SECURITY AGREEMENT


     THIS SECURITY  AGREEMENT (this "Agreement") is made as of December 1, 1999,
by  and  between  American  International  Petroleum   Corporation.,   a  Nevada
corporation  ("AIPC") and St. Marks Refinery,  Inc., a Florida corporation ("St.
Marks") (AIPC and St. Marks are collectively referred to as the "Debtors"),  and
__________________________ ("Secured Party").


     1. Definitions.

     (a) Certain Defined Terms.  The following  terms, as used herein,  have the
meanings set forth below:

     "Accounts" means all of the following:  (a) accounts  receivable,  contract
rights, book debts, notes, drafts and other obligations and indebtedness arising
from  the  sale,  lease or  exchange  of goods  or  other  property  and/or  the
performance  of services;  (b) rights in, to and under all  purchase  orders for
goods,  services or other property;  (c) rights to any goods,  services or other
property  represented by any of the foregoing (including returned or repossessed
goods and unpaid sellers' rights of rescission, replevin, reclamation and rights
to stoppage in transit);  (d) monies due to or to become due under all contracts
for the  sale,  lease  or  exchange  of  goods  or  other  property  and/or  the
performance  of  services  (whether or not yet earned by  performance);  and (e)
Proceeds of any of the foregoing and all  collateral  security and guaranties of
any kind given by any Person with respect to any of the foregoing.

     "Collateral" has the meaning assigned to that term in Section 3.

     "Documents" means all "documents" (as defined in the UCC) or other receipts
covering, evidencing or representing goods.

     "Equipment"  means all  "equipment"  (as  defined  in the UCC),  including,
without limitation, all machinery,  motor vehicles,  trucks, trailers,  vessels,
aircraft  and  rolling  stock  and  all  parts  thereof  and all  additions  and
accessions thereto and replacements therefor.

     "Event of Default" has the meaning assigned to that term in Section 9.

     "Fixtures" means all plant fixtures,  business fixtures, other fixtures and
storage  office  facilities  and  all  additions  and  accessions   thereto  and
replacements therefor.

     "General  Intangibles"  means all "general  intangibles" (as defined in the
UCC), including,  without limitation:  (a) all agreements,  leases, licenses and
contracts  to which  Debtor is or may  become a party;  (b) all  obligations  or
indebtedness owing to Debtor (other than Accounts) from whatever source arising;
(c) all tax refunds; (d) all intellectual property; (e) all choses in action and
causes of action; and (f) all trade secrets and other  confidential  information
relating to the business of Debtor.

     "Instruments"  means all  "instruments,"  "chattel  paper" or  "letters  of
credit" (each as defined in the UCC) including,  but not limited to,  promissory
notes, drafts, bills of exchange and trade acceptances.

     "Inventory"  means all  "inventory"  (as  defined  in the UCC),  including,
without  limitation,  finished goods,  raw materials,  work in process and other
materials  and supplies  (including  packaging and shipping  materials)  used or
consumed in the  manufacture or production  thereof and returned and repossessed
goods.

     "Investment  Property" means all  "investment  property" (as defined in the
UCC),   including   certificated   and   uncertificated   securities,   security
entitlements,  securities  accounts,  commodity contracts and commodity accounts
(each as defined in the UCC).


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     Note -  means  that  certain  Bridge  Note of even  date  herewith,  in the
original principal amount of $2,500,000, made and executed by AIPC and issued to
Secured Party, and all amendments and supplements thereto,  restatements thereof
and renewals, extensions, restructuring and refinancings thereof.

     Person  -  means  and  includes  natural  persons,  corporations,   limited
partnerships,  general  partnerships,  joint stock  companies,  joint  ventures,
associations,  companies,  trusts, banks, trust companies, land trusts, business
trusts or other  organizations,  whether or not legal entities,  and governments
and agencies and political subdivisions thereof.

     Proceeds  - means all  proceeds  of,  and all  other  profits,  rentals  or
receipts, in whatever form, arising from the collection,  sale, lease, exchange,
assignment,  licensing  or  other  disposition  of,  or  realization  upon,  any
Collateral including,  without limitation,  all claims against third parties for
loss of, damage to or destruction of, or for proceeds payable under, or unearned
premiums with respect to,  policies of insurance with respect to any Collateral,
and any condemnation or requisition payments with respect to any Collateral,  in
each case whether now existing or hereafter arising.

     Secured Obligations - has the meaning assigned to that term in Section 4.

     Security  Interests  - means the  security  interests  granted  pursuant to
Section  3, as well as all other  security  interests  created  or  assigned  as
additional  security for the Secured  Obligations  pursuant to the provisions of
this Agreement.

     Securities  Purchase  Agreement - means that  certain  Securities  Purchase
Agreement of even date herewith, by and between Debtors and Secured Party.

     UCC - means the Uniform  Commercial Code as in effect on the date hereof in
the State of New York,  provided  that if by reason of mandatory  provisions  of
law,  the  perfection  or the  effect of  perfection  or  non-perfection  of the
Security  Interest in any Collateral or the availability of any remedy hereunder
is  governed by the  Uniform  Commercial  Code as in effect on or after the date
hereof in any other jurisdiction,  "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or  non-perfection or availability of
such remedy.

     2. Other Definition  Provisions.  References to "Sections",  "subsections",
"Exhibits"  and  "Schedules"  shall be to  Sections,  subsections,  Exhibits and
Schedules,   respectively,  of  this  Agreement  unless  otherwise  specifically
provided.  Any of the terms  defined in  Section  1(a) may,  unless the  context
otherwise  requires,  be used in the  singular  or the plural  depending  on the
reference.  All  references  to statutes and related  regulations  shall include
(unless otherwise  specifically  provided herein) any amendments of same and any
successor statutes and regulations.

     3. Grant of Security Interests

     In order to secure the payment and  performance of the Secured  Obligations
in accordance  with the terms  thereof,  Debtors hereby grant to Secured Party a
continuing  security interest in and to all right, title and interest of Debtors
in the collateral  (and any Proceeds  therefrom)  described on Exhibit A hereto,
whether  now owned or  existing  or  hereafter  acquired  or arising  (all being
collectively referred to as the "Collateral").

     4. Security for Obligations

     This  Agreement  secures  the  payment and  performance  of the  Securities
Purchase Agreement and the Note, and all renewals, extensions, restructuring and
refinancings thereof (the "Secured Obligations").

     5.  Representations  and  Warranties.  Debtors  represent  and  warrant  as
follows:

     (a) Binding  Obligation.  This  Agreement is the legally  valid and binding
obligation of Debtors, enforceable against Debtors in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,  reorganization,
moratorium,  or similar  laws or  equitable  principles  relating to or limiting
creditor's rights generally.

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(b) Ownership of Collateral.  Debtors own the  Collateral  free and clear of any
lien,  security  interest or encumbrance.  No effective  financing  statement or
other form of lien notice  covering all or any part of the Collateral is on file
in any recording office.

     (c) Office Locations; Debtors Names.

          (i) As of the date  hereof,  the chief  place of  business,  the chief
          executive  office and the office  where each of the Debtors  keeps its
          books and  records  is  located  at the place  specified  on  Schedule
          5(d)(i) hereto. Except as set forth on Schedule 5(d)(i),  Debtors have
          not  maintained  any other  address at any time  during the five years
          preceding the date hereof.

          (ii)  Debtors do not do business  nor, as of the date  hereof,  has it
          done  business  during the past five years under any  corporate  name,
          trade name or fictitious  business name except for Debtors'  corporate
          name set forth  above and except as  disclosed  on  Schedule  5(d)(ii)
          hereto.

     (d) Perfection.  This Agreement,  together with the UCC filings  referenced
herein,  and delivery of the  Collateral  to Secured Party as of the Closing (as
such term is defined in the Securities  Purchase Agreement) create to secure the
Secured  Obligations a valid,  perfected and first priority security interest in
the  Collateral,  and all filings and other  actions  necessary  or desirable to
perfect and protect such security interest have been duly taken.  Debtors hereby
agree to deliver the Collateral to Secured Party as of the Closing.

     (e) Governmental  Authorizations;  Consents. No authorization,  approval or
other action by, and no notice to or filing with, any governmental  authority or
regulatory  body or consent of any other  Person is required  either (i) for the
grant by Debtors of the Security  Interests granted hereby or for the execution,
delivery or  performance of this Agreement by Debtors or (ii) for the perfection
of or the exercise by Secured Party of its rights and remedies hereunder (except
as may have been taken by or at the direction of Debtors or Secured Party) other
than the filing of financing statements in connection with the perfection of the
Security Interests.

     (f) Value of  Collateral.  The aggregate  value of the collateral as of the
date hereof is equal to not less than  $2,500,000 and the value of the Debenture
described in Exhibit A has an outstanding principal amount as of the date hereof
of $1,500,000.00.

     (g) Accurate Information.  All information heretofore,  herein or hereafter
supplied  to  Secured  Party by or on  behalf of  Debtors  with  respect  to the
Collateral is and will be accurate and complete in all material respects.

     6. Further Assurances; Covenants

     (a) Other Documents and Actions.  Debtors will, from time to time, at their
expense,  promptly execute and deliver all further instruments and documents and
take all further  action that may be  necessary  or  desirable,  or that Secured
Party may  reasonably  request,  in order to perfect and  protect  any  security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise  and  enforce its rights and  remedies  hereunder  with  respect to any
Collateral.  Without limiting the generality of the foregoing, Debtors will: (i)
execute  and file such  financing  or  continuation  statements,  or  amendments
thereto,  and  such  other  instruments  or  notices,  as  may be  necessary  or
desirable,  or as Secured Party may reasonably  request, in order to perfect and
preserve the security interests granted or purported to be granted hereby;  (ii)
at any reasonable  time,  upon demand by Secured Party exhibit the Collateral to
allow  inspection of the  Collateral  by Secured Party or persons  designated by
Secured Party; and (iii) upon Secured Party's request,  appear in and defend any
action or  proceeding  that may  affect  Debtors'  title to or  Secured  Party's
security interest in the Collateral.

     (b) Secured Party  Authorized.  Debtors hereby  authorize  Secured Party to
file one or more financing or continuation  statements,  and amendments thereto,
relating to all or any part of the Collateral  without the signatures of Debtors
where permitted by law.

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     (c) Corporate or Name Change. Debtors will notify Secured Party promptly in
writing  at  least 30 days  prior to (a) any  change  in  Debtors'  name and (b)
Debtors' commencing the use of any trade name, assumed name or fictitious name.

     (d) Business Locations.  Debtors shall give Secured Party thirty (30) days'
prior written  notice of any change in its chief place of business or of any new
location of business or any new location for any of the Collateral. With respect
to any new location (which in any event shall be within the  continental  United
States),  Debtors shall execute such  documents and take such actions as Secured
Party reasonably deems necessary to perfect and protect the Security Interests.

     (e)  Bailees.  No  Collateral  shall  at any time be in the  possession  or
control of any  warehouseman,  bailee or Debtors'  agents or processors  without
Secured Party's prior written consent and unless Secured Party, if Secured Party
has so requested,  has received  warehouse receipts or bailee letters reasonably
satisfactory to Secured Party prior to the commencement of such storage. Debtors
shall, upon the request of Secured Party, notify any such warehouseman,  bailee,
agent or processor of the Security Interests.

     (f)  Insurance.  Debtors  shall  maintain  insurance  with  respect  to the
Collateral of types and in amounts that are  customary  for  similarly  situated
businesses.  Debtors hereby direct all insurers under such policies of insurance
with  respect  to its  assets to pay all  material  proceeds  of such  insurance
policies to Secured Party.

     (g) Taxes and Claims. Debtors will pay (i) all taxes, assessments and other
governmental  charges  imposed upon the  Collateral  before any penalty  accrues
thereon and (ii) all claims (including claims for labor, services, materials and
supplies)  for sums that have become due and payable and that by law have or may
become a lien upon any of the Collateral  before any penalty or fine is incurred
with respect thereto; provided that no such tax, charge or claim need be paid if
a Debtors are contesting same in good faith by appropriate  proceedings promptly
instituted and diligently conducted and if Debtors have established such reserve
or other appropriate provision,  if any, as shall be required in conformity with
generally accepted accounting principles consistently applied.

     (h) Collateral  Description.  Debtors will furnish to Secured  Party,  from
time to time,  statements and schedules  further  identifying and describing the
Collateral  and such other reports in connection  with the Collateral as Secured
Party may reasonably request, all in reasonable detail.

     (i) Use of Collateral;  Renegotiation  of Terms of Debenture.  Debtors will
not use or permit any  Collateral  to be used  unlawfully or in violation of any
provision of this Agreement or any applicable statue, regulation or ordinance or
any policy of insurance  covering  any of the  Collateral.  Notwithstanding  the
foregoing,  Secured Party hereby  agrees to permit  Debtors to  renegotiate  the
terms or form of the $3,000,000  Principal  Amount 5% Exchangeable  Subordinated
Debenture described on Exhibit A hereto,  which Debenture  constitutes a portion
of the Collateral; provided, however, the Debenture as so amended shall not have
a value of less than $1.5  million  principal  amount  and shall  have terms and
conditions no less favorable than those presently existing.

     (j) Records of  Collateral.  Debtors shall keep full and accurate books and
records  relating to the Collateral and shall stamp or otherwise mark such books
and records in such manner as Secured Party may  reasonably  request  indicating
that the Collateral is subject to the Security Interests.

     (k) Other  Information.  Debtors will,  promptly  upon request,  provide to
Secured Party all information and evidence it may reasonably  request concerning
the  Collateral  to enable  Secured  Party to  enforce  the  provisions  of this
Agreement.

     7. Secured Party  Appointed  Attorney-in-Fact.  Debtors hereby  irrevocably
appoint Secured Party as its attorney-in-fact,  with full authority in the place
and stead of Debtors and in the name of  Debtors,  Secured  Party or  otherwise,
from  time to time in  Secured  Party's  discretion  to take any  action  and to
execute any instrument  that Secured Party may deem necessary or advisable after
the occurrence and during the  continuation of an Event of Default to accomplish
the purposes of this Agreement, including, without limitation:



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<PAGE>

     (a) to obtain and adjust insurance required to be paid to Secured Party;

     (b) to ask, demand, collect, sue for, recover,  compound,  receive and give
acquittance and receipts for monies due and to become due under or in respect of
any of the Collateral;

     (c) to file any claims or take any action or institute any proceedings that
Secured Party may deem  necessary or desirable for the  collection of any of the
Collateral  or otherwise to enforce the rights of Secured  Party with respect to
any of the Collateral;

     (d) to pay or discharge taxes or liens, levied or placed upon or threatened
against  the  Collateral,  the  legality  or  validity  thereof  and the amounts
necessary to discharge  the same to be  determined  by Secured Party in its sole
discretion,  and such payments made by Secured  Party to become  obligations  of
Debtors,  due and payable immediately without demand and secured by the Security
Interests; and

     (e) generally to sell, transfer, pledge, make any agreement with respect to
or otherwise  deal with any of the  Collateral as fully and completely as though
Secured Party were the absolute  owner  thereof for all purposes,  and to do, at
Secured Party's option and Debtors'  expense,  at any time or from time to time,
all acts and things that Secured Party deems  necessary to protect,  preserve or
realize upon the Collateral.

     Neither  Secured Party nor any Person  designated by Secured Party shall be
liable for any acts or omissions or for any error of judgment or mistake of fact
or law  other  than as a  result  of  Secured  Party's  or such  Person's  gross
negligence or wilful misconduct.  This power, being coupled with an interest, is
irrevocable so long as this Agreement shall remain in force.

     8. Transfers and Other Liens

     Debtors shall not without Secured Party's prior written consent:

          (a) Sell,  assign (by  operation  of law or  otherwise)  or  otherwise
     dispose of, or grant any option with respect to, any of the Collateral.

          (b)  Create or suffer to exist any lien,  security  interest  or other
     charge or  encumbrance  upon or with  respect to any of the  Collateral  to
     secure  indebtedness of any Person except for the security interest created
     by this Agreement.

     9. Events of Default.

     The occurrence of any one or more of the following  events shall constitute
an Event of Default by Debtors under this Agreement:

          (a)  General  Default.  AIPC shall  fail to  observe  or  perform  any
     covenant,  obligation,  term  or  condition  contained  in  the  Securities
     Purchase  Agreement,  the Note, the Mortgage and Security  Agreement by and
     between St. Marks and Secured Party of even date herewith (the  "Mortgage")
     or this Agreement.

          (b)  Nonpayment.  AIPC shall fail to pay any  principal,  interest  or
     other amount owing under the Note or Securities Purchase Agreement when and
     as the same shall be due and payable.

          (c) Material  Misrepresentations.  Any  representation or warranty set
     forth herein shall prove to be false in any material respect.

          (d) Going Concern.  Debtors shall terminate their corporate  existence
     or shall cease to operate as a going concern.

          (e) Judgments.  A judgment shall be entered against either Debtor or a
     warrant of execution or similar  process shall be issued or levied  against
     its property and within  thirty (30) days after such  judgment,  warrant or
     process shall not have been paid in full or proper appeal of the same made.

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<PAGE>

          (f) Debtors  Relief - Voluntary.  Debtors  shall  commence a voluntary
     case or  other  proceeding  seeking  liquidation,  reorganization  or other
     relief with respect to itself or its debts under any bankruptcy, insolvency
     or other similar law now or hereafter in effect or seeking the  appointment
     of a trustee, receiver, liquidator,  custodian or other similar official of
     it or any  substantial  part of its property,  or shall consent to any such
     relief or to the  appointment of or taking  possession by any such official
     in an involuntary case or other proceeding  commenced  against it, or shall
     make a general  assignment  for the  benefit  of  creditors,  or shall fail
     generally to pay its debts as they become due, or shall take any  corporate
     action to authorize any of the foregoing.

          (g)  Debtors  Relief  -  Involuntary.  Any  involuntary  case or other
     proceeding  shall  be  commenced   against  Debtors  seeking   liquidation,
     reorganization  or other  relief with  respect to it or its debts under any
     bankruptcy,  insolvency  or other similar law now or hereafter in effect or
     seeking the appointment of a trustee,  receiver,  liquidator,  custodian or
     other similar official of it or any substantial  part of its property,  and
     such  involuntary  case or other  proceeding  shall remain  undismissed and
     unstayed for a period of thirty (30) days;  or an order for relief shall be
     entered  against  Debtors  under  the  federal  bankruptcy  laws  as now or
     hereafter in effect.

          (h)  Other.  The  occurrence  any "Event of  Default"  as that term is
     defined in Securities Purchase Agreement or Mortgage.

     10. Remedies

     (a) If any Event of Default shall have occurred and be continuing,  Secured
Party  may  declare  the  entire  outstanding   principal  amount  of  the  Note
immediately  due and payable,  provided that upon the occurrence of any Event of
Default set forth in Section 9(f) or 9(g), the outstanding  principal  amount of
the Note shall become automatically due and payable,  without any notice, demand
or other action on the part of Secured Party.

     (b) If any Event of Default shall have occurred and be continuing,  Secured
Party may exercise in respect of the Collateral, in addition to all other rights
and remedies  provided  for herein or otherwise  available to it, all the rights
and remedies of a secured party on default under the UCC (whether or not the UCC
applies to the affected  Collateral)  and also may: (i) require  Debtors to, and
Debtors  hereby  agree that it will,  at its expense and upon request of Secured
Party  forthwith,  assemble all or part of the Collateral as directed by Secured
Party and make it  available  to Secured  Party at a place to be  designated  by
Secured  Party which is  reasonably  convenient  to both  parties;  (ii) without
notice or demand or legal  process,  enter upon any premises of Debtors and take
possession of the  Collateral;  (iii) without notice except as specified  below,
sell the  Collateral  or any part  thereof  in one or more  parcels at public or
private sale, at any of Secured  Party's  offices or elsewhere,  at such time or
times, for cash, on credit or for future  delivery,  and at such price or prices
and upon such other  terms as Secured  Party may deem  commercially  reasonable;
(iv)  notify the  obligors  on any  Accounts  or  Instruments  to make  payments
thereunder directly to Secured Party; and (v) without notice to Debtors,  renew,
modify or  extend  any of the  Accounts  and  Instruments  or grant  waivers  or
indulgences  with  respect  thereto  or  accept  partial  payment  thereof,   or
substitute  any  obligor  thereon,  in any  manner  as  Secured  Party  may deem
advisable,  without  affecting or diminishing  Debtors'  continuing  obligations
hereunder. Debtors agree that, to the extent notice of sale shall be required by
law,  at least ten days'  notice to  Debtors of the time and place of any public
sale or the time after  which any  private  sale is to be made shall  constitute
reasonable  notification.  At any sale of the  Collateral,  if permitted by law,
Secured  Party may bid  (which  bid may be, in whole or in part,  in the form of
cancellation of indebtedness)  for the purchase of the Collateral or any portion
thereof for the account of Secured  Party.  Secured Party shall not be obligated
to make any sale of  Collateral  regardless of notice of sale having been given.
Secured  Party  may  adjourn  any  public or  private  sale from time to time by
announcement  at the time and place fixed therefor,  and such sale may,  without
further notice,  be made at the time and place to which it was so adjourned.  To
the extent  permitted by law,  Debtors hereby  specifically  waive all rights of
redemption,  stay  or  appraisal  which  it has or may  have  under  any law now
existing or hereafter enacted.

     (c) Upon the  occurrence  of an Event of Default  hereunder,  Secured Party
shall have the right to enter upon the premises of Debtors where the  Collateral
is located (or is believed to be located)  without any obligation to pay rent to
Debtors,  or any other place or places  where the  Collateral  is believed to be
located and kept, to render the  Collateral  useable or saleable,  to remove the
Collateral  therefrom to the  premises of Secured  Party or any agent of Secured
Party for such time as Secured Party may desire in order to effectively  collect
or liquidate the

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<PAGE>

Collateral,  and/or to require  Debtors to assemble the  Collateral  and make it
available  to  Secured  Party at a place or places to be  designated  by Secured
Party. Upon the occurrence of an Event of Default hereunder, Secured Party shall
have the right to take  possession of Debtors'  original  books and records,  to
obtain  access to Debtors'  data  processing  equipment,  computer  hardware and
software  relating to the  Collateral  and to use all of the  foregoing  and the
information contained therein in any manner Secured Party deems appropriate; and
Secured  Party shall have the right to notify postal  authorities  to change the
address for delivery of Debtors' mail to an address  designated by Secured Party
and to receive, open and dispose of all mail addressed to Debtors.

     11. Limitation on Duty of Secured Party with Respect to Collateral.  Beyond
the safe custody  thereof,  Secured Party shall have no duty with respect to any
Collateral in its  possession or control (or in the possession or control of any
agent or bailee) or with respect to any income  thereon or the  preservation  of
rights  against prior parties or any other rights  pertaining  thereto.  Secured
Party  shall be deemed to have  exercised  reasonable  care in the  custody  and
preservation  of the  Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property. Secured
Party  shall not be liable or  responsible  for any loss or damage to any of the
Collateral,  or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman,  carrier,  forwarding  agency,  consignee or other
agent or bailee selected by Secured Party in good faith.

     12. Application of Proceeds. Upon the occurrence and during the continuance
of an Event of Default,  the proceeds of any sale of, or other realization upon,
all or any part of the Collateral  shall be applied:  first, to all fees,  costs
and  expenses  incurred by Secured  Party with  respect to the  Collateral;  and
second, to the Secured Obligations.  Secured Party shall pay over to Debtors any
surplus and Debtors shall remain liable for any deficiency.

     13. Expenses.  Debtors agree to pay all insurance expenses and all expenses
of protecting, storing, warehousing, appraising, insuring, handling, maintaining
and shipping the  Collateral,  all costs,  fees and expenses of  perfecting  and
maintaining the Security Interests,  and any and all excise, property, sales and
use  taxes  imposed  by any  state,  federal  or local  authority  on any of the
Collateral,  or with  respect to  periodic  appraisals  and  inspections  of the
Collateral, or with respect to the sale or other disposition thereof. If Debtors
fail  promptly to pay any portion of the above  expenses  when due or to perform
any other obligation of Debtors under this Agreement,  Secured Party may, at its
option, but shall not be required to, pay or perform the same, and Debtors agree
to reimburse  Secured Party therefor on demand.  All sums so paid or incurred by
Secured Party for any of the foregoing, any and all other sums for which Debtors
may become  liable  hereunder and all costs and expenses  (including  attorneys'
fees,  legal expenses and court costs) incurred by Secured Party in enforcing or
protecting the Security  Interests or any of their rights or remedies under this
Agreement  shall be payable on demand,  shall  constitute  Secured  Obligations,
shall bear  interest  until paid at the rate  provided  in the Note and shall be
secured by the Collateral.

     14. Termination of Security Interests;  Release of Collateral. Upon payment
in full of all Secured  Obligations,  the Security Interests shall terminate and
all rights to the Collateral  shall revert to Debtors.  Upon such termination of
the Security Interests or release of any Collateral,  Secured Party will, at the
expense of Debtors,  execute and deliver to Debtors  such  documents  as Debtors
shall reasonably  request to evidence the termination of the Security  Interests
or the release of such Collateral, as the case may be.

     15. Notices. Each notice,  communication and delivery under this Agreement:
(a) shall be made in writing  signed by the party  giving it; (b) shall  specify
the section of this  Agreement  pursuant  to which  given;  (c) shall  either be
delivered in person or by telecopier,  a nationally recognized next business day
courier service or Express Mail; (d) unless delivered in person,  shall be given
to the address specified below; (e) shall be deemed to be given (i) if delivered
in person,  on the date  delivered,  (ii) if sent by telecopier,  on the date of
telephonic  confirmation  of receipt,  (iii) if sent by a nationally  recognized
next business day courier  service with all costs paid, on the next business day
after it is  delivered  to such  courier,  or (iv) if sent by Express Mail (with
postage and other fees paid), on the next business day after it is mailed.  Such
notice shall not be effective  unless copies are provided  contemporaneously  as
specified  below,  but neither the manner nor the time of giving notice to those
to whom  copies are to be given  (which  need not be the same as the  addressee)
shall  control  the  date  notice  is  given  or  received.  The  addresses  and
requirements for copies are as follows:

                                       7
<PAGE>

     If to AIPC:

              American International Petroleum Corporation
              444 Madison Avenue
              New York, New York 10022
              Telecopier No.  (212)688-6657
              Confirmation No. (212)688-3333
              Attention: Denis Fitzpatrick, Chief Financial Officer




                                       8
<PAGE>

     If to St. Marks:

              St. Marks Refinery, Inc.
              5201 Westshore Boulevard
              Tampa, Florida  33611-5699
              Telecopier No.  ________________
              Confirmation No. _______________
              Attention:  Denis Fitzpatrick


     If to Secured Party:



              with a copy to:

     16.  Waivers,  Non-Exclusive  Remedies,  Severability.  Except as otherwise
expressly set forth in any particular  provision of this Agreement,  any consent
or approval required or permitted by this Agreement to be given by Secured Party
may be given, and any term of this Agreement or of any other instrument  related
hereto or mentioned herein may be amended,  and the performance or observance by
Debtors of any term of this Agreement,  the Securities Purchase Agreement or the
Note may be waived  (either  generally  or in a  particular  instance and either
retroactively  or  prospectively)  with,  but only with,  the  written  specific
consent of Secured Party. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of dealing or
delay or omission  on the part of Secured  Party in  exercising  any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon Debtors shall entitle  Debtors to other or further  notice or demand
in similar or other circumstances.  The rights in this Agreement, the Securities
Purchase  Agreement  and the Note are  cumulative  and are not  exclusive of any
other remedies provided by law. The invalidity,  illegality or  unenforceability
of any  provision  in or  obligation  under this  Agreement  shall not affect or
impair the validity,  legality or enforceability of the remaining  provisions or
obligations under this Agreement.

     17.  Successors  and Assigns.  This Agreement is for the benefit of Secured
Party and its successors  and assigns,  and in the event of an assignment of all
or any  of  the  Secured  Obligations,  the  rights  hereunder,  to  the  extent
applicable to the Secured Obligations so assigned,  may be transferred with such
Secured  Obligations.  This  Agreement  shall be binding  on  Debtors  and their
successors  and assigns,  provided that Debtors shall not assign this  Agreement
without Secured Party's prior written consent.

     18. Changes in Writing. No amendment,  modification,  termination or waiver
of any  provision  of this  Agreement  or  consent to any  departure  by Debtors
therefrom,  shall in any event be effective  without the written  concurrence of
Secured Party and Debtors.

     19.  Governing  Law. This  Agreement  shall be governed by and construed in
accordance with the laws of the State of New York,  without giving effect to the
conflicts of law principles thereof.

     20. Headings.  Cross reference pages and headings  contained herein are for
convenience of reference only, do not constitute a part of this  Agreement,  and
shall not be deemed to limit or affect any of the provisions hereof.

     21.  Counterparts.  This  Agreement  may be  executed  by each party upon a
separate copy, and in such case one  counterpart of this Agreement shall consist
of enough of such copies to reflect the  signatures of all of the parties.  This
Agreement may be executed in two or more counterparts, each of which shall be an
original,  and each of which shall  constitute one and the same  agreement.  Any
party may  deliver  an  executed  copy of this  Agreement  and of any  documents
contemplated hereby by facsimile transmission to another party and such delivery
shall have the same force and effect as any other delivery of a manually  signed
copy of this Agreement or of such other documents.



                                       9

<PAGE>

     DULY EXECUTED and delivered by the parties on the date first written above.


                                    AMERICAN INTERNATIONAL PETROLEUM CORPORATION


                                    By: ________________________________________
                                    Name: ______________________________________
                                    Title: _____________________________________


                                    ST. MARKS REFINERY, INC.


                                    By: ________________________________________
                                    Name: ______________________________________
                                    Title: _____________________________________







                                    By: ________________________________________
                                    Name: ______________________________________
                                    Title: _____________________________________



                                       10
<PAGE>


                                    EXHIBIT A

                                   COLLATERAL

1. Two thousand  five  hundred  shares of St.  Marks  Refinery,  Inc., a Florida
corporation  ("St.  Marks")  evidenced by Stock  Certificate  No. 2, such shares
being the only outstanding shares of St. Marks.

2.  The  $_________________   Principal  Amount  5%  Exchangeable   Subordinated
Debenture  made by  American  International  Petroleum  Corporation  of Columbia
payable to AIPC and dated February 25, 1997.





                                       11
<PAGE>

                                SCHEDULE 5(d)(i)



                                       12

<PAGE>

                               SCHEDULE 5.2(d)(ii)


                                       13