EXHIBIT 10.2
                              EXPLORATION CONTRACT

                            (TRANSLATED FROM RUSSIAN)

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                                    CONTRACT

           for exploration of hydrocarbons in Yuzhny Alibek Oil Field
    partially located within the limits of the exploration blocks XXII-23-D,E
                   in Mugojar District, Aktyubinskaya Oblast',
           in accordance with the License AE No 1557 as of 29.04.1999

                                     between

                      AGENCY OF THE REPUBLIC OF KAZAKHSTAN
                                 ON INVESTMENTS

                                (Competent Body)

                                       and

                       JOINT-STOCK COMPANY "KASPIY NEFT'"

                                  (Contractor)



                                  Astana - 2000
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                                    CONTENTS

Preamble......................................................................
Section 1. Definitions........................................................
Section 2. Purpose of Contract................................................
Section 3. Term of Contract...................................................
Section 4. Contractual Area...................................................
Section 5. Title to property and information..................................
Section 6. Right of the State to acquire and requisition of minerals (oil)....
Section 7. General rights and obligations of the Parties......................
Section 8. Working Program....................................................
Section 9. Exploration Period.................................................
Section 10. Commercial  Oil Pool Discovery....................................
Section 11. Accounting and Reporting..........................................
Section 12. Measuring.........................................................
Section 13. Execution of Sub-contractual Works................................
Section 14. Financing.........................................................
Section 15. Taxes and Payments................................................
Section 16. Accountancy.......................................................
Section 17. Insurance.........................................................
Section 18. Liquidity and liquid fund.........................................
Section 19. Protection of Subsoil and Environment.............................
Section 20. Safety of Local Population and Personnel..........................
Section 21. Force-Majeure.....................................................
Section 22. Confidentiality...................................................
Section 23. Assignment of Rights and Obligations..............................
Section 24. Applicable Law....................................................
Section 25. Procedure for Settlement of Disputes..............................
Section 26. Guarantees of Contract Stability..................................
Section 27. Conditions for Termination and Suspension of Contract.............
Section 28. Language of Contract..............................................
Section 29. Additional Provisions.............................................

Appendices:

No 1 - License AE No 1557 as of 29.04.99.
No 2 - Working Program (Exploration Period)
No 3 - Approvals and Experts Conclusions

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     The present Contract for Exploration of Hydrocarbons in Alibek Yuzhny field
partially located within the limits of the exploration blocks XXII-23-D,E in the
territory of Mugojar District, Aktyubinskaya Oblast', Republic of Kazakhstan was
concluded on the 7th of March, 2000, between Agency of the Republic of
Kazakhstan on Investments (hereinafter referred to as Competent Body) and
Joint-Stock Company "Kaspi Neft'" (hereinafter referred to as Contractor) as a
holder of the License AE No 1557 as of 29.04.1999.


                                    PREAMBLE

     WHEREAS

1.   Subsoil  and all  Mineral  Wealth  contained  are  government  property  in
     accordance with the Constitution of the Republic of Kazakhstan.

2.   Republic of Kazakhstan is willing to conduct efficient and rational
     utilization of Mineral Wealth including exploration and test operation of
     Alibek Yuzhny Oil Field.

3.   Contractor is willing and financially capable to conduct efficient and
     rational exploration works.

4.   Government of the Republic of Kazakhstan  has  authorized the Agency of the
     Republic of Kazakhstan on Investments to conclude and execute the Contract.

5.   Competent Body and Contractor have agreed that their mutual rights and
     obligations in Exploration of Hydrocarbons will be regulated by the
     Contract.

NOW THEREFORE, Competent Body and Contractor have agreed as follows:

                             SECTION 1. DEFINITIONS

     The terms and definitions not explained in this Section will have the
meaning attached to them in the Decree of the President of the Republic of
Kazakhstan "On Subsoil and Subsoil Use" as of January, 27, 1996, acting as a law
(hereinafter referred to as Decree "On Subsoil") and other legislative acts on
specific minerals and technogenic mineral formations.

1.   State (Republic) shall mean Republic of Kazakhstan.

2.   Governmental Body shall mean a central executive body of the Republic of
     Kazakhstan authorized to execute definite functions in the name of the
     State (Republic).

3.   Mining Allocation shall mean a document attached to the License determining
     spatial boundaries of the subsoil area allocated for execution of the works
     specified in the License.

4.   Contractual Year shall mean a period of 12 (twelve) successive months
     according to the Gregorian Calendar; in the context of the Contract it
     begins from the effective date of the Contract.

5.   Effective  Date of the Contract shall mean the date given in Paragraph 3.1.
     of the Contract.

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6.   Legislation on Subsoil Use shall mean Decree of the President of the
     Republic of Kazakhstan "On Subsoil and Subsoil Use" as of January, 27,
     1996, operating as a law and other legislative acts.

7.   Commercial   discovery   shall  mean   discovery  one  or  several   fields
     commercially fit for Production in the Contractual Area.

8.   Competent Body shall mean Agency of the Republic of Kazakhstan on
     Investments delegated with the rights directly connected with conclusion
     and execution of the Contract.

9.   Contract shall mean the present Contract for Exploration of hydrocarbon raw
     materials in Alibek Yuzhny oil field between Competent Body and Contractor
     as well as all the Appendices to the Contract.

10.  Contractual Area shall mean the territory specified in the License
     (Appendices 1,2,3) by the geographical coordinates and allocated for
     execution of exploration works.

11.  License shall mean the License AE No 1557 (oil) as of 29.04.1999 issued by
     the Government of the Republic of Kazakhstan to the Joint-Stock Company
     "Kaspi Neft'" to conduct exploration of hydrocarbon raw materials in Alibek
     Yuzhny Oil Field located in Mugojar District, Aktyubinskaya Oblast',
     Republic of Kazakhstan.

12.  Licensing Body shall mean "Licensor" executive body with the competence to
     issue licenses in accordance with the applicable law.

13.  License  Works  shall  mean all works  under the  License  and  Exploration
     Contract.

14.  Oil Field shall mean Alibek Yuzhny oil field or a part of subsoil
     containing a natural accumulation of oil.

15.  Taxes shall mean all the taxes and other  compulsory  payments  paid to the
     state budget of the Republic of Kazakhstan,  local budgets and  non-budget.
     Funds.

16.  Tax legislation shall mean Decree of the President of the Republic of
     Kazakhstan "On Taxes and other Compulsory Payments to the Budget" No 2235
     as of April, 24, 1995, operating as a law, with all amendments and
     alterations, and other legislative and legal laws regulating payment of
     taxes and fees.

17.  Subsoil shall mean a part of the earth's crust beneath edaphic (soil) layer
     and in the absence of the latter - beneath earth surface and floor of water
     reservoirs extending down to the depths accessible for Subsoil Use
     Operation with consideration for technological progress.

18.  Subsoil Use Operations shall mean operations relating to exploration works
     conducted in the Contractual Area under the License.

19.  Oil Operations shall mean operations relating to Exploration, Production,
     Construction and Operation of underground storing capacities and reservoirs
     of oil, Construction and Operation of Oil and Gas Pipelines executed in
     land within the limits of rivers, lakes and other inland waters as well as
     Marine Oil Operations.

20.  Contractor shall mean Subsoil User, i.e. "Kaspi Neft'" Joint-Stock  Company
     which has concluded the Contract with the Competent Body.

21.  Government shall mean Government of the Republic of Kazakhstan.

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22.  Accompanying  Useful Minerals shall mean the components  produced  together
     with the essential mineral.

23.  Positive practice of Oil Field Development shall mean established and
     generally accepted world practice of Oil Operations considered as rational,
     safe, efficient and necessary in conducting of Oil Operations.

24.  Exploration  shall mean  operations  relating to search of useful  minerals
     fields and their evaluation.

25.  Working  Program shall mean all types of design work to be implemented  for
     exploration the Contractual Area.

26.  Hydrocarbon Raw Materials shall mean oil, gas and condensate.

27.  Parties shall mean Competent Body and Contractor  where they are determined
     collectively.

28.  Subcontractor shall mean a legal body or natural person who has concluded
     an agreement with Contractor on execution of a specific part of
     Contractor's obligations under the Contract.

29.  Third Party  shall mean any  natural or legal body except for the  Contract
     Parties.

30.  Proved Reserves shall mean geological and extractable oil reserves of
     Alibek Yuzhny Oil Field evaluated by the state examination.

31.  Bonuses  shall mean  payments  made at the time of specific  periods of the
     Contract  realization:  "signing  bonus"  (for  signing  of the  Contract),
     "commercial discovery bonus" (for discovery of a commercial oil field).

32.  Royalty shall mean payments for the right to use subsoil during the process
     of hydrocarbon production. In case of test operation, royalty for test
     operation shall be specified.

33.  Construction  works shall mean operations for construction and operation of
     underground facilities of general purpose and for disposal of wastes

34.  Production works shall mean operations relating to extraction of useful
     minerals from the subsoil to the land surface and from the technogenic
     mineral formations as the state property including all technological
     operations up to processing of mineral raw materials.

35.  Rate of discount shall mean the coefficient used for balancing expenditures
     and returns by the beginning of the Contractor's works.

36.  Customs payments shall mean all taxes, fees and duties specified in the
     register of customs duties in accordance with normative legal acts of the
     Republic of Kazakhstan.

                       SECTION 2. PURPOSE OF THE CONTRACT

2.1.          The purpose of this Contract is execution of efficient geological
              exploration as well as determination and legal registration
              contractual relations between the Parties in accordance with the
              applicable legislation of the Republic of Kazakhstan.

                         SECTION 3. TERM OF THE CONTRACT

3.1.          The Contract becomes effective from the time of its official
              registration in the authorized body and is valid during the time
              specified in Paragraph 4 of the License.

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3.2.          Term of the  Contract  expires on the last day of operation of the
              License.

3.3.          The term of the Contract may be extended  only after  extension of
              the License.

3.4.          When  extended  the terms and  conditions  of the  Contract may be
              changed by written agreement of the Parties if such changes are in
              compliance with the provisions of the License.

                          SECTION 4. CONTRACTUAL AREA

4.1.          Contractor  carries out  exploration of hydrocarbon  raw materials
              within the limits of the  Contractual  area in accordance with the
              License and provisions of the Contract.

4.2.          If during exploration of hydrocarbon raw materials the
              geographical boundaries are found to go beyond the Contractual
              Area then the issue of its extension shall be decided by making
              additional provisions into the Contract.

4.3.          Return  of the  Contractual  Area  except  for  the  area  where a
              commercial discovery is made will be executed after 2005.

               SECTION 5. PROPERTY RIGHTS TO STOCK AND INFORMATION

5.1.          All tangible and intangible assets acquired by the Contractor for
              exploration of hydrocarbonic raw materials are property of the
              Contractor.

5.2.          Property rights to stock and other property laws indicated in 5.1.
              may be put in pledge or encumbered otherwise to the benefit of the
              Third Party in order to provide  financing of exploration works in
              accordance with the legislation of the State.

5.3.          The Contractor shall acquire the Information on Subsoil in the
              Contractual Area owned by the State in the Republican Center of
              geological information of the Ministry of natural resources and
              protection of environment of the Republic of Kazakhstan in the
              order established by the legislation of the State.

5.4.          Information on geological structure of the subsoil, useful
              minerals contained, geological parameters of the oil fields,
              volume of the reserves, development conditions and other features
              of the subsoil contained in geological reports, maps and other
              materials are owned by the State if they are obtained from
              budgetary allocations and they are owned by the Contractor if they
              are obtained from its owned funds.

5.5.          Geological and other information on Subsoil obtained by the
              Contractor in the process of exploration of hydrocarbons shall be
              duly transferred for storing, systematization and analysis to the
              Republican Center of geological information of the Ministry of
              Natural Resources and Environmental Protection of the Republic of
              Kazakhstan.

5.6.          Utilization of the geological information on Subsoil obtained at
              the expense of the Contractor for training, research, commercial
              and other purposes and transferred in accordance with Paragraph
              5.5 of the Contract shall be determined on the basis of a separate
              agreement between Contractor and Republican Center of Geological
              Information of the Ministry of Natural Resources and Environmental
              Protection of the Republic of Kazakhstan in accordance with the
              Decree No 1357 as of 7.11.96. of the Government of the Republic of
              Kazakhstan "On approval of Regulations for Geological Information
              owned by the State and the order of its use for training,
              research, commercial and other purposes".

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5.7.          On termination of the Contract all geological information shall be
              transferred to the State property. The Contractor is obliged to
              transfer all the documents and other material carriers of
              geological information on a gratis basis including primary
              information to the Republican Center of Geological Information of
              the Ministry of Natural Resources and Environmental Protection of
              the Republic of Kazakhstan.

    SECTION 6. RIGHT OF THE STATE TO ACQUIRE AND REQUISITE OF USEFUL MINERALS

6.1.          In case of war, natural disasters or other emergencies stipulated
              by the law on emergencies, the Government has the right to
              requisite a part or all hydrocarbons owned by the Contractor.
              Requisition may be exercised to the extent required for needs of
              the State throughout the whole period of the emergency situation.

6.2.          The State guarantees compensation for requested useful minerals in
              kind or reimbursing for the cost on the basis of world prices
              operating on the day of requisition (for a foreign contractor
              reimbursement is made in convertible currency and for a national
              contractor - in national currency of the State).

6.3.          The State has the priority right to acquire hydrocarbons from the
              Contractor at the prices not higher than existing world prices.
              The limiting volume of the acquired hydrocarbons shall be 50% of
              all produced hydrocarbons at the prices not lower than cost price.

            SECTION 7. GENERAL RIGHTS AND OBLIGATIONS OF THE PARTIES

7.1.          CONTRACTOR HAS THE RIGHT:

7.1.1.        To carry out exploration of hydrocarbons in the Contractual Area
              on an exclusive basis.

7.1.2.        To make any independent legal actions on use of subsoil within the
              limits of the Contractual Area in accordance with the provisions
              stipulated in the License and the Contract.

7.1.3.        In the Contractual Area and if necessary in other plots of land
              allotted to the Contractor in an established order, to construct
              objects of productive and social sectors essential for
              implementation of exploration and production works in accordance
              with the applicable laws.

7.1.4.        To use objects and communications of collective use as agreed with
              their  owners  both in the  Contractual  Area and  outside  of its
              limits.

7.1.5.        To conduct negotiations on extension of the term of the Contract
              on a priority basis in accordance with the procedure determined in
              Paragraph 3.3. of the Contract.

7.1.6.        To invite Subcontractors for implementation of specific works
              related to exploration work.

7.1.7.        To assign all or a part of his rights to other persons complying
              with the provisions of the Contract and legislation of the State.

7.1.8.        Contractor may appoint Operator of the Contract at any time of the
              term of the Contract and both Contractor or any other person may
              by appointed as Operator hereby.

7.1.9.        To terminate his activities in accordance with the provisions
              stipulated in the Contract and legislation of the State.

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7.1.10.       In case of termination of the Contract, Contractor has the right
              to dispose of his owned property.

7.1.11.       To conduct exploration works strictly in accordance with the
              legislation of the State and Working Program.

7.2.          CONTACTOR IS OBLIGED:

7.2.1.        Within 90 days after registration of the Contract, to commence
              implementation of the Working Program.

7.2.2.        To use the most efficient methods and technologies in exploration
              of hydrocarbons based on the norms and standards accepted in the
              world practice.

7.2.3.        To use Contractual Area only for the purposes stipulated in the
              License and present Contract.

7.2.4.        Not to prevent other persons to move freely within the limits of
              the Contractual Area, to use objects and communications of
              collective use or conduct any works including exploration and
              extraction of any other natural resources except oil if such
              activities do not require special safety measures and they do not
              interfere with exploration works.

7.2.5.        To observe duly agreed technological designs and projects for
              exploration of hydrocarbons safe for the personnel and local
              population.

7.2.6.        To prefer equipment, materials and finished products made in the
              State provided that they are competitive ecological and technical
              specifications, prices, working parameters and delivery
              conditions.

7.2.7.        To give priority to the State organizations and institutions in
              using services for exploration of hydrocarbons including use of
              air, railway and water transport provided that these services are
              able to meet competition in price, efficiency and quality.

7.2.8.        In conducting exploration of hydrocarbons, to take part in
              development of social sector of the Region and give priority to
              local personnel provided that they have proper experience and
              qualification.

7.2.9.        To submit Working Program and progress reports to the Competent
              Body.

7.2.10.       To finance (no less than 1% of annual capital cost of the licensed
              object) professional training of local personnel used in the works
              under the Contract.

7.2.11.       To submit all necessary documents, information and unimpeded
              access of the inspecting bodies of the State to the working sites
              as they fulfill their duties and eliminate appropriately all the
              violations found.

7.2.12.       If required to transfer  information related to Exploration to the
              third parties only with written consent of the other Party.

7.2.13.       To pay timely all taxes and other compulsory payments in
              accordance with the law of the State and the Contract.

7.2.14.       In his activities, to preserve objects of cultural and historical
              importance located in the Contractual Area.

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7.2.15.       To forecast long-term ecological consequences of his activities
              under the Contract and submit these forecasts to the Competent
              Body and public organs of environmental protection; the final
              forecast to be submitted not later than one year before
              termination of the Contract.

7.2.16.       To leave the Contractual Area in the state meeting the
              requirements of Mining and Sanitary Supervision and protection of
              subsoil and environment.

7.2.17.       To restore the plots of land and other natural objects damaged as
              a result of the activities of the Contractor to the extent
              adequate for further utilization in accordance with the
              legislation of the State.

7.2.18.       To compensate fully damages resulting from the activities of the
              Contractor and inflicted on environment, personnel and other
              organizations and population.

7.2.19.       Contractor carries out Oil Operations in accordance with the
              License and Working Program agreed with the Authorized Body for
              supervision of safe procedure of work.

7.3.          OBLIGATIONS OF THE COMPETENT BODY:

7.3.1.        To provide for fulfillment and cancellation of the Contract in the
              order and on the grounds envisaged in the legislation of the
              State.

7.3.2.        To submit his proposals on withdrawal or alterations of the
              License to the Licensing Body.

7.3.3.        To provide for a plot of land to the Contractor for use in
              accordance with the License.

7.4.          RIGHTS OF THE COMPETENT BODY:

7.4.1.        To represent the State in talks with the Contractor regarding
              terms and conditions of the Contract.

7.4.2.        In the process of execution of the Contract, to approach the
              Licensing Body with proposals on modification of the provisions of
              the License.

7.4.3.        To demand regular and sample reporting on fulfillment of the
              provisions of the Contract.

7.4.4.        To carry out inspection of the exploration works of the Contractor
              relating to his activity under the Contract.

7.4.5.        To have access to any works in the Contractual Area relating to
              Exploration of Hydrocarbons.

                           SECTION 8. WORKING PROGRAM

8.1.          Contractor executes Exploration of Hydrocarbons in accordance with
              the Working Program agreed with the Authorized Body on utilization
              and protection of subsoil.


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8.2.          Contractor may submit proposals on modification and/or addition of
              the agreed Working Program. Modifications, amendments and
              additions of the Working Program are made in written form if
              mutually agreed by the Parties.

                          SECTION 9. EXPLORATION PERIOD

9.1.          Exploration Period consists of six successive years according to
              the License and may be extended twice as mutually agreed by the
              Parties with each period of extension as long as two years. Hereby
              the Parties shall determine the part of the Contractual Area for
              further exploration and make appropriate changes in the Working
              Program.

9.2.          As Exploration works proceed, in case of commercial  discovery the
              Contractor may retain the whole territory for himself.

9.3.          The Contract terminates upon expiry of the Exploration Period with
              regard to specific extensions if no commercial discoveries or no
              decision on transition to the Production Period were made in the
              Contractual Area. If the Contractor refuses to continue operations
              under the Contract then he forfeits all the rights on the

              Contractual Area and may not claim for any compensation of the
              expenses under the Contract.

                        SECTION 10. COMMERCIAL DISCOVERY

10.1.         If the Contractor makes a discovery of any commercial field of
              hydrocarbon raw materials which can be, to his opinion,
              economically profitable then he will immediately inform the
              Competent Body thereof and within 30-day period develops Working
              Program in order to evaluate its reserves and information required
              for determination of profitability of the Field.

10.2.         Within Exploration Period, the Contractor will submit Design of
              Test Operation (Exploration) to the Central Commission for
              Exploration (CCE).

10.3.         The Contractor will execute Test Operation (Exploration) without
              conservation and draw up relevant documents essential for expert
              assessment of the field reserves.

10.4.         Commercial Discovery entitles the Contractor with the exclusive
              right for conclusion Production Contract provided that provisions
              of the License and the Contract are met.

10.5.         If no Commercial Discovery is made in the Process of Exploration
              then the Contractor has no right to compensate the expenses
              incurred in the process of Exploration.

                      SECTION 11. ACCOUNTING AND REPORTING

11.1.         The Contractor undertakes to provide for accounting and within a
              specified period to keep all documents pertaining to Exploration
              under the Contract in accordance with the Legislation of the
              State.

11.2.         Prior to the 10th day of the following month, the Contractor will
              submit to the Competent Body a detailed report on his business
              activity in the preceding quarter.

11.3.         The Contractor will submit reports on his business activity to
              relevant state organs in the order and within a specified period
              of time according to the Legislation of the State.

11.4.         The Competent Body will have the right to conduct inspection of
              adherence of the Contractor to the terms and conditions of the
              Contract and may attend, through his representatives, the site of
              Exploration conducted by the Contractor.

                             SECTION 12. MEASUREMENT

12.1.         Measurement and weighing of Crude Oil produced in the Contractual
              Area shall be taken by the Contractor in accordance with the
              methods and practice accepted in the State.

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12.2.         Contractor with the participation of the Competent Body shall
              conduct annual tests of the equipment and instruments used for
              weighing and measurement of Crude Oil.

12.3.         If the tests or inspection detect any defect of the equipment and
              instruments and the time of the defect cannot be determined
              properly then the time of the defect is determined as half the
              time from the previous measurement to the day of detection of the
              defect.

12.4.         If the Contractor considers it is essential to make any changes in
              the method of measurement or replace the measuring instruments
              installed then he must provide notification to the Competent Body
              not later than 15 days before so that the representatives of the
              Competent Body can be present as these changes or replacement take
              place.

                    SECTION 13. EXECUTION OF SUBCONTRACT WORK

13.1.         Contractor submits to the Competent body a plan of subcontract
              work, a list of subcontracts for supply of materials, equipment
              and services as a part of the Working Program to be concluded in
              the next calendar year with estimated costs of the subcontracts as
              well as a list of potential local and foreign subcontractors.

13.2.         In conclusion of all subcontracts, the Contractor will give
              priority to services, equipment, materials and finished products
              made in the State if they are competitive in their ecological and
              technical specifications, prices, working parameters and terms of
              delivery.

13.3.         Subcontractors are invited by the Contractor as a rule on a
              competitive basis.

13.4.         Contractor is responsible for execution of subcontract works in
              accordance with the legislation of the State.

                              SECTION 14. FINANCING

14.1.         Contractor shall assume responsibility for full financing of his
              activities under the Contract in accordance with the Working
              Program agreed by the Parties.

14.2.         Contractor may freely obtain credits for financing his activities
              in any currency both in the State and outside if it complies with
              the legislation of the State.

14.3.         Contractor may have accounts both in national and foreign currency
              in the banks of the State and outside for the purpose of execution
              of the Contract in order to receive monetary resources as receipts
              and earnings from the Contract.

                         SECTION 15. TAXES AND PAYMENTS

15.1.         In connection with the activities under the Contract, the
              Contractor undertakes to pay taxes and payments in accordance with
              Tax Legislation of the Republic of Kazakhstan and provisions of
              the Contract. Whatever the organizational form of the Contractor,
              he shall be considered as a single taxpayer for the purposes of
              calculation of taxes and payments in connection with the
              activities under the Contract.

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15.2.         Contractor undertakes to pay the following taxes and payments:

15.2.1.       Income tax for legal entities. The Contractor is responsible for
              full deduction and transfer to the budget of the income tax
              withheld at the source of payment in accordance with Section II of
              the Law of the Republic of Kazakhstan "On taxes and other
              compulsory payments to budget" No 2235 as of April, 24, 1995
              (hereinafter referred to as Tax Code) applicable on the effective
              date of the Contract.

15.2.1.1.     Income tax for legal entities shall be paid at the rates specified
              in Articles 30-33 and 37 of Tax Code.

15.2.1.2.     The Contractor is responsible for full deduction and transfer to
              budget of income tax on legal entities withheld at the source of
              payment in accordance with provisions of the Tax Legislation and
              international agreements ratified by the Republic and applicable
              on the date of emergence of tax obligations with the exclusion of
              dividend tax calculated in accordance with the Tax Legislation
              applicable on the Effective Date of the Contract. In the case of
              establishment of permanent representation of non-resident legal
              entity then the Contractor in addition to income tax shall be
              imposed with a tax on net income of this permanent representation
              calculated in accordance with the Tax Legislation applicable on
              the Effective Date of the Contract.

15.2.2.       Value-added tax (VAT). The Contractor shall pay value-added tax in
              accordance with Section III of the Tax Code.

15.2.3.       Excises. The Contractor shall pay excises in accordance with
              Section IV of the Tax Code. The excisable goods are exclusively
              those listed in Article 76 of the Tax Code.

15.2.4.       Special taxes and payments of subsoil users:

15.2.4.1.     Signing Bonus. The Contractor shall pay Signing Bonus in the
              amount of 100000 (one hundred thousand) US dollars. The Signing
              Bonus shall be paid within 30 days from the Effective Date of the
              Contract.

15.2.4.1.1.   The Contractor shall submit the Declaration on the Signing Bonus
              to the Regional Tax Department in the place of registration prior
              to the 10th day of the month following a reporting one.

15.2.4.2.     Bonus of Commercial Discovery. The amount of the Bonus of
              Commercial Discovery shall be determined in the Contract for
              Production or for Exploration and Production concluded by the
              Contractor for the oil fields located in the Contractual Area.

15.2.4.3.     Royalty. The amount of the Royalty shall be determined in the
              Contract for Production or for Exploration and Production
              concluded by the Contractor for the oil fields located in the
              Contractual Area.

15.2.4.3.1.   In the event of test production of hydrocarbons within the limits
              of the Contract, the Contractor shall pay royalty at the rate of
              2% of the volume of hydrocarbons produced.

15.2.4.3.2.   The object of royalty taxation shall be the volume of the produced
              hydrocarbons calculated in cost value on the basis of the average
              selling price of the hydrocarbons for the reporting period without
              regard of indirect taxes and reduced by the sum of actual expenses
              for transportation to the place of sale.

15.2.4.3.3.   In the event of production of common useful minerals and
              underground water, the Contractor shall pay royalty at the rates
              and in the order established by the Tax Legislation effective on
              the date of emergence of payment obligations.

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15.2.4.3.4.   Royalty shall be paid on a monthly basis not later than the 15th
              day of the month following a reporting one.

15.2.4.3.5.   A reporting period for royalty is a calendar month.


15.2.4.3.6.   Royalty declaration shall be submitted to the tax body not later
              than the 10th day of the month following a reporting one.
              Declaration form shall be approved by an authorized state body.

15.2.4.3.7.   Money form of royalty payment may be replaced by payment in kind
              in the order established by the legislation with sending a
              notification on the order of payment to the Contractor no less
              than 60 days prior to the time of replacement.

15.2.4.4.     Compensation of historical expenses.

15.2.4.4.1.   Total Cost of all expenses on prospecting and exploration work
              (historical expenses) in the licensed area of the Alibek Yuzhny
              oil field incurred for the account of the Budget of the Republic
              amounts to 2 831 630 (two million eight hundred and thirty one
              thousand and six hundred and thirty) US dollars.

15.2.4.4.2.   The Contractor undertakes to pay 0,5% of the sum specified in
              15.2.4.4.1. to the budget of the Republic of Kazakhstan and
              amounting to 14 158 (fourteen thousand and one hundred and fifty
              eight) US dollars. The order of payment of historical expenses is
              determined in the Agreement on acquisition of geological
              information concluded between the Committee of Geology and
              Protection of Subsoil and the Contractor as of October, 21, 1999,
              No 247.

15.2.4.4.3.   Time and order of payment of the remaining total sum of all
              expenses for exploration works specified in 15.2.4.4.1. of the
              Contract and amounting to 2 817 472 (two million and eight hundred
              and seventeen thousand and four hundred and seventy two) US
              dollars shall be determined in the Contract for Production of
              hydrocarbon raw materials to be concluded by the Contractor on the
              oil fields discovered in the Contractual Area.

15.2.4.4.4.   In the event of setting up a joint venture with foreign
              participation, the Contractor is obliged to pay 5% of the total
              cost of historical expenses specified in 15.2.4.4.1. of the
              Contract for the right to use the information.

15.2.4.4.5.   Report on the amount of compensation of the historical expenses
              shall be submitted to tax authorities in the place of registration
              prior to the 20th day of the month following a reporting calendar
              quarter.

15.2.4.4.6.   Payments of the sums of compensation of the historical expenses
              shall be made prior to the 25th of the month following a reporting
              calendar quarter.

15.2.4.4.7.   The Contractor shall be responsible for violation of the order of
              calculation and payment of the sums of compensation of the
              historical expenses envisaged by the Tax Legislation for
              violations of the order of calculation and payment of taxes and
              other compulsory payments to the budget.

15.2.4.5.     Excess profits tax. In the event of conclusion of the Production
              Contract, the Contractor shall pay excess profits tax at the rates
              and in the order established by the Legislation on the date of
              conclusion of the Production Contract.

15.2.5.       Fee for registration of securities issue and assignment of
              national identification number for issue of the stocks not subject
              to state registration. The Contractor shall pay a fee for
              registration of securities issue and assignment of national
              identification number for issue of the stocks not subject to state
              registration in accordance with Section V of the Tax Code valid on
              the date of emergence of payment obligations.

<PAGE>


15.2.6.       Fees for passage of motor transport facilities in the territory of
              the Republic of Kazakhstan are paid by the Contractor in
              accordance with the Legislation of the Republic valid on the date
              of emergence of payment obligations.

15.2.7.       Payment for use of radio-frequency resource of the Republic of
              Kazakhstan shall be paid at the rates approved by the Decree of
              the Government of the Republic of Kazakhstan as of December, 11,
              1996, No 1526, valid on the date of emergence of payment
              obligations.

15.2.8.       Social Tax. The Contractor shall pay Social Tax in accordance with
              Section VII of the Tax Code valid on the effective date of the
              Contract.

15.2.9.       Land tax. The Contractor shall pay a land tax in accordance with
              Section VII of the Tax Code.

15.2.10.      Tax on transport facilities. The Contractor shall pay a tax on
              transport facilities in accordance with Section VIII of the Tax
              Code.

15.2.11.      Tax on property of legal entities. The Contractor shall pay a tax
              on property of legal entities in accordance with Section IX of the
              Tax Code.

15.2.12.      Auction fees. The Contractor will pay auction fees in accordance
              with the Tax Legislation valid on the date of emergence of payment
              obligations.

15.2.13.      Registration fee for legal persons. The Contractor will pay a
              registration fee for legal persons in accordance with the Tax
              Legislation valid on the date of emergence of payment obligations.

15.2.14.      License fee to acquire the right of carrying out a specified
              business activity. The Contractor will pay a license fee to
              acquire the right of carrying out a specified business activity
              fees in accordance with the Tax Legislation valid on the date of
              emergence of payment obligations.

15.2.15.      Customs duties. The Contractor will pay the customs duties in
              accordance with the Law of the Republic of Kazakhstan "On Customs
              in the Republic of Kazakhstan as of July, 20, 1995, No 2368, with
              alterations and additions valid on the effective date of the
              Contract.

15.2.16.      Payment for surface water resources. The Contractor will effect a
              payment for water used from the surface water resources in
              accordance with the Tax Legislation valid on the date of emergence
              of payment obligations.

15.2.17.      Tax on forest utilization (forest income). The Contractor will pay
              a tax on forest utilization (forest income) in accordance with the
              Tax Legislation valid on the date of emergence of the payment
              obligations.

15.2.18.      Payments for environmental pollution. The Contractor will effect
              payments for the environmental pollution in accordance with the
              Legislation effective on the date of emergence of the payment
              obligations.

<PAGE>

15.2.19.      Penalties for violation of the law on environmental protection.
              Penalties for violation of the law on environmental protection are
              paid in accordance with the Legislation valid on the date of
              detection of the violation.

15.2.20.      Mandatory contributions to the Pension Fund. The Contractor will
              pay mandatory contributions to the Pension Fund in the order and
              at the amount determined by the Tax Legislation on Wages Fund for
              citizens of the Republic of Kazakhstan.

15.2.21.      State tax. The Contractor will pay state tax in the order and at
              the amount operating on the date of emergence of payment
              obligations.


15.2.22.      Payment made by legal and physical persons for use of the symbols
              of the City of Almaty in their brands, service and trade marks.
              The Contractor will make payments for use of the symbols of the
              City of Almaty in their brands, service and trade marks in
              accordance with the Legislation valid on the date of emergence of
              payment obligations.

15.2.23.      The Contractor will pay a fee for using the words "Kazakhstan",
              "Republic", "National" (in full or any derivatives) by legal
              persons (except for the state offices and non-commercial
              organizations) in their company names, service, brand and trade
              marks in accordance with the Legislation valid on the date of
              emergence of payment obligations.

15.3.         Taxation of personnel. Personnel of the Contractor will pay taxes
              and other payments in accordance with the Tax Legislation valid at
              the time of emergence of the tax obligations. The Contractor will
              be responsible for the full and correct deduction of an income tax
              on natural persons from the source of payment to the budget in
              accordance with the Tax Legislation.

15.4.         Taxation of Subcontractors. The Contractor will advise his
              subcontractors which render services to him that they and their
              personnel are obliged to pay taxes in accordance with the Tax
              Legislation and the Contractor will be responsible for the full
              and correct deduction of the taxes from the source of payment to
              the budget.

15.5.         Taxation of assignment of rights. The incomes from assignment of
              rights will be subject to taxation in accordance with the Tax Code
              valid on the date of assignment..

15.6.         Transfer price formation. The Contractor admits that the tax
              service may control the prices used by the Contractor in his
              commercial and financial operations and correct the Contractor's
              income for the purpose of taxation according to the Article 138-1
              of the Tax Code.

15.7.         General tax liability. Taxes paid by the Contractor in accordance
              with the terms of the Contract will not exempt the Contractor from
              the obligations to pay taxes on his business activities not
              related to the Contract and established by the legislation of the
              Republic.

15.8.         Tax demarcation. For the purpose of tax calculation, the
              Contractor will not unite the revenues and deductions related to
              the Contract with the revenues and deductions outside the scope of
              the Contract.

15.9.         Payment and placing of taxes and other payments. Any taxes and
              payments determined in this Contract shall be paid by the
              Contractor in the order and at the rates determined by the
              Legislation of the Republic.

<PAGE>

15.10.        All taxes, fees and duties shall be paid in Tenge or other
              national currency subsequently used in the Republic unless
              otherwise provided by the Legislation. All taxes and payments
              shall be paid as determined by the legislation of the Republic to
              the accounts indicated by the tax and financial service of the
              Republic.

15.10.1.      Penalties and fines. Penalties and fines for the infringement of
              the Tax Legislation and untimely payment of the taxes to the
              budget will be applied in accordance with the Tax Legislation
              valid at the time of detection of the infringement.


15.10.2.      Fines. Fines for untimely payment taxes and fees to the budget are
              applied in accordance with the Tax Legislation valid on the date
              of detection of the violations.

15.11.        Stability of tax conditions. Tax conditions determined by the
              Contract (Tax regime) will be effective without any changes until
              the Contract is terminated with the exclusion of the cases when
              the changes of the Tax conditions are mutually agreed by the
              Parties of the Contract and do not entail any changes in regard of
              the initial economic interests of the Republic of Kazakhstan and
              the Contractor.

15.12.        Access to information. The Contractor admits that the tax bodies
              of the Republic will have access to any information related to the
              accounts of the Contractor including any foreign bank accounts of
              the Contractor including the foreign bank accounts. The Contractor
              agrees to submit to the tax service of the Republic any
              information related to such accounts and hereby waives the right
              of confidentiality which may exist in accordance with the relevant
              provisions of the Legislation on bank secrets and other relevant
              laws.

                             SECTION 16. ACCOUNTING

16.1.         The Contractor undertakes to effect full and correct accounting of
              all revenues and expenses under the Contract in accordance with
              the accounting procedure determined by the Legislation of the
              State.

16.2.         All accounting books and documents of the Contractor shall be
              accessible for inspection by the Competent Body and official
              organs within their competence determined by the Legislation of
              the State.

                              SECTION 17. INSURANCE

17.1.         Within 90 days from the effective date of the Contract, the
              Contractor will develop and submit to the Competent Body for
              approval the Insurance Program against risks, properties and
              liabilities related to the Exploration Program and:

              (1)    transportation  and  warehousing of the goods  delivered to
                     the site of the Exploration works and test production;

              (2)    the  property  of the  Contractor  used  in the  course  of
                     implementation of the Exploration works;

              (3)    the environmental pollution including soil as well as the
                     expenses on the elimination of the effects of pollution
                     including melioration and land restoration;

              (4)    general civil and legal liability for the third parties.

<PAGE>

17.2.         The Contractor is obliged to effect social insurance of his
              employees against production accidents, occupational diseases
              including the costs of medical treatment of the employees due to
              such cases.

17.3.         The Contractor may choose insurance companies at his discretion in
              accordance with the legislation of the State.


                  SECTION 18. LIQUIDATION AND LIQUIDATION FUND

18.1.         180 days before the expiration date of the Contract the Contractor
              will submit to the Competent Body for approval a program of
              liquidation of the effects of his activities in the Contractual
              area under the Contract including the liquidation expense budget.

18.2.         Abandonment and conservation of oil, gas and other wells shall be
              carried out in accordance with the provisions of the "Regulations
              on Conservation of Wells in oil and gas fields, underground
              storing facilities and thermal water reservoirs" and "Regulations
              on the procedure of abandonment of the wells and write-off of the
              expenses on their construction".

18.3.         Liquidation Program shall provide for elimination or liquidation
              of the facilities and equipment used in the process of activities
              of the Contractor in the Contractual Area.

18.4.         In order to provide for full financing of the Liquidation Program,
              the Contractor will set up Liquidation Fund in the amount of 1% as
              of Feasibility Study of the Exploration Works. The Liquidation
              Fund is governed by the Contractor.

18.5.         The allocations to the Liquidation Fund in the amount of 1% will
              be effected by the Contractor annually and will be included into
              the costs of the Exploration works.

18.6.         If the actual costs of the liquidation exceed the Liquidation Fund
              then the Contractor effects additional financing of the
              Liquidation.

18.7.         If the actual costs of the liquidation are less than the
              Liquidation Fund then the unused balance will be returned by the
              Government to the Contractor and will be included into the taxable
              revenue of the Contractor.

18.8.         If the Government decides on his own responsibility to extend
              operation of all or a part of the facilities transferred to him by
              the Contractor following the expiration date of the Contract then
              in this case the Contractor will bear no responsibility for
              implementation of the Liquidation Program and will assign to the
              State all the rights to use the assets actually saved up in the
              Liquidation Fund.

<PAGE>

            SECTION 19. PROTECTION OF MINERAL WEALTH AND ENVIRONMENT

19.1.         In the process of implementation of the Petroleum Operations the
              Contractor will be obliged to observe the Legislation of the State
              relating to protection of Subsoil and Environment and take all
              necessary measures for the following:

o    protect life and health of local population;

o    ensure rational and complete utilization of Mineral Wealth;

o    preservation of natural landscapes and rehabilitation of disturbed lands
     and other geo-morphological structures;

o    preservation of the energetic qualities of the upper layers of the Subsoil
     in order to prevent earthquakes, landslips, overflows, terrain subsidence.

19.2.          In the process of exploration  works conducted by the Contractor,
               the  following   requirements  shall  be  of  first  priority:  I
               Ecological Requirements:

o    preservation of environment;

o    prevention of technogenic land desertification;

o    prevention of water and wind erosion of soil;

o    insulation of lost circulation and fresh horizons in order to prevent their
     pollution; application of non-toxic re-agents for drilling fluids;
     prevention of exhaustion and pollution of underground water;

o    cleaning and re-circulation of drilling mud;

o    disposal of remnants of drilling materials, fuels and lubricants using
     environmentally safe procedures;

     II. Requirements for subsoil protection:

o    to provide for complete and integrated geological study of the Subsoil in
     order to carry out a certain evaluation of the quantities and structure of
     hydrocarbon raw materials in the oil fields and subsoil sections allocated
     for use including those not connected with production;

o    to ensure rational and complete utilization of the subsoil resources during
     all stages of the Exploration works;

o    reliable accounting of the extracted useful main and accompanying minerals
     and products of processing of mineral raw materials and wastes in the
     process of the oil field development;

o    to use subsoil in accordance with the provisions of the Legislation of the
     Republic on protection of environment preserving the subsoil from dangerous
     technogenic processes during exploration and production of hydrocarbon raw
     materials;

o    protection of subsoil from water invasion, fires, explosions, collapses of
     superincumbent rock mass and other natural factors reducing quality of the
     subsoil and complicating development and operation of the Oil Field;

o    to prevent subsoil pollution in the process of exploration of hydrocarbon
     raw materials especially in underground storage of oil and gas or other
     substances and materials, disposal of hazardous substances and wastes and
     effluent discharge;

o    to observe the procedure stipulated by Section 27 of the Contract for
     suspension and termination of exploration of the hydrocarbons.

o    To ensure proper sanitary and ecological conditions for storing and
     disposing of industrial and household wastes in order to prevent their
     accumulation in catchment areas and in places of occurrence of underground
     waters;

o    to ensure  reliable and correct  evaluation  of the volume and structure of
     the hydrocarbon raw materials including accompanying components;

o    The Contractor ensures complete and reliable geological, hydrological,
     ecological, engineering and technological studies of the objects of
     exploration of hydrocarbon raw materials.

19.3.          Prior to commencement of his activities in subsoil use, the
               Contractor shall carry out evaluation of the environmental impact
               of the planned operations to be agreed with the State Sanitary
               and Epidemiological Service and permitted by the State organs for
               Nature Protection.

<PAGE>

19.4.          Data on technological monitoring and reports on environmental
               impact shall be submitted to the authorized bodies for
               environmental protection. 19.5. The Contractor is obliged to
               eliminate environmental violations committed by him, carry out
               rehabilitation works and fully compensate damage inflicted in the
               process of implementation of the Contract.

19.6.          State control for observance of the Legislation on Protection of
               Subsoil and Environment is exercised by duly authorized state
               bodies. The project shall be agreed with the State Sanitary and
               Epidemiological Service.

19.7.          The  Contractor  shall  implement  the  works  on  Protection  of
               Environment in the Contractual Area.

19.8.          After termination of the Contract or return of the Contractual
               Area by stages, the Contractor shall transfer the Contractual
               Area in the conditions prior to the operations under the Contract
               and suitable for further proper use in accordance with the
               Legislation of the State.

19.9.          Any infringements (deterioration) of the environmental conditions
               and the Contractual Area itself shall be restored at the expense
               of the Contractor up to the point suitable for further proper
               use.

19.10.         The Subsoil User is obliged to inform public opinion regarding
               ecological situation in the Contractual Area and its changes
               resulting from the Exploration works conducted by the Contractor.

19.11.         To make up a  balance  and  organize  a  monitoring  of the wells
               previously drilled in the Contractual Area.

              SECTION 20. SAFETY OF LOCAL POPULATION AND PERSONNEL

20.1.          In the course of the implementation of the Exploration works
               under the Contract, the Contractor will ensure the observance of
               the safety norms and sanitary regulations stipulated in the
               Legislation as well as he will take actions for prevention and
               elimination of the accidents and occupational diseases.

20.2.          The  Exploration  works  presenting  a danger  for human life and
               health shall be prohibited in accordance with the Legislation.

<PAGE>

20.3.          The State Safety Control for observance of the standards of
               safety and industrial sanitary in implementation of the
               Exploration will be carried out by a specially authorized body of
               the Republic.

20.4.          The  general   requirements   of  safe   implementation   of  the
               Exploration  works  are  as  follows:   to  give  access  to  the
               Exploration  works  only to the  persons  specially  trained  and
               qualified as well as the management of the Exploration Works will
               be entrusted  only to the persons  having  proper  education  and
               experience;

o    to supply the working cloths and the means of individual and collective
     protection required for personal safety to all the persons involved in the
     Exploration Operations;

o    to  operate  the  machines,  equipment  and  materials  complying  with the
     applicable standards of safety and sanitary;

o    proper  registration,   storing  and  consumption  of  the  explosives  and
     accessories as well as their safe and correct handling;

o    to carry out technical, geological, geodesic and other monitoring necessary
     and sufficient for technological working cycle and forecasting of possible
     emergencies;

o    to renew technical documentation and programs of the average liquidation
     which make more precise the borders of the areas safe for work;

o    observance of the terms and conditions of the project systems of Oil field
     Development, projects and technological designs for Exploration,
     Development and Construction of Oil, Gas and Water fields;

o    to carry out relevant sanitary and hygienic actions to prevent professional
     diseases and professional poisoning;

o    to create conditions favorable for health;

o    to organize  routine and  periodical  medical  examination of the employees
     working in harmful and unfavorable conditions;

o    to organize lab instrumental control of the air in the working zone and
     monitoring of harmful factors in working stations (noise, vibration,
     microclimate, severity and labor intensity etc.);

o    to provide for sufficient quantity of good potable water and complete set
     of sanitary and amenity premises in accordance with the approved standards
     and norms.

20.5.          In case of emergence of any direct threat to life and health of
               the employees and/or local population, the executive officers of
               the Contractor are obliged to stop work immediately and to ensure
               evacuation of the people to a safe place and supply complete
               information hereof to the Competent Body and regional executive
               authorities.

20.6.          To execute all operations under the Contract for Exploration of
               Hydrocarbon Raw Materials and Construction of Oil Fields only in
               accordance with the project designs positively approved by Mining
               Supervision Department of the Agency on Emergency Situations of
               the Republic of Kazakhstan.

<PAGE>

                            SECTION 21 FORCE-MAJEURE

21.1.          Neither Party of the Contract will be default on their
               obligations under the Contract if this default or delay in
               fulfillment of their obligations under the Contract occurs due to
               the force-majeure circumstances:

21.2.          The circumstances or events which either Party is unable to
               foresee and to control include military conflicts, natural
               calamities and disasters (fires etc). The given list is not
               exhaustive.

21.3.          In the event of force-majeure circumstances the damaged Party
               will notify the other Party at short notice by handing or mailing
               a written notification specifying the date of commencement and
               description of the force-majeure circumstances.

21.4.          In the event of force-majeure circumstances the Parties will meet
               at the earliest possible date in order to find an equitable
               solution of the situation and will take all possible measures to
               minimize the consequences of the force-majeure.

21.5.          If the Operations under the Contract are completely or partially
               suspended due to the force-majeure circumstances then the term of
               the Operations will be extended for a period equal to the
               duration of this suspension and resumed from the time of ceasing
               of force-majeur circumstances.

                           SECTION 22. CONFIDENTIALITY

22.1.          The information received or acquired by either Party in the
               process of implementation of the Contract will be considered
               confidential, and the Parties may use the confidential
               information for drawing up reports envisaged by the Legislation
               of the Republic.

<PAGE>

22.2.          The Parties have no right to transfer confidential information to
               the third parties without consent of the other Party with the
               exclusion of the following cases:

o    if such information is used in court proceedings;

o    if the information is furnished to the third parties rendering services to
     the Contractor provided that such third party assumes the obligation to
     regard this information as confidential and to use it only for the purposes
     specified by the Parties and during the period of time determined by the
     Parties;

o    if such information is furnished to any bank or other financial
     organization from which the Contractor receives financial funds provided
     that such a bank or other financial organization assumes the obligation to
     consider such information as confidential and use it only for the specified
     purposes.

22.3.          In accordance with the Legislation of the Republic, the Parties
               will determine the time for keeping information confidential as
               per all documents, information and reports related to
               implementation of the Exploration Operations in the Contractual
               Area.

                SECTION 23. ASSIGNMENT OF RIGHTS AND OBLIGATIONS

23.1.          Assignment of the rights and obligations under the Contract to
               the third party except for an associated company of the
               Contractor may be permitted only with a written consent of the
               Licensing Body.

23.2.          The  expenses   connected  with  assignment  of  the  rights  and
               obligations  under the Contract  shall be born by the  Contractor
               and shall not be compensated by the State.

23.3.          For as long as the Contractor continues to take any part in the
               Contract, he and the third party to which he assigned the rights
               and obligations shall be collectively responsible for the
               Contract.

<PAGE>

                           SECTION 24. APPLICABLE LAW

24.1.          Legislation  of the State will be applied  for the purpose of the
               Contract  and  other  agreements  signed  on  the  basis  of  the
               Contract.

24.2.          The Contractor assumes an obligation to fulfill the international
               obligations of the State for protection of environment in the
               Contractual Area and land sections linked with it.

                SECTION 25. PROCEDURE FOR SETTLEMENT OF DISPUTES

25.1.          The  Parties  will  take all  necessary  actions  to  settle  the
               disputes  and   differences   under  the  Contract  by  means  of
               negotiations.

25.2.          If any dispute cannot be settled by means of negotiation within
               60 (sixty) days from the date of its emergence then the Parties
               may transfer the disputable matter to the courts of the State
               authorized to consider such disputes.

                     GUARANTEES OF STABILITY OF THE CONTRACT

26.1.          Terms  and  conditions  of the  Contract  will  remain  the  same
               throughout the effective term of the Contract.

26.2.          Alterations  and  amendments  unfavorable  for the Contractor and
               adopted after  conclusion of the Contract shall not be applied to
               the Contract.

26.3.          In the case of such alterations and amendments specified in 27.2.
               the Parties  will be guided by  Paragraph  15.11.  of the present
               Contract.



<PAGE>




                   TERMINATION AND SUSPENSION OF THE CONTRACT

27.1.          The Competent  Body shall suspend the Contract in a binding order
               if:

o    The License is suspended;

o    There is a direct threat to life or health of the people working or
     residing in a zone influenced by the operations under the Contract;

27.2.          The  Competent  Body has the right to suspend the Contract in the
               following cases:

o    the  Contractor  executes  the  operations  not provided for in the Working
     Program;

o    in the process of his activities,  the Contractor  violates the legislation
     of the State  pertaining  to protection  of subsoil,  environment  and safe
     operation;

o    in the process of his activities,  the Contractor violates the procedure of
     payment of taxes and other compulsory payments specified in the Contract;

o    the Contractor is declared  bankrupt in accordance  with the legislation of
     the State;

o    the above-mentioned list may be added as mutually agreed by the Parties.

27.3.          In case of suspension of the Contract, the Competent Body gives a
               written notification to the Contractor on the reasons of such
               suspension and determines a reasonable term for their
               elimination.

27.4.          The Contract will be renewed after the notice of  elimination  of
               the reasons for suspension of the Contract.

27.5.          The Contract may be early terminated only in the following cases:

o    when the Contractor refuses to eliminate the reasons responsible for
     suspension of the Contract or fails to eliminate them by the date specified
     by the Competent Body;

o    in the case of early termination of the License;

o    when the Contract is declared invalid in accordance with the Legislation on
     Subsoil;

o    if any fact of  violation  of the  Legislation  of the State in signing and
     registration of the Contract is established in legal form;

o    if any fact of essential departure of the terms and conditions of the
     Contract from the provisions of the License or competitive conditions on
     the basis of which the License was granted to the Contractor;

o    if the Contractor assigns all or a part of his rights under the Contract to
     the third party in defiance of Section 24 of the Contract;

o    if any fact of intended furnishing of false information on implementation
     of Exploration in the Contractual Area to the Competent Body or other
     official body by the Contractor is established in legal form;

o    if the  Contractor  effects  repeatedly  the  actions  responsible  for the
     previous suspension of the Contract;

o    if the Contractor discontinues his operations under Working Program for a
     term of more than 90 days except for the events caused by the circumstances
     of force-majeur;

o    if the provision for  confidentiality  of information under the Contract is
     violated.



<PAGE>


27.6.          The Contract may be  terminated  due to the reasons  specified in
               27.5.  within  30 days  after  the  date of  receipt  of  written
               notification  of  early  termination  of the  Contract  from  the
               Competent Body.

27.7.          The Parties shall not be exempted from their current liabilities
               under the Contract which remain unfulfilled by the time the
               notification of termination of the Contract is received by the
               Contractor.



                      SECTION 28. LANGUAGE OF THE CONTRACT

28.1.          The text of the Contract,  appendices and supplemented  documents
               are made up in Kazakh and Russian and both copies are identical

28.2.          If any  differences  or disputes arise between Kazakh and Russian
               texts then the Russian text will be given a preference.

28.3.          The Parties agree that Russian will be used as a language of
               communication. From the effective date of the Contract, all
               technical documentation and information on Exploration Operations
               will be made up in Russian.

28.4.          Documentation   and  information   pertaining  to  administrative
               activities will be made up in Russian or Kazakh language.

                        SECTION 29. ADDITIONAL PROVISIONS

29.1.          All notifications and document required as per execution of this
               Contract will be considered as duly submitted or received by
               either Party only if they are actually submitted or received.

29.2.          All notifications and documents shall be handed over personally
               or transmitted by mail, registered air mail, fax, telex or
               telegraph to the following addresses:

Address of the Competent Body           Address of the Contractor

Astana, Mira Str., 10                   480100 Republic of Kazakhstan,
Tel.:118 161, 118 152                   Atyrau, Lenina Str., 4.
Fax:32-12-70                            tel., fax: 63-66-44
Agency                                  "Kaspi Neft'" Company,
Of the Republic of Kazakhstan           President
On Investments,
Chairman
        D.O.Kuanyshev                               K.M.Shanenov

29.3.          If the address under the Contract changes then the Party involved
               will give a notice thereof to the other Party.

29.4.          All appendices to the Contract shall be considered as integral
               parts of the Contract. With any differences or discrepancies
               between the provisions of the appendices and the Contract itself,
               the latter will be given a preference.

29.5.          Any amendments or additions to the Contract not conflicting with
               the provisions of the License will be drawn up upon written
               consent of the Parties. Such an agreement will be an integral
               part of the Contract.

The present Contract is concluded by the duly authorized  representatives of the
Parties as of March, 7, 2000, Republic of Kazakhstan.

Agency of the Republic of Kazakhstan            Contractor
On Investments

By: /S/ D.O.Kuanyshev                    By: /S/ K.M.Shanenov
signature                                signature

Agency                                   "Kaspi Neft'" Company,
of the Republic of Kazakhstan                  President
on Investments,
Chairman

         D.O.Kuanyshev                          K.M.Shanenov