Exhibit 10.3

                                AGREEMENT FOR THE
                           PURCHASE AND SALE OF SHARES

     AGREEMENT  made this 24th day of March 2000  between AIL Alpha  Corporation
Ltd., a company  established  under the laws of the Isle of Man,  with its legal
address at Prospect Chambers,  Prospect Hill, Douglas,  Isle of Man (hereinafter
"Alpha"),  represented  by Murat  Beisenbekovich  Safinov,  acting  pursuant  to
authority  granted in accordance with a power of attorney Letter No.  _____dated
________,  Transmeridian  Exploration Inc., a company established under the laws
of the British Virgin Islands with its principal  offices  located at 85 Chester
Square,  London,  England  (hereinafter the "Purchaser"),  represented by Nurjan
Sarsekonovich Kurmanov, acting pursuant to a Power of Attorney dated November 1,
1999; and OJSC Caspi Neft  (hereinafter  the "Caspi Neft"),  an open joint stock
company established under the laws of the Republic of Kazakhstan, represented by
Murat Beisenbekovich Safinov, acting pursuant to a power of attorney No. 2 dated
April 27, 2001.  (Alpha and Caspi Neft are  hereinafter  referred to together as
the "Sellers,"  and Purchaser and the Sellers are from time to time  hereinafter
referred to individually as a "Party" and collectively as the "Parties".)

                                    RECITALS

     WHEREAS,  AIL and Purchaser  entered into that Agreement dated November 13,
1999 (the "Original  Agreement"),  in accordance  with which AIL agreed to sell,
and Purchaser agreed to purchase,  the shares of "ZAO 'Caspi Neft A,"' a company
to be established by AlL's  wholly-owned  subsidiary,  Caspi Neft, in accordance
with Applicable Law;

     WHEREAS,   the  Original   Agreement  had  obliged  AIL,  upon  Caspi  Neft
establishing  Caspi Neft "A," to procure assignment to Caspi Neft "A" of License
AI No. 1557 dated 29 April 1999 (the "License") previously issued to Caspi Neft,
and to negotiate and assign to Caspi Neft "A" a Contract for the  exploration of
hydrocarbons of Yuzhny Alibek oil field (the  "Exploration  Contract"),  entered
into pursuant to the License,  for oil  exploration  and pilot  production  from
Yuzhny  Alibek,  an oil field  located in the  Aktyubinskaya  Oblast,  Mugodzhar
District of the Republic of Kazakhstan (the "Field");

     WHEREAS,  Alpha,  after  Caspi  Neft's  establishment  of Caspi  Neft  "A,"
procured the Exploration  Contract in the name of Caspi Neft "A" as successor to
Caspi Neft rather than as Caspi Neft's assignee,  and did not procure assignment
of the License to Caspi Neft "A;"

     WHEREAS,  Purchaser,  seeking-  to  effectuate  the  terms of the  Original
Agreement,  requested,  and Alpha now  reportedly  has caused the  amendment and
registration by the Competent Authority of the Exploration Contract to designate
Caspi Neft as the contractor  under the Exploration  Contract,  so that both the
License and


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Exploration  Contract are in Caspi Neft's name, as  contemplated in the Original
Agreement;

     WHEREAS,  Alpha is the lawful successor to AIL and owns one hundred percent
(100%) of the outstanding- and issued shares of Caspi Neft;

     WHEREAS, the Parties now intend to undertake the transactions  contemplated
in the Original Agreement,  and to assign both License and Exploration  Contract
to a subsidiary of Caspi Neft; and

     WHEREAS, the Parties,  although intending to effectuate the purposes of the
Original  Agreement,  also wish to amend the Original  Agreement in light of the
foregoing developments.

     NOW, THEREFORE, the Parties agree as follows:

I. Definitions

The following  capitalized  terms and expressions,  when used in this Agreement,
shall have the meanings ascribed to them as set forth below:

"Act of Transfer and  Acceptance"  shall mean an act of transfer and  acceptance
transferring the Shares to Purchaser.

"Agreement"  shall  mean this  Agreement  together  with its  Recitals,  and all
schedules and Exhibits thereto.

"AIL" shall mean Alpha  International Ltd., a company established under the laws
of the Isle of Man.

"Alpha" shall mean AIL Alpha Corporation  Ltd., a company  established under the
laws of the Isle of Man, as  described  in the  introductory  paragraph  of this
Agreement.

"Applicable  Law" shall mean the laws of the Republic of  Kazakhstan,  including
without  limitation,  the Presidential  Decree No. 2828 having the force of law,
dated  January 27, 1996,  "On the Subsoil and Subsoil  Use," ("Law on Subsoil"),
Presidential  Decree No. 2350  having the force of law,  dated June 28, 1995 "On
Petroleum" ("Law on Petroleum"), Law on Introduction of Changes and Additions to
Certain  Legislative  Acts of the Republic of  Kazakhstan  Regarding  Matters of
Subsoil  Use  and  the  Conduct  of  Petroleum  Operations  in the  Republic  of
Kazakhstan,  adopted on August 11,  1999,  and all other  officially  issued and
publicly available laws, decrees,  decisions,  executive orders, regulations and
instructions  as  such  items  may  hereafter  be  supplemented  or  amended  by
officially  issued and  publicly  available  laws,  decrees,  executive  orders,
regulations  and  instructions  contemplating  rights of the  Parties to conduct
negotiations in order to change  conditions of this Agreement for such extent as
those laws, decrees,


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executive  orders,  regulations and instructions may affect this Agreement,  and
such changes have to be completed before Closing date.

"Assignment  Agreement"  shall mean an agreement  providing for assignment  from
Caspi Neft to the Subsidiary of all rights, interests, and authorities under the
License and Exploration Contract.

"Banking Day" shall mean a day when the banks are open for business in New York,
London, and Almaty.

"Breach" means a breach of a representation,  warranty, covenant, obligation, or
other provision of this Agreement or any instrument  delivered  pursuant to this
Agreement  will be  deemed  to have  occurred  if  there  is or has been (a) any
inaccuracy  in or breach of, or any  failure to  perform  or comply  with,  such
representation,  warranty, covenant,  obligation, or other provision, or (b) any
claim  (by any  Person)  or  other  occurrence  or  circumstance  that is or was
inconsistent with such representation,  warranty, covenant, obligation, or other
provision,  and the term "Breach" means any such  inaccuracy,  breach,  failure,
claim, occurrence, or circumstance.

"Caspi Neft" shall mean Open Joint Stock Company Caspi Neft, an open Joint stock
company established pursuant to Applicable Law.

"Caspi  Neft 'A"' shall mean  Limited  Liability  Partnership  Caspi Neft "A," a
limited liability partnership established pursuant to Applicable Law

"Caspi Neft Shares" shall mean one hundred  percent  (100%) all common and other
shares of Caspi Neft which are issued and outstanding.

"Closing" shall have the meaning, ascribed to that term in Section 11 (F).

"Closing Date" shall have the meaning ascribed to that term in Section 11 (F).

"Competent  Authority"  shall mean the Agency of the Republic of  Kazakhstan  on
Investments.

"E&P License"  shall mean a license issued for  exploration,  production or both
pursuant to the Law on Petroleum and Law on Subsurface.

"Exhibits" shall mean the exhibits attached hereto and which are herewith made a
part of this Agreement.

"Exploration  Contract"  shall  have the  meaning  ascribed  to that term in the
second Recital.

"Field" shall have the meaning ascribed to that term in the second Recital.


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"Final  Installment" shall mean Three Million Three Hundred Eighty Five Thousand
Eight Hundred Forty Two U.S. Dollars (US$3,385,842).

"First  Installment"  shall  mean the funds paid by  Purchaser  to Alpha and the
State pursuant to the Original Agreement, totaling One Hundred Fourteen Thousand
One Hundred Fifty Eight U.S. Dollars, (US$11,158).

"Governmental   Authorities"  shall  mean  any  governmental  agency,  ministry,
committee and department,  whether at a national,  regional or local level, with
any  jurisdiction  with respect to the Parties,  the License,  the Field, or the
Exploration  Contract,  as well as the Government the Government of the Republic
of Kazakhstan.

"Indemnitees" shall have the meaning ascribed to that term in Section III (A).

"Indemnified  Parties"  shall have the meaning  ascribed to that term in Section
III (A).

"Indemnity  Termination  Date" shall have the  meaning  ascribed to that term in
Section III (C).

"Liabilities" shall have the meaning ascribed to that term in Section III (A).

"License" shall have the meaning ascribed to that term in the second Recital.

"Option  A2reement"  shall have the meaning  ascribed to that term in Section VI
(A) and which is  attached  hereto as Exhibit 3),  obligating  Alpha to sell the
Caspi Neft Shares to the Purchaser in lieu of selling the Shares.

"Original  Agreement"  shall have the meaning ascribed to that term in the first
Recital.

"Properties"  shall  mean  all  property,   moveable  and  immoveable,  and  all
contractual and other rights owned by the Subsidiary,  including  rights arising
due to the License and Exploration Contract.

"Purchase Price" shall mean Four Million U.S. Dollars (USS4.000.000), consisting
of the First Installment, Second Installment, and the Final Installment.

"Purchaser" shall mean  Transmeridian  Exploration  Inc., a company  established
under the laws of the British Virgin Islands,  as described in the  introductory
paragraph of this Agreement.

"Recitals" shall mean the statements made above in this Agreement so identified,
each of which is preceded with "Whereas."

"Schedules"  shall mean the  schedules  attached to and herewith  made a part of
this Agreement.


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"Second  Installment" shall have the meaning ascribed to that term in Section II
(A).

"Sellers" shall mean Alpha and Caspi Neft together.

"Shares"  shall mean one hundred  percent  (100%) of all common and other shares
issued and outstanding of the Subsidiary.

"State" shall mean the Republic of Kazakhstan.

"Subsidiary" shall have the meaning ascribed to that term in Section II (B).

"Subsurface  Use Contract"  shall mean a contract  between a contractor  and the
State pursuant to the Law on Subsurface, including the Exploration Contract.

"Warranty  Certificates"  shall mean any and each of the  certificates  attached
hereto as Exhibits 1 and 2.

II. Registration Of Agreement, Purchase Of Shares, And Payment Of Purchase Price

     A.   Purchaser,  within five (5)  Banking  Days after  receiving  (1) proof
          satisfactory  to  Purchaser  that the  Exploration  Contract  has been
          properly  registered by the  Competent  Authority in the name of Caspi
          Neft in accordance with Applicable Law such that the enforceability of
          the Exploration  Contract and validity of the License are not impaired
          under Applicable Law, and (2) an executed Warranty  Certificate in the
          form attached hereto as Exhibit 1, Purchaser shall pay to Sellers Five
          Hundred Thousand U.S. Dollars (US$500,000),  including Ninety Thousand
          U.S.  Dollars  (US$90,000)  which  Purchaser shall pay to the State on
          behalf  of  Caspi  Neft  in  partial   satisfaction  of  Caspi  Neft's
          obligation  to pay One  Hundred  Thousand  U.S.  Dollars  (US$100,000)
          pursuant to Article  15.2.4 of the  Exploration  Contract to the State
          (the "Second Installment").

     B.   Alpha,  no later  than  thirty  (30) days after  receiving  the Second
          Installment, will cause Caspi Neft to establish, and Caspi Neft hereby
          agrees  to  establish  pursuant  to  Applicable  Law,  a  wholly-owned
          subsidiary   in  the  form  of  an  open  joint  stock   company  (the
          "Subsidiary").  As soon as practicable after State registration of the
          Subsidiary,  Caspi  Neft  shall  under-take  in  accordance  with  the
          requirements  of Applicable Law State  registration of the emission of
          the Subsidiary's shares (the "Shares").

     C.   Caspi  Neft,  as  soon  as  practicable  after  establishment  of  the
          Subsidiary,  but in no event  later than  ninety  (90) days after such
          establishment,  shall assign the License and  Exploration  Contract to
          the  Subsidiary  pursuant  to an  Assignment  Agreement  in  form  and
          substance  attached  hereto as Exhibit __, and shall give any notices,
          obtain any  authorizations,  and comply with any requirements that are
          necessary or


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          advisable under  Applicable Law and under the Exploration  Contract to
          lawfully effect such assignment.

     D.   Caspi Neft, upon completion  assignment of the License and Exploration
          Contract  pursuant to Section II(C) shall deliver to Purchaser (1) the
          original,   executed   Assignment   Agreement;   and  (2)  a  Warranty
          Certificate in the form attached hereto as Exhibit 2 executed by Caspi
          Neft and Alpha.  Purchaser,  upon receiving delivery of the foregoing,
          and subject to the Sellers  fulfilling  each of  conditions  stated in
          Section II (C), Section II (D), Section II(E), and Section II(H) shall
          thereupon  be  obliged  to pay the Final  Installment  as  hereinafter
          provided.

     E.   In  the  event   Purchaser,   upon  receiving  the   information   and
          confirmations  provided  to  it  pursuant  to  Section  II(D)  is  not
          satisfied  that the  assignment  has been effected in compliance  with
          Applicable  Law and that the License and  Exploration  Contract are in
          compliance with  Applicable Law,  Purchaser will specify in writing to
          Caspi Neft and Alpha those deficiencies  identified by Purchaser,  and
          Caspi Neft and Alpha shall remedy any such deficiencies  within twenty
          (20) days after receiving Purchaser's notice thereof.

     F.   Purchaser's payment of the Final Installment and Caspi Neft's delivery
          of the Shares and transfer to  Purchaser  (the  "Closing")  shall take
          place on that date (the  "Closing  Date") which is the earlier of: (1)
          five (5) days after the  conditions  stated in Section II(D) have been
          satisfied;  or (2) ninety (90) days after the date hereof, unless such
          date is extended by mutual agreement of the Parties.

     G.   Subject to the terms and conditions of this Agreement, at the Closing,
          Sellers will sell and transfer the Shares to Purchaser,  and Purchaser
          will  consummate  the  purchase of 'the Shares  from  Sellers.  At the
          Closing:

          (1)  Sellers shall be obliged as follows:

               a)   Caspi Neft shall  effect  registration  of the Shares in the
                    name  of  Purchaser  with  the  Subsidiary's  registrar  (or
                    depository,  as the case may be) and deliver to Purchaser an
                    extract from the Subsidiary's share register confirming such
                    registration;

               b)   Caspi  Neft  shall   deliver  to   Purchaser   any  and  all
                    certificates evidencing the Shares together with an executed
                    Act of Transfer and Acceptance.

               c)   Caspi Neft shall deliver the certificate  attached hereto as
                    Exhibit 4.

          (2)  Purchaser  shall  be  obliged  to  effect  payment  of the  Final
               Installment to Alpha and Caspi Neft as follows:


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               a)   Purchaser shall pay One Hundred Fifty Thousand U.S.  Dollars
                    (US$150,000) to Caspi Neft.

               b)   Purchaser  will pay Three  Million  Two  Hundred  Thirty Six
                    Thousand Eight Hundred Forty Two U.S. Dollars (US$3,235,842)
                    to Alpha.

               c)   Purchaser shall instruct that the One Hundred  Thousand U.S.
                    Dollars  (US$100,000) held in trust pursuant to the Original
                    Agreement be released to the Sellers.

     H.   Notwithstanding, the foregoing, the obligations of Purchaser hereunder
          to purchase the Shares and to pay the  Purchase  Price  therefore  are
          subject to the satisfaction of each of the

          (1)  All of the representations and warranties of Sellers contained in
               each Warranty  Certificate shall be true and correct at and as of
               the Closing Date with the same force and effect as if restated in
               their entirety on and as of the Closing Date.

          (2)  Sellers  shall have  performed  and complied in all respects with
               the agreements  and  conditions  required by this Agreement to be
               performed or complied with prior to or at the Closing, including,
               without  limitation,  the delivery of all  documents  referred to
               elsewhere  in this  Agreement  as being  required to be delivered
               prior to or at the Closing.

          (3)  All  authorizations,  approvals or permits of, or  registrations,
               qualifications.  Declarations  or filings  with the  Republic  of
               Kazakhstan  or  regulatory   authorities  thereof  (collectively,
               Governmental  Authorities")  that are required in connection with
               the lawful sale and transfer of the Shares or  assignment  of the
               Exploration  Contract or License have been duly obtained and made
               in form and substance  reasonably  satisfactory  to Purchaser and
               shall be effective at and as of the Closing Date.

          (4)  From the date of this Agreement to the Closing Date, the business
               of  Caspi  Neft  and  each  of its  subsidiaries  (including  the
               Subsidiary)  shall have been  conducted in the usual and ordinary
               course; there shall have been no material change in the nature or
               character  of the  business,  capital or debt  structure or legal
               form of  Caspi  Neft or any of its  subsidiaries,  including  the
               Subsidiary, including but not limited to, any sale, conveyance of
               the Field.

          (5)  Neither  Caspi Neft nor any of its  subsidiaries,  including  the
               Subsidiary,  shall have suffered any material adverse change with
               respect  to  its  Properties,   business   operation,   financial
               condition or prospects.


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          (6)  Purchaser   shall  have  received  from  Sellers  the  following,
               documents in form and substance satisfactory to Purchaser and its
               counsel:

               a)   Stock  certificates  representing the Shares,  with any such
                    stock  certificates  duly  endorsed  in blank  or with  duly
                    executed stock powers attached in proper form for transfer.

               b)   A  certificate  of Caspi Neft  substantially  in the form of
                    Exhibit 4 hereto,  dated the Closing Date and duly  executed
                    by Caspi Neft  certifying  that Caspi Neft is the record and
                    sole  beneficial  owners of the Shares and has  complete and
                    unrestricted  power to endorse and deliver the  certificates
                    representing the Shares to Purchaser  without the consent of
                    any third party.

               c)   Letters  of  resignation  of each  member  of the  Board  of
                    Directors, and/or members of any other administrative and/or
                    executive  bodies  of  the  Subsidiary  effective  as of the
                    Closing Date.

               d)   A  certificate  from  the  appropriate  governmental  agency
                    confirmation  the  good  standing  of  Caspi  Neft  and  the
                    Subsidiary.

               e)   The corporate minute book and stock transfer records for the
                    Subsidiary together with copies of all constituent documents
                    of the Subsidiary.

               f)   Certificate  dated  as of  the  Closing  Date,  executed  by
                    Sellers,  certifying that all of the conditions specified in
                    this Agreement have been fulfilled.

               g)   All  required  consents  from  Governmental  Authorities  in
                    connection  with  the  transactions   contemplated  by  this
                    Agreement.

          (7)  All other  formalities or acts to be accomplished or performed by
               the  Subsidiary   and/or  Caspi  Neft  In  connection   with  the
               transactions  contemplated hereby shall have been accomplished or
               performed,  and all documents and  instruments  incident  thereto
               shall  have  been  made  available  and be in form and  substance
               reasonably satisfactory to Purchaser and its counsel.

          (8)  There  shall  be no  action  or  proceeding  actual,  pending  or
               threatened,  by any  Governmental  Authority  or  private  person
               before any court or  administrative  body to restrain,  enjoin or
               otherwise   prevent   the   consummation   of  the   transactions
               contemplated  hereby or to recover damages or obtain other relief
               as a result thereof.


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          (9)  All  amounts  owed  to the  Subsidiary  by  any of its  officers,
               directors,  employees or shareholders  shall have been discharged
               in full on or before the Closing Date.

          (10) All  guarantees or pledges made by the Subsidiary for the benefit
               of any of the Sellers or their  respective  affiliates shall have
               been discharged in full on or before the Closing Date.

          (11) Purchaser  shall have  completed  a due  diligence  review of the
               Subsidiary  pursuant to Section IV (B) of this  Agreement and the
               conclusions  and results of such due  diligence  review  shall be
               satisfactory to Purchaser in its sole opinion.

          (12) The Shares to be sold by Caspi Neft to Purchaser pursuant to this
               Agreement  shall,  in the  aggregate  on a fully  diluted  basis,
               constitute at least 100% of the issued and outstanding shares.

          (13) As of the  Closing  Date,  there shall be no  encumbrances  on or
               pledges, mortgages, or liens on any of the Properties.

                              III. Indemnification

     A.   Agreement to  Indemnify.  Sellers  agree,  jointly and  severally,  to
          indemnify  Purchaser  and  Purchaser's  investors   (collectively  the
          "Indemnified  Parties")  and  their  respective  officers,  directors,
          partners,  shareholders,  employees,  affiliates,  agents,  attorneys,
          lessees, successors and assigns, their officers, directors,  partners,
          shareholders,   employees,  affiliates,  agents,  attorneys,  lessees,
          successors  and assigns  (collectively,  the  "Indemnitees")  from and
          against all liabilities (including sums paid in settlement of claims),
          losses (including lost profits) costs,  obligations,  demands,  suits,
          liens, damages (including,  consequential and punitive damages), fines
          (including  any sums ordered to be paid or expended by  Indemnities by
          any  Governmental  Authority  as a fine,  penalty or  damages  for any
          violation),  penalties, forfeitures, actions, defenses, administrative
          proceedings (including informal proceedings),  judgments, settlements,
          orders,   equitable   relief,   expenses   (including   experts'   and
          consultants' fees and costs),  attorneys' fees and expenses (including
          any fees and  expenses  incurred in  enforcing  or  interpreting  this
          Agreement),  and claims  (including,  third party  claims for personal
          injury  or real or  personal  property  damage)  of any kind or nature
          whatsoever  (whether  foreseeable  or  unforeseeable,   contingent  or
          non-contingent,   or  arising  out  of   contracts   entered  into  or
          indemnifications  provided by Indemnitees or otherwise) (collectively,
          the  "Liabilities")  and  to  protect,  save  and  keep  harmless  the
          Indemnified Parties and Indemnitees from, and to assume liability for,
          payment of all  Liabilities  that may be imposed on or Incurred by the
          Indemnified   Parties  or  Indemnitees  as  a  consequence  of  or  in
          connection  with  (a) any  misrepresentation  by any  Seller,  (b) any
          breach by any  Seller of a warranty  contained  in this  Agreement  or
          Warranty


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          Certificate, or (c) any failure by any Seller to perform any agreement
          or covenant contained herein.  Notwithstanding the foregoing,  Sellers
          shall only be  required  to  indemnify  the  Indemnified  Parties  and
          Indemnitees for Liabilities  pursuant to this Article IV to the extent
          such  Liabilities are not reimbursed under any insurance  policy.  The
          foregoing  indemnity  shall  include all  attorneys'  fees incurred in
          connection with the enforcement of this indemnity.

     B.   Notice of Claims and Potential  Claims.  Any claim for indemnity under
          this  Agreement  shall  be  made  by  written  notice  to the  Sellers
          specifying  in  reasonable  detail the basis of the party  against any
          Indemnified  Party,  as  applicable,  which might give rise to a claim
          against  Sellers  stating  the nature and basis of such claim and,  if
          ascertainable the amount thereof.  Purchaser's  failure to give timely
          notice or to provide  copies of documents or to furnish  relevant data
          in  connection  with any third  party  claim  shall not  constitute  a
          defense (in part or in whole) to any claim for  indemnification by the
          Indemnified  Party or  Indemnitee,  except and only to the extent that
          such failure shall result in any  prejudice to Sellers.  In connection
          with any such third party claim,  Sellers  may, at their  election and
          expense,  have the right to  participate  in the defense of such third
          party  claim.  If Sellers  shall have  acknowledged  in writing  their
          obligation  to  indemnify  in respect of any third  party  claim which
          might  give rise to a claim  for  indemnity  under  this  Article  IV,
          Purchaser  agrees not to settle  such third  party  claim  without the
          consent of Sellers,  which  shall not be  unreasonably  withheld,  and
          Purchaser  further  agrees  upon the written  request of  Sellers,  to
          assign all rights and  liabilities  with  respect to such third  party
          claim to Sellers  and to  cooperate  in the  prosecution  and  defense
          thereof,  including without  limitation  providing access to the books
          and records of the Subsidiary; provided, however, Sellers agree not to
          settle any such third party claim  without the consent of Purchaser if
          any relief, other than the payment of money damages,  would be granted
          by  such  settlement  that  might   materially   affect  the  business
          operations or reputation of any  Indemnitees or Indemnified  Party, as
          applicable,  or if, as a result  of the  limitations  on the  Sellers'
          liability provided herein, the Indemnitees or Indemnified  Parties, as
          applicable, might be liable to the third party for all or a portion of
          the amount of such settlement.

     C.   Termination  of Indemnity  Obligations.  The  obligation of Sellers to
          indemnify hereunder shall terminate (the "Indemnity Termination Date")
          (i) upon the  termination of the applicable  statute of limitations in
          the case of  statutory  violations  and (ii) two (2)  years  after the
          Closing Date in all other  instances  except as to matters as to which
          any   Indemnitee   or   Indemnified   Party   has  made  a  claim  for
          indemnification or given written notice of a claim for indemnification
          on or prior to such  date,  With  respect  to  matters as to which any
          Indemnitee or Indemnified  Party has made a claim for  indemnification
          or given written notice of a claim for  indemnification on or prior to
          the Indemnity  Termination  Date,  the right to  indemnification  with
          respect   thereto  shall  survive  the  expiration  of  the  Indemnity
          Termination  Date,  until  such  claim  is  finally  resolved  and any
          obligations with respect thereto are fully satisfied.


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IV. Conduct Of Business Prior To Closing

     A.   Conduct of Business  Prior to Closing.  Sellers  Jointly and severally
          represent,  warrant and  covenant  that from  November 13, 1999 to the
          Closing  Date,  each of Caspi  Neft and (upon its  establishment)  the
          Subsidiary  have  carried on and shall  carry on its  business  in the
          normal and ordinary course in a manner  consistent with the conduct of
          its business in prior years and,  except as permitted by prior written
          consent of Purchaser,  Alpha shall not permit Caspi Neft or any of its
          subsidiaries in respect of its business to:

          A.   Except  in  the  ordinary  course  of  business,  modify,  amend,
               transfer,  assign,  renew, enter into or terminate any Subsurface
               Use Contract or E&P License;

          B.   Modify, amend,  transfer,  assign, renew, enter into or terminate
               the  License  or  Exploration   Contract,   except  as  expressly
               contemplated herein;

          C.   Sell, transfer or encumber any of their properties, or enter into
               any transaction or make any commitment  relating to its property,
               assets  or  business  otherwise  than in the  ordinary  course of
               business;

          D.   Issue any capital stock or partnership interests, as the case may
               be or pay any dividends or make any  distributions  in respect of
               such capital stock or partnership interests, as the case may be;

          E.   Sell or  transfer,  or agree to sell or  transfer,  any assets or
               cancel or agree to cancel  any  debts or  claims,  except in each
               case in the ordinary course of business;

          F.   Reclassify  or change the rights of any  securities of Caspi Neft
               or any of its subsidiaries; or

          G.   Amend the Charter or other constituent documents of Caspi Neft or
               any of its Subsidiaries.

     B.   Access to  Information  Prior to Closing.  Prior to the Closing  Date,
          Sellers will make available to Purchaser's  counsel,  accountants  and
          other  representatives  full access,  during normal business hours, to
          all of the  employees,  books,  contracts,  reports,  commitments  and
          records of each of Caspi Neft and its  subsidiaries for the purpose of
          performing  all  inspections  and due  diligence  deemed  necessary by
          Purchaser  and will  supply to  Purchaser  such  detailed  information
          concerning the business  affairs of Caspi Neft and its subsidiaries as
          Purchaser may reasonably  request in connection  with this  Agreement.
          The  intent  of the  provisions  of this  Section  IV (B) is to  allow
          Purchaser to investigate  any matters  concerning,  Caspi


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          Neft  and its  subsidiaries  regarding  which  Purchaser  in its  sole
          discretion requires further comfort or assurance.

     C.   Notice of  Events.  Throughout  the  period  between  the date of this
          Agreement  and  the  Closing  Date,  Sellers  shall  advise  Purchaser
          promptly in writing of any and all  material  events and  developments
          concerning the assets, liabilities, results of operations or prospects
          of Caspi Neft,  its  subsidiaries,  and the  Subsidiary  or any of the
          items or matters  concerning  Caspi Neft or its  subsidiaries,  or the
          Subsidiary  covered by the  representations,  warranties and covenants
          contained in this Agreement.

     D.   No Other Negotiations.  Prior to the Closing,  neither Sellers nor any
          representative  of any of  them  shall  conduct  any  negotiations  or
          discussions  with any party regarding a possible  acquisition of Caspi
          Neft, the License, the Field, or the Exploration Contract or of all or
          a  substantial  part of the business or assets of Caspi Neft or any of
          its subsidiaries.

V. Payments

All payments  hereunder shall be made by wire transfer in immediately  available
funds to a bank account designated in writing by the respective recipient, Caspi
Nefl, Alpha or Purchaser, as the case may be,

VI. Purchaser's Right To Purchase Shares Of Caspi Neft From AIL

     A.   Purchaser,  in the event  Caspi Neft falls to assign the Shares to the
          Subsidiary  in  compliance  with and within the time limits  stated in
          Section II (C), shall have the right,  but not the obligation,  at any
          time thereafter in consideration  for payment of the Final Installment
          to Alpha to  purchase  one  hundred  percent  (100%) of the issued and
          outstanding  common shares and other outstanding  shares of Caspi Neft
          (the "Caspi Neft Shares")  pursuant to the Option  Agreement.  For the
          avoidance of doubt, the Option Agreement shall survive any termination
          of this Agreement, whether such termination is pursuant to Article VII
          hereof, or otherwise.

     B.   Alpha, upon  presentation of the Option  Agreement,  shall execute the
          Option Agreement, and thereafter shall:

          (1)  Promptly  execute and  deliver to Caspi Neft and the  independent
               registrar and/or  depositary (as the case may be) which maintains
               the register  with respect to the Caspi Neft Shares,  a notice of
               the Option Agreement with respect to the Caspi Neft Shares. (Such
               notice shall be accompanied by a copy of the Option Agreement.)

          (2)  Register or cause to be registered, the Option Agreement by means
               of a notation  of the Option  Agreement  on the Caspi Neft Shares
               together


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               with an affidavit  stating the  truthfulness  and completeness of
               the documentation.

     C.   Alpha hereby covenants to Purchaser that:

          (1)  It will make no  assignment,  pledge,  transfer  of or create any
               security interest in the Caspi Neft Shares.

          (2)  It  will,  at its own  expense  and  cost,  defend  its  title or
               interests  to the Caspi Neft Shares for the benefit of  Purchaser
               against any and all  attachments,  liens,  claims,  encumbrances,
               security  interests or other  impediments of any nature,  however
               arising,  of all  persons  whomever.  Alpha shall give the Pledge
               prompt  written  notice of any claim  relating  to the Caspi Neft
               Shares.

     D.   Purchaser  hereby  covenants  that  it  shall  use  its  best  efforts
          including,  but  not  limited  to  making  application  to  Government
          Authorities,  entering into an assignment agreement, and other actions
          reasonably  required by Sellers to transfer any other E&P Contract and
          related license to Alpha, and to retain in Caspi Neft only the License
          and Exploration Contract;  provided, however, that Purchaser shall not
          be obliged to take any  action  which  would  endanger  the  validity,
          enforceability,  or rights  pursuant  to the  License  or  Exploration
          Contract.

                                VII. Termination

     A.   This  Agreement  may, by notice given prior to or at the  Closing,  be
          terminated:

          (1)  by  either  Purchaser  or  Sellers  if a  material  Breach of any
               provision of this Agreement has been committed by the other Party
               and such Breach has not been waived;

          (2)  by Purchaser if any of the  conditions  in Section II(H) have not
               been satisfied as of the Closing Date or if  satisfaction of such
               a condition  is or becomes  impossible  (other  than  through the
               failure of  Purchaser to comply with its  obligations  under this
               Agreement)  and  Purchaser  has not waived such  condition  on or
               before the Closing Date;

          (3)  by Mutual consent of Purchaser and Sellers; or

          (4)  by either  Purchaser  or Sellers if the Closing has not  occurred
               (other than through the failure of any Party seeking to terminate
               this  Agreement to comply fully with its  obligations  under this
               Agreement) on or before ninety (90) days from the date hereof, or
               such later date as the Parties may agree upon.

     B.   Each  Party's  right  of  termination  under  this  Article  VII is in
          addition  to any other  rights it may have  under  this  Agreement  or
          otherwise,  and the exercise of a right of termination  will not be an
          election of remedies.  In the event this  Agreement is


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          terminated  by a Party  because of the Breach of the  Agreement by the
          other  Party  (or  because  one  or  more  of  the  conditions  to the
          terminating  Party's obligations under this Agreement is not satisfied
          as  a  result  of  the  other  Party's  failure  to  comply  with  its
          obligations  under this Agreement),  the terminating  Party's right to
          pursue all legal remedies will survive such termination unimpaired.

     C.   If this  Agreement  is  terminated  pursuant  to Section  VII(A),  all
          further   obligations   of  the  Parties  under  this  Agreement  will
          terminate, except that:

          (1)  If  Purchaser   terminated  the  Agreement  pursuant  to  Section
               VII(A)(1)  or (2),  Sellers  shall  be  obliged  to  procure  the
               immediate  repayment to Purchaser  of the First  Installment  and
               Second  Installment,  and shall pay to Purchaser  additional  Two
               Hundred Thousand U.S. Dollars (US$200,000) in damages.

          (2)  If Sellers  terminated this Agreement  pursuant to Section VII(A)
               (1),  Sellers shall return the Second  Installment  to Purchaser,
               and Purchaser shall procure  release of the First  Installment to
               Sellers,  thereby  effecting  the  payment  of  the  One  Hundred
               Thousand U.S. Dollars (US$ 100,000) to Sellers.

                               VIII. Miscellaneous

     A.   Survival of Representation  and Warranties.  Notwithstanding  anything
          contained in this Agreement to the contrary,  all  representations and
          warranties  made by Sellers  and  Purchaser  under this  Agreement  in
          connection  with  the  transactions  contemplated  herein  or  in  any
          schedule,  certificate,  list or other instrument  delivered  pursuant
          hereto  shall  survive the Closing and any  investigation  made at any
          time with respect thereto.

     B.   No Waiver of  Rights.  No failure or delay on the part of any party in
          the exercise of any power, right or privilege  hereunder shall operate
          as a waiver  thereof,  and no single or partial  exercise  of any such
          power,  right or privilege  shall preclude  other or further  exercise
          thereof  or of any other  right,  power or  privilege.  All rights and
          remedies  existing under this  Agreement are cumulative  with, and not
          exclusive of, any rights or remedies  otherwise  available.  No waiver
          shall be  binding  unless in  writing,  and  signed by the party to be
          charged or a qualified officer thereof.

     C.   Notice.  All notices hereunder shall be in writing and shall be either
          personally  delivered,  transmitted by postage  prepaid  registered or
          certified mail,  airmail if international,  return receipt  requested,
          transmitted by telex or telecopier,  or transmitted by courier service
          to the  Parties  hereto  at  their  respective  addresses.  Except  as
          otherwise specified herein, all notices and other communications shall
          be deemed to have been duly given on receipt or, if  undeliverable  or
          refused at the address  provided  herein,  upon attempted  delivery or
          refusal.  For Purposes  hereof,


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          the addresses of the Parties hereto (until notice of a chancre thereof
          is given in the manner  provided in this Section VIII (C)) shall be as
          set forth on Exhibit 6 hereto.

     D.   Governing Law.  Notwithstanding the Parties compliance with Applicable
          Law  in  the  performance  their  respective  duties  hereunder,  this
          Agreement and the rights and  obligations  of the Parties hereto shall
          be governed by and construed in  accordance  with the laws of the laws
          of England, without regard to the conflict of law provisions thereof.

     E.   Counterpart Originals. This Agreement has been executed simultaneously
          in four (4)  Counterparts,  two (2) in Russian and two (2) in English,
          each of which shall be deemed an original,  but all of which  together
          shall constitute one and the same instrument.  This Agreement,  having
          been executed in English and Russian  versions,  both  versions  shall
          have equal force.

     F.   Dispute  Resolution.  Any  dispute  arising  in  connection  with this
          Agreement  or in  connection  with  the  Original  Agreement  shall be
          resolved  pursuant  to  Section  8.1 of the  Original  Agreement.  For
          avoidance  of doubt,  Alpha  shall be  entitled  to  appoint  only one
          arbitrator on behalf of the Sellers and AIL pursuant to Section 8.1 of
          the Original Agreement.

     G.   Assignment:  Successors  This Agreement  shall inure to the benefit of
          and be binding upon the heirs,  successors and assigns of all Parties.
          Purchaser  may  assign  or  transfer  to an  Affiliate  of  Purchaser,
          including without limitation,  any or all of its interests,  rights or
          obligations under this Agreement,  and any assignees or transferees of
          Purchaser hereunder shall be fully vested with such interests,  rights
          or  obligations  Sellers may not assign or transfer  any of his or her
          interests,  rights or  obligations  under this  Agreement  without the
          prior written consent of Purchaser.

     H.   Joint and Several, Obligations.  Unless otherwise provided for in this
          Agreement, all representations, warranties, undertakings and covenants
          of Sellers are made jointly and severally by each of them.

     I.   Further  Assurances.  The Parties hereto agree that, from time to time
          hereafter,  and upon request,  each of them will execute,  acknowledge
          and deliver such other documents and instruments as may be required to
          carry out more effectively the terms and conditions of this Agreement.
          In  particular,  due to the very  limited  time in which the  Parties'
          counsel have had to prepare this  Agreement,  the Exhibits (other than
          Exhibit  1) and  Schedules  hereto  have  not  been  completed.  These
          Exhibits and  Schedules  will be prepared and presented to the Parties
          within  seven  (7) days  after  the date  hereof,  and  shall  each be
          initialed  confirming  that  they are in form and  substance  mutually
          satisfactory to the Parties.

     J.   Entire   Agreement:   Modifications;   Severability   This  Agreement,
          including  the  Exhibits  and  Schedules,   together  with  the  other
          agreements  referred  to  herein,


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          constitutes the entire agreement between the Parties pertaining to the
          subject  matter hereof and  supersedes  all prior and  contemporaneous
          agreements,  representations and  understandings,  written or oral, of
          the Parties. This Agreement may not be modified or amended except by a
          writing  signed  by each of the  Parties  hereto  (and by a  qualified
          officer if such party is a legal entity).  The invalidity,  illegality
          or  unenforceability  for any reason of any one or more  provisions of
          this   Agreement   shall  not  affect  the   validity,   legality   or
          enforceability of the remainder of this Agreement.

     K.   Confidentiality.  The existence and subject  matter of this  Agreement
          and the other agreements entered into pursuant hereto are confidential
          and shall not be  disclosed  to or  discussed  with any third  parties
          (except  professional  advisers)  without the prior written consent of
          the Parties  hereto.  This  obligation  shall survive the execution of
          this Agreement in the event the transaction contemplated herein is not
          consummated on the Closing Date.

IN WITNESS  WHEREOF,  the Parties have executed this  Amendment No.3 on the date
first above written.

For Transmeridian Exploration Inc.

By: /S/ Nurjan Sarsekenovich Kurmanov
-------------------------------------
Name: Nurjan Sarsekenovich Kurmanov
Title:  Authorized representative

For AIL Alpha Corporation Ltd.

By: /S/ Murat Beisenbekovich Safinov
-------------------------------------
Name: Murat Beisenbekovich Safinov
Title:  Authorized representative

For OJSC Caspi Neft.

By: /S/ Murat Beisenbekovich Safinov
-------------------------------------
Name: Murat Beisenbekovich Safinov
Title:  Authorized representative


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