFFECTIVE  REGISTRATION STATEMENT UNDER THAT ACT OR WITHOUT AN OPINION
          OF COUNSEL REASONABLY  SATISFACTORY TO THE SKPI THAT SUCH REGISTRATION
          IS NOT REQUIRED."


SKPI warrants that:

     A.   It has been duly  incorporated  and is in good standing under the laws
          of the State of Nevada.

     B.   It has full power under its constitutive  documents and applicable law
          and all authorizations,  approvals,  consents and licenses required by
          it have  been  unconditionally  obtained  and are in  full  force  and
          effect,  to permit it to enter into and perform  this  Agreement;  and
          this Agreement has been duly authorized,  executed and delivered by it
          and is a valid and binding  agreement of it  enforceable in accordance
          with its terms;

     C.   The issuance and delivery of the Common Stock and the compliance by it
          with  all  of  the  provisions  of  this  Agreement,  as  well  as the
          consummation  of  the  transactions  herein  contemplated,   will  not
          conflict  with or result in a breach  or  violation  of (i) any of the
          terms or provisions of, or constitute a default under any agreement or
          instrument; or (ii) any applicable laws.

     D.   No person has any  conflicting  right,  contingent  or  otherwise,  to
          purchase  or to be  offered  any of the Common  Stock;  SKPI has valid
          title to, and the legal right and the power to issue and transfer full
          beneficial  and legal  interest in, the Common Stock,  and issuance of
          the Common  Stock to PARA will pass title to such Common Stock to PARA
          free  and  clear  of  all  security  interests,  liens,  encumbrances,
          equities or other claims  together with all rights and  advantages now
          and hereafter attaching to the Common Stock.


Neither SKPI nor PARA shall be able to assign their respective rights under this
Agreement at any time.

This  Agreement and  interpretation  hereof shall be governed by the laws of the
State of Nevada,  exclusive of the choice of law rules thereof, as if therein to
be wholly performed.

No prior  stipulations,  agreements  or  understanding  by the parties or any of
their  representatives  shall be valid or  enforceable  unless  embodied in this
Agreement or covered by its provisions or added by separate  letter  executed by
both parties or their agents.




<PAGE>


This  Agreement  shall be  binding  and  ensure to the  benefits  of the  heirs,
successors and assigns of the parties hereto.

Very truly yours,




Sky Petroleum, Inc.
Daniel Meyer,
President


AGREED TO AND ACCEPTED This
day of May, 2005

Paraskaevi
Ltd.

By:_____________________________________


Its:____________________________________