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.

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.


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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.

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.


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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.

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.


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                          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".

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.


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    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.

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.


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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.

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.


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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.

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


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              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.

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.


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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.

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.


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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.

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.


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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.


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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.

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.


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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.

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.


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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.

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.


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                  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.

            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;


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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.

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.


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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.

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;


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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.

                            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.

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


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     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.

                           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.


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                   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.

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.


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                      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.


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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


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