DTIR-02-0015
                                                                   TRD-DP-032/02
                                    AGREEMENT


          This  Agreement,  made  and  entered  into as of March 1, 2002, by and
between  Penn  Octane Corporation, a corporation organized under the laws of the
State  of  Delaware,  United  States  of  America, having its principal place of
business  at  77-530  Enfield  Lane,  Building "D", Palm Desert California 92211
United  States  of  America ("Seller") and P.M.I. Trading Limited, a corporation
organized  under  the laws of Ireland, having its principal place of business at
Mexico  City,  Mexico  ("Buyer")  (each  of  Buyer  and  Seller,  "Party"  and
collectively,  the  "Parties").

     WHEREAS,  Seller  believes that it has certain claims against Buyer arising
under  or related to contracts for the delivery of Products (as defined herein);

     WHEREAS,  the  Parties are willing to settle the claims (the "Settlement");

     WHEREAS,  the  terms  of  the  Settlement  will  be governed by the certain
Settlement  Agreement  (the  "Settlement Agreement") between the Parties of even
date  herewith;  and

     WHEREAS,  the  execution  and  delivery  of  this  Agreement is part of the
Settlement  and is a condition concurrent to the effectiveness of the Settlement
Agreement;

     NOW,  THEREOFRE,  in  consideration  of  the  representations,  warranties,
covenants  and  agreement  hereinafter  set  forth,  the Parties hereby agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

     1.01     DEFINITIONS.  For  purposes of this Agreement, the following terms
              -----------
shall  have  the  meaning  indicated  below:

     "Affiliate"  shall  mean,  with  respect  to  any  Person, any other Person
     controlling,  controlled  by,  or  under  common  control with such Person;

     "Agreement"  shall  mean  this  Agreement,  including all Exhibits attached
     hereto,  as  the same may be amended, modified or supplemented from time to
     time;

     "Alternative  Delivery  Point"  shall mean Seller's terminal located at 902
     Chemical Road, Port of Brownsville, 78521 Texas, Untied States of America.;

     "ASTM"  shall  mean  the  American  Society  for  Testing  and  Materials;


                                  Page 1 of 22
<PAGE>
                                                                    DTIR-02-0015

     "Banking  Day"  shall mean any day on which the banks are open for business
     in  the  jurisdiction  in  which  payment  is  to  be  made;

     "Butane"  shall  comply  with  the  specifications  set  forth  by the GPA;

     "Buyer's  Representatives"  shall  mean  Pemex-Gas  y Petroquimica Basica's
     personnel  authorized  to  supervise  the  operations  described  in  this
     Agreement  at  the  Delivery  Point  or  at the Alternative Delivery Point;

     "DDU"  shall  mean  Delivered  Duty  Unpaid,  according  to Incoterms 2000;

     "Day"  shall  mean  a  twenty-four (24) hour period, starting at zero hours
     local  time  in Matamoros on the morning of each calendar day and ending at
     zero hours local time in Matamoros on the morning of the following calendar
     day;

     "Delivery  Point"  shall  mean  Seller's  terminal located at Carr. Sendero
     Nacional Km. 9, desviacion Carr. La Rosita-Lucio Blanco Km. 3.4, desviacion
     brecha  22  s/n  (a  500  mts.),  Ejido  La  Gloria, C.P. 87560, Matamoros,
     Tamaulipas,  Mexico;

     "Exhibit  A"  contains  the  LPG  Mix  specifications;

     "FCA"  shall  mean  Free  Carrier,  according  to  Incoterms  2000;

     "Gallon(s)"  shall  mean  one  (1)  U.S. standard gallon to two hundred and
     thirty  one  (231)  cubic  inches  at  sixty  degrees  Fahrenheit  (60  F);

     "GPA"  shall  mean  the  Gas  Processors  Association;

     "Injection  Point"  shall  mean  Seller's terminal location at 902 Chemical
     Road,  Port  of  Brownsville,  Texas,  78521,  Untied  States  of  America;

     "LPG  Mix"  shall mean the mixture meeting the specification parameters set
     forth  in  Exhibit  A.
                ----------

     "Mexico"  shall  mean  the  United  Mexican  States;

     "MMgal/Month"  shall  mean  millions  of  Gallons  per  Month;

     "Month"  shall  mean  a  calendar  month;

     "Monthly  Volume" shall mean the quantity of Product to be delivered at the
     Delivery  Point  during  any  Month  in  accordance  with  Article  3.02;


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<PAGE>
                                                                    DTIR-02-0015

     "Person" shall mean an individual, partnership, company, firm, trust, joint
     venture,  unincorporated  organization  or  government or any department or
     agency  thereof;

     "PGPB"  shall  mean  Pemex-Gas  y  Petroquimica  Basica;

     "Products"  shall mean LPG Mix, Butane or Propane, as the context dictates;

     "Propane"  shall  comply  with  the  specifications  set  forth by the GPA;

     "Summer  Season"  shall  mean  the periods comprised form (i) April 1, 2002
     through  September  30, 2002; (ii) from April 1, 2003 through September 30,
     2003;  and  (iii)  April  1,  2004  through  May  31,  2004;

     "U.S.  Dollars"  or  "U.S.$"  shall  mean  dollars  of the United States of
     America;

     "U.S."  shall  mean  the  United  States  of  America;  and

     "Winter Season" shall mean the periods from (i) March 1, 2002 through March
     31,  2002;  (ii) October 1, 2002 through March 31, 2003 and/ and (iii) from
     October  1,  2003  through  March  31,  2004.


                                   ARTICLE II

                                  PURPOSE; TERM

     2.01     PURPOSE.  Seller  agrees  to sell, transfer, convey and deliver to
              --------
Buyer and Buyer agrees to purchase and accept receipt of from Seller, LPG Mix in
such  volumes  as  specified  in, and otherwise in accordance with the terms and
conditions  of,  this  Agreement.

     2.02     TERM.  Unless  earlier  terminated  in  accordance  with  this
              -----
Agreement,  the term of this Agreement (the "Term") shall commence open March 1,
2002  (the  "Effective  Date")  and  end  on  May  31,  2004.


                                   ARTICLE III

                                     PRODUCT

     3.01     PRODUCT  SPECIFICATIONS.  LPG  Mix  shall,  at all times, meet the
              ------------------------
specification  parameters  set  forth  in  Exhibit  A.
                                           ----------

     3.02     PRODUCT QUANTITY.  The Monthly Volume sold and delivered by Seller
              -----------------
and  lifted  by Buyer shall be an average of (i) 17 MMgal/Month + 16% at Buyer's
option  during  the  Winter  Season,  and  (ii) 17 MMgal/Month +/- 5% at Buyer's


                                  Page 3 of 22
<PAGE>
                                                                    DTIR-02-0015

option  during  the  Summer Season, calculated in each of the Applicable Periods
(as  defined  hereunder);  it being understood that Buyer may nominate larger or
smaller  volumes  during any particular Month, but the parties intend that in no
event  shall  it  be  less than the Floor Volumes, defined below, as long as the
Minimum  Volume  (as defined in this Section 3.02) for each Applicable Period is
met,  provided, however, that, notwithstanding the intent of the Parties and the
table  appearing  at the end of this section 3.02, Seller's exclusive remedy for
Buyer's failure to take the Minimum Volume shall be as set forth in Section 3.03
herein.  Thus  the  minimum volume of LPG Mix sold and delivered from Seller and
lifted  by Buyer (the "Minimum Volume") for each corresponding applicable period
set  forth  below  (each,  an  "Applicable  Period")  shall  be  as  follows:

<TABLE>
<CAPTION>


                                            MINIMUM VOLUME
     APPLICABLE PERIOD                  (EXPRESSED IN GALLONS)
--------------------------------------  ----------------------
<S>                                     <C>

March 1, 2002 through June 30, 2002                 65,450,000
--------------------------------------  ----------------------
July 1, 2002 through December 31, 2002              99,450,000
--------------------------------------  ----------------------
January 1, 2003 through June 30, 2003               99,450,000
--------------------------------------  ----------------------
July 1, 2003 through December 31, 2003              99,450,000
--------------------------------------  ----------------------
January 1, 2004 through May 31, 2004                83,300,000
--------------------------------------  ----------------------
</TABLE>



          3.02.1  EARLY  TERMINATION.  If this Agreement is terminated by either
                -------------------
     Party  prior to the expiration of the Term in accordance with the terms and
     conditions of this Agreement, the Applicable Period then in effect shall be
     deemed  to end on the termination date of this Agreement, the Actual Volume
     shall  be  calculated  through such termination date and the Minimum Volume
     shall  be  prorated through the termination date on the basis of 17,000,000
     Gallons  of  LPG  Mix  per  Month  during  the Winter Season and 16,150,000
     Gallons  of  LPG  Mix  per  Month  during  the  Summer  Season.

     3.03     BUYER'S  SHORTFALL.
              -------------------

          3.03.1     MONTHLY  FLOOR  VOLUME.  Buyer shall not order less than 17
                     -----------------------
MMgal/Month  for delivery during the Winter Season, nor less than 15 MMgal/Month
for delivery during the Summer Season.  Such volumes shall be referred to herein
as  "Floor  Volumes."

          3.03.2     SHORTFALL  OCCURRENCE.  A  shortfall  attributable to Buyer
                     ----------------------
(the  "Buyer's  Shortfall")  shall  occur  when  the  volume of LPG Mix actually
delivered  by  Seller  and  lifted  by  Buyer during any particular Month at the
Delivery  Point (or Alternative Delivery Point, if Buyer exercises its option to
take  delivery  at  the  Delivery  Point) (the "Actual Volume") is less than the
Floor  Volume  of  such  particular  Month,  provided,  however,  that a Buyer's
Shortfall  shall not be deemed to have occurred in the event Buyer fails to take
delivery  of  the  Floor  Volume  during  any  Month  due  to  Seller's fault or
non-compliance  with  this  Agreement,  including  without  limitation, Seller's
failure  to  deliver  the  nominated  quantity,  the  provision of non-compliant


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<PAGE>
                                                                    DTIR-02-0015

product, or Seller's inability to deliver Product to the Delivery Point, and any
such  volumes  not  delivered  by  Seller  shall  be deducted from the Shortfall
Computation,  as  defined  below.

          3.03.3     SHORTFALL  COMPUTATION.  A  Buyer's  Shortfall shall be the
                     -----------------------
positive  difference  between  the Floor Volume and the Actual Volume, provided,
however,  that should Buyer fail to take delivery of the Floor Volume during any
Month  due  to  Seller's  fault or non-compliance with this Agreement, including
without  limitation,  Seller's  failure  to  deliver the nominated quantity, the
provision  of non-compliant Product, or Seller's inability to deliver Product to
the Delivery Point, then the Floor Volume for such Month shall be reduced by the
amount  of  Product  not  delivered  by Seller (the "Buyer's Shortfall Volume").

          3.03.4     SHORTFALL  PAYMENT.  If  a  Buyer's Shortfall occurs, Buyer
                     -------------------
shall pay to Seller as liquidated damages an amount calculated as the difference
between the resale price of the LPG Mix and the price payable by Buyer under the
terms  of  this  Agreement  (the  "Buyer's  Shortfall Price"), multiplied by the
Buyer's Shortfall Volume, provided, however, that it is expressly understood and
agreed  between  the  Parties  that the Buyer's Shortfall Price shall not exceed
$XXXX  USD  per  gallon  for  any  Buyer's  Shortfall.

     3.04     PRODUCT  QUALITY  AND QUANTITY INSPECTION.  Buyer and Seller shall
              -----------------------------------------
appoint an independent inspection company mutually agreeable to buyer and Seller
(the  "Inspector")  to  determine  quality  and  quantity  of the Product at the
Delivery Point. The Inspector's findings shall be binding and the Parties in the
absence  of fraud, bad faith or gross error. Buyer shall pay the gross amount of
the  Inspector's  fees,  however Buyer shall deduct the amount of U.S. $XXXX per
Month from amounts due to Seller, such amount representing Seller's share of the
Inspector's  fees.

          3.04.1     PRODUCT QUALITY INSPECTION.  All LPG Mix shall be monitored
                     ---------------------------
to  ensure  compliance  with  the  specification  parameters  in  Exhibit  A.
                                                                  ----------
Determination  of  quality  shall  follow the procedures set forth in the latest
revision  of ASTM procedures (the "Compliance Procedures").  A sample of LPG Mix
will  be  drawn in accordance with the Compliance Procedures (the "Sampling") by
the  Inspector  at  the Injection Point for every 50,000 Gallons injected at the
Injection Point.  A GC analysis (as defined hereunder) shall be performed by the
Inspector  on the sample in accordance with the ASTM D-2163 method to assess the
sample's  compliance  with  the  specification  parameters in Exhibit A.  If the
                                                              ---------
sample  analysis  is found to be non-compliant, the entire 50,000 Gallons of LPG
Mix  from  with  the  sample  was  taken  will  be  deemed  non-compliant  (the
"Non-Compliant  LPG  Mix"),  and  the  Inspector  shall  immediately notify both
Parties.  All  Non-Compliant  LPG  Mix  shall  be deemed not delivered and Buyer
shall  not  be  responsible  for payment nor for any Shortfall Payment.   Seller
shall use its best efforts to dispose of any Non-Compliant LPG Mix promptly upon
notification of its non-compliance by the Inspector and shall be responsible for
any  and all costs and liabilities relating to or arising from the Non-Compliant
LPG  Mix.  The GC shall be calibrated in accordance with the latest ASTM and GPA
procedures.


                                  Page 5 of 22
<PAGE>
                                                                    DTIR-02-0015

          3.04.2     PRODUCT QUANTITY INSPECTION.  The Inspector shall determine
                     ----------------------------
the  quantity  of  LPG  Mix  for  payment  proposes  as  follows:

     (a)  Each  empty  tank  truck shall be weighed on the platform scale at the
Delivery  Point/Alternative  Delivery  Point,  or  an  alternative  independent
platform  scale  mutually acceptable to the Parties.  Once LPG Mix is completely
loaded  onto  the  tank  trucks,  such  tank  truck will be weighted at the same
platform  scale  upon  its  departure.  The  weight obtained by the differential
between  these  two  measurements  shall be converted into the volume in Gallons
corrected  at  60  F  in  accordance with the Compliance Procedures, through the
determination  of  the  specific  gravity  through  either  a  gas chromatograph
provided  by Seller or by Inspector (the "GC") analysis (ASTM D-2163 and D-2598)
or by Pressure Thermo Hydrometer Method (ASTM D-1657).  The Inspector shall take
samples  and  shall test each tank truck loaded for the above-mentioned methods.
The  GC  shall  be  calibrated  in  accordance  with  the  latest  ASTM  and GPA
procedures.

     (b)  Seller's  terminal  platform  scale  at the Delivery Point/Alternative
Delivery  Point  will  be  tested  and adjusted for accuracy at lease once every
thirty  (30)  days.  Seller  will be required to comply with the calibration and
certification  procedures  adopted  by  Mexican  authorities  in accordance with
Official  Standards  (NOM-010-SCFI-1994  (1999)).  Buyer's  Representatives  and
Inspector  may  witness  the  calibration  and certification procedures.  Seller
shall  provide Buyer via fax a monthly copy of the above-mentioned certificates.
If  Seller's  terminal platform scale at the Delivery Point/Alternative Delivery
Point  is  used, and/or any claim is received by Buyer from PGPB, Buyer reserves
the  following  rights:  To  execute  evaluation  procedures  on  a random basis
sending  tank  trucks to an independent scale to test the accuracy of such scale
and  recover  damages  from  Seller  for  any  discrepancy  found.

     (c)  If  Seller's platform scale at the Delivery Point/Alternative Delivery
Point  is  not  suitable  for  the  service  due  to  non-compliance  with  the
above-mentioned  Official  Standards  and an independent platform scale is used,
the  Parties will share equally the costs of weighing the tank trucks before and
after  loading.

     (d)  If  Seller at any time replaces the platform scales at its terminal at
the  Delivery Point/Alternative Delivery Point, such new scales shall be used to
weigh  tanks trucks receiving LPG Mix at the Delivery Point/Alternative Delivery
Point,  and  shall  be  operated  and  maintained  in  accordance with the above
provisions.  Seller  shall  be responsible for all costs and expenses associated
with  such  new  scales.

     (e)  For  customs and inventory-management purposes, LPG Mix pumped through
Seller's  pipeline  from  the  Injection  Point  to  the Delivery Point shall be
measured  on  a  weekly basis every Monday at the Micromotion measurement device
installed  at the Delivery Point.  Readings by such device shall be witnessed by
the  Inspector,  Mexican  authorities,  PGPB's  customs  broker,  Buyer's
Representative  and  Seller's  representative.  A reading of the quantity of LPG
Mix  pumped  will  be  calculated  on  the basis of the differential between the
current reading and the reading taken the previous Monday converted to volume in


                                  Page 6 of 22
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                                                                    DTIR-02-0015

Gallons  corrected  at  60  F,  through  the determination of the average of the
specific gravity samples taken at the Injection Point on the immediate preceding
five (5) Days, through either a GC analysis or by the Pressure Thermo Hydrometer
Method  (ASTM  D-1657).  The  Inspector will take line samples and will test the
batch  pumped  at  the  time  of  the  reading.

     3.05     VOLUME  NOMINATION.  Buyer  shall  notify Seller in writing of the
              -------------------
Monthly  Volume at least seven (7) Days prior to the beginning of the applicable
Month  in  which  the  requested  deliveries  are  to  commence.

     3.06     SELLER'S  FAILURE  TO  DELIVER  NOMINATED  QUANTITY.  In the event
              ----------------------------------------------------
Seller  fails  to  delivery  the  quantity  of  LPG  Mix  nominated  by Buyer in
accordance  with  Article  3.05  of  this Agreement ("Seller's Shortfall"), then
Buyer shall be entitled to purchase substitute product in an amount equal to the
difference  between  the  nominated volume and actual volume delivered by Seller
("Seller's  Shortfall Volume").  Seller shall pay to Buyer as liquidated damages
an  amount  calculated  as  the difference between Buyer's purchase price of the
substituted  LPG  Mix  and  the  price  payable by Buyer under the terms of this
Agreement,  together  with  any additional costs incurred in connection with the
purchase  of  substitute  product  (including  without  limitation,  additional
transportation  and reasonable brokerage fees) (the "Seller's Shortfall Price"),
multiplied by Seller's Shortfall Volume, provided, however, that it is expressly
understood  and  agreed  between  the  parties that the Seller's Shortfall Price
shall  in  no  event  exceed  $XXXX  USD  per  Gallon.


                                   ARTICLE IV

                      PRODUCT DELIVERY; TRNASFER OF TITLE;
                         RISK OF LOSS AND CONTAMINATION.


     4.01     PRODUCT  DELIVERED  AT DELIVERY POINT.  LPG Mix shall be delivered
              -------------------------------------
DDU  at  the scale exit of the Delivery Point.  Title of LPG Mix shall pass from
Seller  to Buyer at the point in the Seller's pipeline where LPG Mix passes into
Mexico  at the U.S./Mexico border in Matamoros, Tamaulipas, Mexico.  The risk of
loss  and  contamination with respect to LPG Mix shall pass from Seller to Buyer
at  the  scale  exit  of  the  Delivery  Point.

     4.02     PRODUCT  DELIVERED  AT  THE  ALTERNATIVE  DELIVERY  POINT.  If, by
              ---------------------------------------------------------
reason  of  a programmed maintenance of an event different from Force Majeure at
the Delivery Point, Seller is not able to deliver Product at the Delivery Point,
Buyer  shall  have  the  option  of  loading Product at the Alternative Delivery
Point, in which case Buyer shall so notify to Seller.  The LPG Mix shall be then
delivered FCA at the scale exit of the Alternative Delivery Point.  Title of LPG
Mix  shall pass from Seller to Buyer as the LPG Mix passes the flange connecting
the  Seller's Alternative Delivery Point with Buyer's tank trucks.  Risk of loss
and contamination with respect to LPG Mix shall pass from Seller to Buyer at the
scale  exit  of  the  Alternative  Delivery  Point.


                                  Page 7 of 22
<PAGE>
                                                                    DTIR-02-0015

For  Product  delivered  at  the Alternative Delivery Point, Buyer shall provide
tank truck transportation services.  Seller shall discount the Service Fee by an
amount  equal  to  the  transportation  costs  incurred  by  the  Buyer,  such
transportation  costs to be determined based on the prevailing market conditions
at the time that Buyer must arrange for transportation and as mutually agreed by
the  Parties.

In  the  event  of  a Force Majeure condition at the Delivery Point, Buyer shall
also  have the option of loading Product at the Alternative Delivery Point.  The
Parties agree that in this event, Seller shall discount from the Product's price
(including  the  Service  Fee), as set forth in Article 5.01, an amount equal to
the  operational  costs of the terminal at the Delivery Point plus costs related
to  the transportation of Product through Seller's pipeline from the Alternative
Delivery  Point  to  the  Delivery  Point.  Seller  shall  inform  Buyer  of its
calculation  of  the  amounts to be discounted, such final discount amount to be
mutually  agreed  between  the  Parties.

In  the  event  Buyer  elects not to exercise its option to take delivery at the
Alternative  Delivery Point, Seller shall still be obligated to deliver to Buyer
the  volume  nominated  by  Buyer  in  accordance with Section 3.05 and shall be
liable  for  any  Seller's  Shortfall,  in  accordance  with  Section  3.06.



                                    ARTICLE V

                        PRICING; INVOICING; PAYMENT TERMS


     5.01     PRICE  OF  LPG  MIX;  SERVICE  FEES.  LPG  Mix  pricing  shall  be
              ------------------------------------
calculated  monthly, assuming ninety percent (90%) Propane and ten percent (10%)
normal  Butane  content for such mix, on the basis of the sum of (i) the average
price  of  Propane and normal Butane during the applicable Month as published by
OPIS  (Oil  Price  Information Service) for Mt. Belvieu non-TET spot posting and
(ii)  a  premium (the "Service Fee") of U.S. $XXXX per gallon of LPG Mix for the
Term.

     The  estimated  prices  (the  "Estimated  Prices")  to  be used for interim
invoicing  purposes  shall  be  determined  in  accordance  with  the  foregoing
paragraph  of  this  Section  5.01  (including the Service Fee), except that the
price  of LPG Mix shall be based on the closing posting price of the Mt. Belvieu
non-TET  for ninety percent (90%) Propane and ten percent (10%) normal Butane as
of  the  fifth  Day  prior  to  the  delivery  Month in which a posting price is
published.  At  the  end of every delivery Month, an adjustment shall be made so
as  to  reflect the differences between the Estimated Prices as invoiced and the
actual  Month-end  prices as computed in the foregoing paragraph (the "Month-End
True  Up").


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                                                                    DTIR-02-0015

     5.02     INVOICING.  Seller  shall invoice and send Buyer every Friday, the
              ---------
total  volume loaded during the immediately preceeding week, using the Estimated
Prices  (the  "Estimated  Invoices"),  as  set  forth  under  Article  5.01.

     The  Month-End True Up shall be invoiced (the "True up Invoice") at the end
of  the  applicable  delivery  Month.  This  True  Up  Invoice shall include the
difference between (i) the volume delivered from Seller to Buyer and the Monthly
Volume  of  LPG Mix in accordance with Section 3.05, and (ii) the realized price
as per Section 5.01 and the Estimated Prices. The True Up invoice must contain a
deduction  of US$XXXX per Month, representing Seller's payment of its shares of
Inspector's  fees,  as  provided  under  Article  3.04.

     All  Invoices shall comply with Buyer's treasury policies and shall be sent
in  original  to  Buyer's financial contact set forth in the notice provision of
this  Agreement.  Neither faxed nor copied invoices will be acceptable to Buyer.

     5.03     PAYMENT  TERMS.  Payments  shall  be  made  by  Buyer  in net U.S.
              --------------
Dollars  without  set-off,  deduction  or  counterclaim, and by wire transfer to
Seller's  designated  account,  as  follows.

          5.03.1     ESTIMATED  INVOICES  PAYMENT.  Payment  of  each  of  the
                     ----------------------------
Estimated  Invoices  shall be made by Buyer in net U.S. Dollars without set-off,
deduction  or counterclaim, and by wire transfer to Seller's designated account,
ten  (10)  Days  after the date on which such Estimated Invoices are received by
Buyer.  In  case  that  the  payment date falls on a Sunday or holiday, then the
payment date will be the next working date.  In case that the payment date falls
on  a  Saturday,  then  the  payment  date  will  be  the  prior  working  date.

          5.03.2     TRUE UP INVOICE PAYMENT.  Payment of any amount due, either
                     -----------------------
from  Buyer to Seller or from Seller to Buyer shall be made in U.S. Dollars with
ten  (10)  Days after receipt of the original invoice.  In case that the payment
date  falls  on  a  Sunday  or  holiday,  then the payment date will be the next
working  date.  In  case  that  the  payment  date falls on a Saturday, then the
payment  date  will  be  the  prior  working  date.

          5.03.3     OTHER  PAYMENT.  Except  as  provided  in  Articles 5.03.1,
                     --------------
5.03.2  above,  any amount due from one Party to the other shall be paid in U.S.
Dollars  within  ten  (10)  Days after receipt of the original invoice.  In case
that the payment date falls on a Sunday or holiday, the payment date will be the
next  working date.  In case that the payment date falls on a Saturday, then the
payment  date  will  be  the  prior  working  date.

          5.03.4     OFFICE  EXPENSES.  Seller  shall  provide Buyer with a list
                     -----------------
detailing certain expenses which Buyer shall be liable for and which may include
telephone,  telefax,  cleaning  and  secretarial  services,  as well as expenses
incurred  by  Buyer's  representatives  supervising  receipt  of  the  LPG  Mix
deliveries  at  the  Delivery  Point.  Buyer's Representatives must approve such
detailed list. Seller shall invoice buyer at the end of each Month U.S.$XXXX for
such  expenses, and Buyer shall pay Seller within twelve (12) days after receipt
of  the  original  invoice  at  Buyer's  offices.  If the payment Day falls on a
weekend  or  U.S.  or  Mexican  holiday,  payment shall be made on the following
Banking  Day.  Extraordinary  expenses  shall be mutually agreed by the Parties.



                                  Page 9 of 22
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                                                                    DTIR-02-0015

          5.03.5     LATE PAYMENT.  If either Party does not make timely payment
                     ------------
of  any amount due under this Agreement, then any such late payment shall accrue
interest at a rate equal to the Prime Rate announced by Citibank N.A., New York,
New  York,  U.S., pro-rated for the number of days a payment is late.  If either
Party,  for  any  reason,  disputes an amount which is invoiced or claimed to be
owed,  then  such  Party  shall promptly pay the undisputed amount to the extent
that  such  amount  is  undisputed.  Buyer and Seller shall resolve the disputed
amount, and a replacement invoice shall be issued and payment of the replacement
invoice  shall  be made in accordance with Article 5.03.  The failure of a Party
to  object to an invoice within ten (10) Days after receipt of the invoice shall
terminate the Party's right to contest the amount stated.  If a timely objection
is  raised  and not resolved within thirty (30) Days thereafter, the dispute may
then  be submitted to the American Arbitration Association through its expedited
arbitration  procedures.


                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES


     Seller  hereby  represents  and  warrants  to  Buyer  as  follows:

     6.01     ORGANIZATION  AND  QUALIFICATION.   Seller  is  a corporation duly
              --------------------------------
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  of  its  incorporation  and  has all requisite corporate power and
authority  to  own  and  operate  its  assets and properties and to carry on its
business as currently conducted.  Seller is duly qualified to do business and is
in  good  standing  as  a  foreign  corporation  in  each jurisdiction where the
ownership  or  operation  of  its  assets  and  properties  or the conduct of it
business  requires  such  qualification.

     6.02     CORPORATE  AUTHORIZATION.   Seller  has  full  corporate power and
              ------------------------
authority  to execute and deliver this Agreement, and to perform its obligations
hereunder.  The execution, delivery, and performance by Seller of this Agreement
has  been  duly and validly authorized and no additional corporate authorization
or  consent  is  required  in  connection  with  the  execution,  delivery  and
performance  by  it  of  this  Agreement.

     6.03     CONSENTS  AND  APPROVALS.   No  consent,  approval,  waiver  or
              -------------------------
authorization is required to be obtained by Seller from, and no notice or filing
is  required  to  be given by Seller or made by Seller with, any federal, state,
local  or  foreign governmental authority or other person in connection with the
execution,  delivery  and  performance  of  this  Agreement.


                                  Page 10 of 22
<PAGE>
                                                                    DTIR-02-0015

     6.04     NON-CONTRAVENTION.   The  execution,  delivery  and performance by
              -----------------
Seller  of this Agreement, and the consummation of the transactions contemplated
hereby,  do  not  and  will  not (i) violate any provision of the organizational
documents  of  Seller,  (ii)  conflict  with,  or  result  in  the breach of, or
constitute  a  default  under,  or  result  in  the termination, cancellation or
acceleration  (whether  after the filing of notice or the lapse of time or both)
of any right or obligation of Seller under, or to a loss of any benefit to which
Seller  is  entitled  under,  any contract; or (iii) or result in a breach of or
constitute  a  default  under  any law of any court or governmental authority to
which  Seller  is  subject.

     6.05     BINDING  EFFECT.   This  Agreement constitutes a valid and legally
              ----------------
binding  obligation  of Seller enforceable against Seller in accordance with the
terms  of  this  Agreement,  subject  to bankruptcy, insolvency, reorganization,
moratorium  and  similar  laws of general applicability relating to or affecting
creditors'  rights  and  to  general  equity  principles.

Buyer  hereby  represents  and  warrants  to  Seller  as  follows:

     6A.01     ORGANIZATION  AND  QUALIFICATION.   Buyer  is  a corporation duly
               --------------------------------
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  of  its  incorporation  and  has all requisite corporate power and
authority  to  own  and  operate  its  assets and properties and to carry on its
business  as currently conducted.  Buyer is duly qualified to do business and is
in  good  standing  as  a  foreign  corporation  in  each jurisdiction where the
ownership  or  operation  of  its  assets  and  properties  or the conduct of it
business  requires  such  qualification.

     6A.02     CORPORATE  AUTHORIZATION.   Buyer  has  full  corporate power and
               ------------------------
authority  to execute and deliver this Agreement, and to perform its obligations
hereunder.  The  execution,  delivery and performance by Buyer of this Agreement
has  been  duly and validly authorized and no additional corporate authorization
or  consent  is  required  in  connection  with  the  execution,  delivery  and
performance  by  it  of  this  Agreement.

     6A.03     CONSENTS  AND  APPROVALS.   No  consent,  approval,  waiver  or
               -------------------------
authorization  is required to be obtained by Buyer from, and no notice or filing
is  required  to  be  given  by Buyer or made by Buyer with, any federal, state,
local  or  foreign governmental authority or other person in connection with the
execution,  delivery  and  performance  of  this  Agreement.

     6A.04     NON-CONTRAVENTION.   The  execution,  delivery and performance by
               -----------------
Buyer  of  this Agreement, and the consummation of the transactions contemplated
hereby,  do  not  and  will  not (i) violate any provision of the organizational
documents  of  Buyer,  (ii)  conflict  with,  or  result  in  the  breach of, or
constitute  a  default  under,  or  result  in  the termination, cancellation or
acceleration  (whether  after the filing of notice or the lapse of time or both)
of  any right or obligation of Buyer under, or to a loss of any benefit to which
Buyer  is  entitled  under,  any  contract; or (iii) or result in a breach of or
constitute  a  default  under  any law of any court or governmental authority to
which  Buyer  is  subject.


                                  Page 11 of 22
<PAGE>
                                                                    DTIR-02-0015

     6A.05     BINDING  EFFECT.   This Agreement constitutes a valid and legally
               ----------------
binding  obligation  of  Buyer  enforceable against Buyer in accordance with the
terms  of  this  Agreement,  subject  to bankruptcy, insolvency, reorganization,
moratorium  and  similar  laws of general applicability relating to or affecting
creditors'  rights  and  to  general  equity  principles.



                                   ARTICLE VII

               TERMINAL-RELATED PROVISIONS; REGULARTORY COMPLIANCE


     7.01     TERMINAL  SAFETY.     Buyer  will  comply,  and will cause Buyer's
              -----------------
Representatives  entering  into  the Delivery Point (or the Alternative Delivery
Point,  if  such is the case) to comply, with all applicable terminal safety and
health  regulations.  Seller  will  execute on its name, pay for, and furnish to
Buyer  prior  to accepting any LPG Mix at the Delivery Point (or the Alternative
Delivery  Point,  if  such  is  the case), all information (including applicable
material  safety data sheets), documents, labels, placards, container, and other
materials  which  may  be  required  to  be  furnished  by  Buyer  by  statutes,
ordinances,  rules  or  regulations  of  any  public  authority  relating to the
describing,  packaging,  receiving, storing, handling, or shipping of LPG Mix at
or  from  the  Delivery Point (or the Alternative Delivery Point, if such is the
case). Seller shall provide such information at the execution of this Agreement.

     7.02     LOADING.  Seller  will  provide  loading  services at the Delivery
              -------
Point  (or the alternative Delivery Point, if such is the case) seven (7) Days a
week,  twenty-four  (24) hours per Day.  If the Parties determine that it is not
necessary  to  have  personnel  24  ours a Day based upon operational experience
developed  on site, hours of service shall be subject to availability of Buyer's
Representatives  to dispatch LPG Mix from the Delivery Point (or the Alternative
Delivery  Point,  if  such  is  the  case).

          Seller will provide Buyer, in addition to the Inspector's report, with
a  daily activity report specifying the quantity (weight and volume) and quality
of LPG Mix delivered to Buyer at the Delivery Point (or the Alternative Delivery
Point,  if  such  is  the  case).

     7.03     SPILL/ENVIRONMENTAL  POLLUTION.  If  any  Propane and/or Butane or
              ------------------------------
LPG  Mix  spill  or other environmental polluting discharge occurs in connection
with  or  relating  to  any  LPG  Mix  prior  to  delivery  of such LPG Mix, all
containment  and  clean-up  operations  (including  those  required  by  any
governmental  authority),  shall  be  at  Seller's  expense.

     If such spill or environmental polluting discharge occurs after delivery at
the  Delivery  Point  (or  the Alternative Delivery Point, is such is the case).
Buyer authorizes Seller to commence containment or clean-up operations as deemed
appropriate  or  necessary  by  Seller or as may be required by any governmental


                                  Page 12 of 22
<PAGE>
                                                                    DTIR-02-0015

authority.  Seller  will  notify  Buyer  immediately of such operations.  Seller
shall  have  the  right  to  direct  all  containment  and  clean-up operations.

     All  costs  of  containment  and  clean-up  for  any spill or environmental
pollution will be borne by the Party responsible for such spill or environmental
pollution, and such Party shall indemnify and hold harmless the other Party from
any  and  all expenses, claims, liabilities, damages, penalties, fines and other
costs (including, without limitation, attorney's fees) resulting from or related
to  such  incident.


                                  ARTICLE VIII

                             CHANGE OF CIRCUMSTANCES
                             -----------------------

     A  significant  increase in PGPB's gas plant production of Propane, Butane,
and/or  LPG  Mix  in  the Northeast region of Mexico and a prompt utilization of
such  output shall constitute a Change of Circumstance under this Agreement. The
Party  affected  by such Change of Circumstance shall have thirty (30) Days from
the  occurrence  of  the Change of Circumstance event to notify the other Party,
and  upon  such  notification,  the  Parties shall renegotiate in good faith the
affected  terms  of  this  Agreement. If, after such thirty (30) Day period, the
Parties  cannot  come to a mutually acceptable resolution, then either Party may
terminate  the Agreement with sixty (60) Days' prior written notice to the other
Party  with  no  further  liability  to  the  other  Party under this Agreement.

     In  the  event  of  the deregulation of the Mexican LPG market and Seller's
sale,  either  directly  or  indirectly through any Affiliate or, in the case of
third  parties,  through any third party that Seller knows or has reason to know
will  engage  in the sale, or Propane, Butane and/or LPG Mix for distribution in
Mexico, then Seller shall provide written notice to Buyer, specifying the amount
of  Propane,  Butane  and/or  LPG Mix that Seller is selling (either directly or
indirectly),  at  least  twelve (12) Days prior to the beginning of the delivery
Month  under  this  Agreement.  Buyer shall then have the option of reducing the
Monthly  Volume  it is required to purchase for the delivery Month by the amount
of  Propane,  Butane  and/or  LPG  Mix  that  Seller is selling, and any Buyer's
Shortfall  Computation  shall  be  reduced  by  the amount of Product so sold by
Seller,  either  directly  or  indirectly  by  Seller  in  Mexico.

     The  deregulation  of  the  Mexican LPG Market shall constitute a Change of
Circumstance  under  this Agreement. Anytime during the term hereof Seller shall
have  the  right upon the occurrence of the Change of Circumstance or thereafter
to  notify  Buyer  of  its  desire  to  renegotiate  the  affected  terms of the
Agreement.  Upon  such notification, the Parties shall renegotiate in good faith
the  affected  terms  of this Agreement. If, after thirty (30) Days, the Parties
cannot  come  to a mutually acceptable resolution, then Seller may terminate the
Agreement  with  sixty  (60)  Days'  prior  written  notice  to Buyer. Upon such
notification  and  the  passage of sixty (60) Days this Agreement will terminate
except  that  any  and  all  sums  due  to  either Party hereunder shall be paid
promptly.


                                  Page 13 of 22
<PAGE>
                                                                    DTIR-02-0015

                                   ARTICLE IX

                                  MISCELLANEOUS
                                  -------------


     9.01     NOTICES.  All notices or  other  communications hereunder shall be
              --------
deemed  to have been duly given and made if in writing and if served by personal
delivery  upon  the Party for whom it is intended, if delivered by registered or
certified  mail,  return receipt requested, or by a national courier service, or
if  sent  by  telecopier;  provided  that  the telecopy is promptly confirmed by
telephone confirmation thereof, to the person at the address set forth below, or
such  other  address  as  may  be  designated  in writing hereafter, in the same
manner,  by  such  person:

     BUYER:          P.M.I  TRADING  LIMITED
     ADDRESS:        Av.  Marina  Nacional  No.  329
                     Torre  Ejecutiva,  Piso  20
                     Col.  Huasteca
                     11311  Mexico  D.F.

     Commercial  Contact

     Name:           Rodrigo  Aranda/Adalberto  Santin
     Telephone:      (52-55)  5227-0124/0158  /  (713)  567-0124/0158
     Telex  No.:     1773671
     Fax  No.:       (52-55)  5227-0134  /  (713)  567  0134

     Operations  Contact

     Name:           Victor  Gomez/Manuel  Villarino/Ivan  Arizaga
     Telephone No.:  (52-55)  5227-0114/0142/0157
                     (713)  567-0114/0142/0157
     Telex  No.:     1773671/1773509
     Fax  No.:       (52-55)  5227-0111  /  (713)  567-0111

     Financial  Contact

     Name:           Juan  Carlos  Caballero/Francisco  Cervantes
     Telephone  No.: (52-55)  5227-0074/0077  /  (713)  567-0074/0077
     Telex  No.:     1773671-1773509
     Fax  No.:       (52-55)  5227-0072  /  (713)  567-0072

     WITH A COPY TO: Marisa  Marinelli,  Esq.
                     Holland  &  Knight  LLP


                                  Page 14 of 22
<PAGE>
                                                                    DTIR-02-0015

                     195  Broadway
                     New  York,  NY  10007
                     Fax:  (212)-385-9010

     SELLER:         PENN  OCTANE  CORPORATION
     ADDRESS         77-530  Enfield  Lane
                     Building  D
                     Palm  Desert,  CA  92211

     Commercial  Contact

     Name:           J.R.  Richter
     Telephone  No.: (760)  772-9080
     Fax  No.:       (760)  772-8588

     Name:           Jorge  R.  Bracamontes
     Telephone  No.: (52-55)  5281-7633/5281-7634
     Fax  No.:       (52-55)  5281-7650

     Name:           Vicente  Soriano
     Telephone  No.: (52-55)  5281-7635
     Fax  No.:       (52-55)  5281-7650

     Name:           Charlie  Handly
     Telephone  No.: (281)  999-2624
     Fax  No.:       (281)  999-8021

     Name:           Jerry  Lockett
     Telephone  No.: (281)  999-1123
     Fax  No.:       (281)  999-8021

     Operational  Contact

     Name:           Joe  Martinez
     Telephone  No.: (956)  831-9442
                     902  Chemical  Road
                     Port  of  Brownsville
                     Brownsville,  TX  78521

     Name:           Pedro  Prado
     Telephone  No.: (956)  793-0235
                     Carretera  La  Rosita  -  Lucio  Blanco  KM  3.4
                     La  Gloria,  Tamaulipas

     Financial  Contact


                                  Page 15 of 22
<PAGE>
                                                                    DTIR-02-0015

     Name:           Ian  Bothwell
     Telephone  No.: (562)  929-1984
     Fax  No.:       (562)  929-1921

     WITH A COPY TO: FREDRIC  N.  RICHMAN,  ESQ.
                     Richman,  Mann,  Chizever,  Phillips,  &  Duboff
                     9601  Wilshire  Boulevard
                     Beverly  Hills,  CA  90210
                     Fax  (310)  274-2631

     9.02     AMENDMENT; WAIVER,  Any provision of this Agreement may be amended
              ------------------
or waived if, and only if, such amendment or waiver is in writing and signed, in
the  case  of  an amendment, by Buyer and Seller, or in the case of a waiver, by
the  Party against whom the waiver is to be effective.  In the event of any such
attempted assignment or delegation by any Party without the consent of the other
Party, such Party shall have the right, without prejudice to any other rights or
remedies  it  may  have  hereunder  or  otherwise,  to  terminate  the Agreement
effective  immediately  upon  notice  to  the  other Party.  Notwithstanding the
foregoing,  Buyer  may  freely assign the Agreement to any affiliate thereof and
Seller  will have the right to assign this Agreement if substantially all of its
assets  are  sold or in the event of a merger with another entity in which it is
not  the  surviving  entity,  provided  that  Seller  receives the prior written
consent  from  Buyer,  which  consent  shall  not  be  unreasonably  withheld.

     No  failure  or  delay  by  any  Party  in  exercising  any right, power or
privilege  hereunder  shall  operate as a waiver thereof nor shall any single or
partial  exercise  thereof preclude any other or further exercise thereof of the
exercise  of  any other right, power or privilege.  The rights and remedies here
provided  shall  be  cumulative  and  not  exclusive  of  any rights or remedies
provided  by  law.

     9.03     ASSIGNMENT.  No  Party  to  this  Agreement  may assign any of its
              -----------
rights  or obligations under this agreement without the prior written consent of
the  other  Party  hereto.

     9.04     ENTIRE AGREEMENT.  This Agreement. (including all Exhibits hereto)
              -----------------
contains  the  entire  agreement  between the Parties hereto with respect to the
subject  matter  hereof  and supersedes all prior agreements and understandings,
oral  or  written,  with  respect  to  such  matters,  except for the Settlement
Agreement  which  will  remain  in  full force and effect for the term specified
therein.

     9.05     FULFILLMENT  OF  OBLIGATIONS.  Any  obligation of any Party to any
              -----------------------------
other  Party  under  this Agreement, which obligation is performed, satisfied or
fulfilled  by an Affiliate of such Party, shall be deemed to have been performed
satisfied  or  fulfilled  by  such  Party.

     9.06     PARTIES IN INTEREST.  This Agreement shall inure to the benefit of
              --------------------
and  be  binding  upon  the  Parties  hereto and their respective successors and
permitted  assigns.  Nothing  in this Agreement, express or implied, is intended


                                  Page 16 of 22
<PAGE>
                                                                    DTIR-02-0015

to  confer  upon  any  Person  other  than  Buyer,  Seller  or  their respective
successors  or  permitted  assigns, any rights or remedies under or by reason of
this  Agreement.

     9.07     DISCLOSURE.  Notwithstanding anything herein to the contrary, each
              -----------
of  the Parties hereby agree with the other Party or Parties hereto that, except
as  may  be  required to comply with the requirements of any applicable Laws and
the rules and regulations of any stock exchange upon which the securities of one
of  the Parties is listed, not press release or announcement or communication of
any  kind  shall  ever,  whether prior to or subsequent to the execution of this
Agreement, be made or caused to be made concerning the execution, performance or
terms  of  this Agreement unless specifically approved in advance by all Parties
hereto.

     9.08     EXPENSES.  Except  as  otherwise  expressly  provided  in  this
              --------
Agreement,  whether  or  not the transactions contemplated by this Agreement are
consummated,  all  costs and expenses incurred in connection with this Agreement
and  the  transactions contemplated hereby shall be borne by the Party incurring
such  expenses.

     9.09     GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
              --------------
IN  ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
ITS  CONFLICTS  OF  LAW  PRINCIPALS.

     9.10     ARBITRATION.  Any  and  all  disputes,  claims  or  controversies
              ------------
arising  under  or  relating  to  this Agreement shall be settled by arbitration
administered  by  the  American  Arbitration Association under its International
Arbitration  Rules.  The  place  of  the arbitration shall be New York City, New
York,  U.S.  The  Parties  agree  that the number of arbitrators shall be three.
Each  Party  shall  nominate  a  neutral and independent arbitrator, and the two
arbitrators  so  appointed  shall  appoint  the  third  neutral  and independent
arbitrator,  who  shall  act as the Chairperson.  If the arbitrators selected by
the  Parties  are  unable  or fail to agree upon the third arbitrator, the third
arbitrator shall be selected by the American Arbitration Association.  The award
shall be in writing, shall be signed by a majority of the arbitrators, and shall
include  a  statement regarding the reasons for the disposition of any claim.  A
judgment  of  the court having jurisdiction may be entered on the award.  Except
as  may  be  required by law, neither a Party nor an arbitrator may disclose the
existence,  content,  or  results of any arbitration hereunder without the prior
written  consent  of  both  Parties.

     9.11     COUNTERPARTS.  This  Agreement  may  be  executed  in  one or more
              -------------
counterparts,  each of which shall be deemed an original, and all of which shall
constitute  one  and  the  same  Agreement.

     9.12     HEADINGS.  The heading references herein and the table of contents
              ---------
hereto  are  for  convenience  purposes  only,  do not constitute a part of this
Agreement  and  shall be deemed to limit or affect any of the provisions hereof.


                                  Page 17 of 22
<PAGE>
                                                                    DTIR-02-0015

     9.13     SEVERABILITY.  The  provisions  of  this Agreement shall be deemed
              -------------
severable  and  the  invalidity  or  unenforceability of any provision shall not
affect  the  validity  or enforceability of the other provisions hereof.  If any
provision  of  this  Agreement,  or the application thereof to any Person or any
circumstance,  is  invalid  or  unenforceable,  (a)  a  suitable  and  equitable
provision shall be substituted therefore in order to carry out, so far as may be
valid  and  enforceable, the intent and purpose of such invalid or unenforceable
provision  and  (b)  the remainder of this agreement and the application of such
provision  to  other  Persons  or  circumstances  shall  not be affected by such
invalidity  or  unenforceability,  nor shall such invalidity or unenforceability
affect  the  validity  or  enforceability  of such provision, or the application
thereof,  in  any  other  jurisdiction.

     9.14     THIRD  PARTY  BENEFICIARIES.  Nothing in the Agreement is intended
              ----------------------------
or  shall be construed to confer upon or give to any Person or entity any rights
as  a  third  party  beneficiary  of  the  Agreement  or  any  part  thereof.

     9.15     TAXES.  Each  Party  shall  be  responsible  for paying any taxes,
              ------
duties,  fees  or  whichever  other similar to which they are obliged to paid in
accordance  with  the  applicable  law.

     9.16     OTHER TERMS AND CONDITIONS.  Except as would conflict or except as
              ---------------------------
otherwise provided in this Agreement, Incoterms 2000 for DDU shall apply.  In no
event  shall  the United Nations Convention for the International Sales of Goods
apply  to  this  Agreement.

     9.17     FORCE  MAJEURE.  Neither  Party  shall  be  liable  for demurrage,
              ---------------
losses,  damages,  claims  or  demands  of  any  nature arising out of delays or
defaults  in performance under the Agreement due to any unforeseeable impediment
beyond  the  reasonable  control  of  the Parties ("Force Majeure"), which shall
include,  but  not  be  limited to: acts of god or public enemy; floods or fire;
hostilities  or  war  (whether  declared  or  undeclared);  blockades;  labor
disturbances,  strikes,  riots,  insurrections  or  civil  commotion; quarantine
restrictions  or  epidemics;  electrical  shortages  or  blackouts; earthquakes;
tides,  storms  or  bad  weather;  accidents; breakdown or injury to Buyer's (or
Seller's)  facilities;  or laws decrees, regulations, orders or other directives
or  actions  of  either  general  or particular application of the government of
Mexico or the U. S. or any agency thereof or of a person or authority purporting
to  act  therefore,  or  request  of  any  such  person or authority.  Any Party
claiming  Force Majeure shall promptly notify the other of the occurrence of the
event  of  Force  Majeure relied upon and shall estimate the length of time that
the  Force  Majeure  condition  is  expected to continue.  Such Party shall also
promptly notify the other Party of the cessation of the Force Majeure condition.
Nothing in this Article shall relieve Buyer of its obligation to pay in full for
product  sold  and  effectively  delivered  and  to pay all other amounts due to
Seller  under  the  Agreement.

     The  occurrence  of  any event of Force Majeure shall not operate to extend
the  period  of  this  Agreement.  Should  be  such event curtail or suspend the
performance  of  either  Party  hereunder  for a period in excess of thirty (30)


                                  Page 18 of 22
<PAGE>
                                                                    DTIR-02-0015

Days,  either Party shall have the right to terminate this Agreement upon notice
to  the  other  Party.

     If,  as  a  result  of  Force  Majeure,  Seller  at  any time does not have
available  a  sufficient  amount of LPG Mix to be sold to Buyer, Seller shall be
obligated  to equally prorate the available amount it holds for export among its
customers,  including  Buyer,  or  shall  make  reasonable commercial efforts to
purchase  LPG  Mix  from  any  third  party  to  sell  to  Buyer.

     9.18     CONFIDENTIALITY  The  Parties  agree  to  keep  all  terms  and
              ---------------
conditions  of this Agreement private and confidential except to the extent that
disclosure  is required under any rule or regulation to which the Party shall be
subject.

     9.19     LIMITATION  OF  LIABILITY.  Neither  Party  shall  be  liable  for
              --------------------------
special,  indirect,  incidental  or  consequential  damages.


                                    ARTICLE X

                                   TERMINATION

     10.01     TERMINATION  BY  NOTICE.  Notwithstanding  any other provision of
               ------------------------
this  Agreement,  either  Party may terminate this Agreement at any time and for
any  reason whatsoever, upon ninety (90) Days' prior written notice to the other
Party,  such  notice to be delivered at any time on or after March 2, 2003, such
that  this  Agreement  shall  terminate  on  or  after  May  31,  2003.

     10.02     TERMINATION  FOR VARIOUS EVENTS.  Notwithstanding anything herein
               --------------------------------
to  the  contrary, either Party may (in addition to any other rights or remedies
provided  to  the  other  Party  under this Agreement) terminate this Agreement,
effective  immediately  upon  notice to the other Party, if any of the following
events  occurs,  and  no alternative payment arrangement has been made to secure
payment  to  the  terminating  Party:

     (a)  The  other  Party  (or  any guarantor to her other Party's obligations
          hereunder) institutes proceeding to be adjudged bankrupt or insolvent,
          seeks  or  suffers reorganization under court order, seeks the benefit
          of  any  law  for  the  relief of debtors, makes an assignment for the
          benefit of creditors, admits in writing its inability to pay its debts
          generally  when become due, or performs any other generally recognized
          act  of  insolvency  or  bankruptcy,  or  there  shall  be  declared a
          moratorium  on  the payment of the other Party's (or such guarantor's)
          debts;

     (b)  There  is  entered  any decree or order by a court adjudging the other
          Party  (or  any  guarantor  of  any  of  the other Party's obligations
          hereunder)  bankrupt  or  insolent,  approving  a  petition  for
          reorganization,  approving  a  petition seeking the benefit of any law
          for  the  relief  of  debtors,  appointing a receiver,


                                  Page 19 of 22
<PAGE>
                                                                    DTIR-02-0015

          or  decreeing  or  ordering the winding-up or liquidation of the other
          Party's  (or  such  guarantor's)  affairs;

     (c)  Any  law,  rule,  regulation  or  decree  of  any  competent authority
          restricts  the  ability of the other Party (or any guarantor of any of
          the  other  Party's  obligations hereunder) to obtain U.S. dollars for
          payments  to  be  made  under  the  Agreement  (or  any guaranty); and

     (d)  Any  material  representation  or  material warranty made by the other
          Party  (or  any  guarantor  of  any  of  the other Party's obligations
          hereunder)  hereunder  or otherwise proves to be false or incorrect in
          any  material  respect.



                      [THIS SPACE LEFT INTENTIONALLY BLANK]


                                  Page 20 of 22
<PAGE>
                                                                    DTIR-02-0015

     IN  WITNESS  WHEREOF,  the  Parties,  by  their  respective duly authorized
representatives have executed this Agreement effective as of the day first above
written.

          "SELLER"                                   "BUYER"

  PENN  OCTANE  CORPORATION                  P.M.I.  TRADING  LIMITED

BY:     /s/  J.  B.  Richter                 BY:     /s/  Rodrigo  Aranda
        --------------------                         --------------------

NAME:   J.  B.  Richter                      NAME:   Rodrigo  Aranda
        ---------------                              ---------------

TITLE:  President                            TITLE:  Signatory
        ---------                                    ---------

DATE:   4/11/02                              DATE:   April  11,  2002
        -------                                      ----------------



Schedule  of  Exhibits:
Exhibit  A   LPG  Mix  specifications


                                  Page 21 of 22
<PAGE>
                                                                    DTIR-02-0015

<TABLE>
<CAPTION>
                         Exhibit "A"
                         -----------

TEST/COMPONENT    SPECIFICATION  UNITS        METHOD
----------------  -------------  -----  -------------------
<S>               <C>            <C>    <C>

PROPANE                  90 MIN  % VOL  GC (ASTM D-2163-91)
                                        (1996)
----------------  -------------  -----  -------------------
BUTANE                   10 MAX  % VOL  GC (ASTM D-2163-91)
                                        (1996)
----------------  -------------  -----  -------------------
ETHANE                    2 MAX  % VOL  GC (ASTM D-2163-91)
                                        (1996)
----------------  -------------  -----  -------------------
BUTYLENE                  1 MAX  % VOL  GC (ASTM D-2163-91)
                                        (1996)
----------------  -------------  -----  -------------------
PROPYLENE                 2 MAX  % VOL  GC (ASTM D-2163-91)
                                        (1996)
----------------  -------------  -----  -------------------
PENTANES &                2 MAX  % VOL  GC (ASTM D-2163-91)
HEAVIES                                 (1996)
----------------  -------------  -----  -------------------
VAPOR PRESSURE          200 MAX  PSIG   ASTM D-1267-95
AT 100 F DEG.                                    (2001) OR
                                        GC (ASTM D-2163-91)
                                        (1996)
----------------  -------------  -----  -------------------
SPECIFIC GRAVITY              -      -  ASTM D-1657 (1998)
                                        OR
                                        GC (ASTM D-2163-91)
                                        (1996)
                                        ASTM D-2598-96
                                        (2001)
----------------  -------------  -----  -------------------
CORROSION                     1         ASTM D-1838-91
COPPER STRIP AT                         (2001)
100 F DEG.
----------------  -------------  -----  -------------------
OTHER             NONE
DELETERIOUS
SUBSTANCES
----------------  -------------  -----  -------------------
</TABLE>

     Notes:    GC:  Gas  chromatograph
               ASTM:  American  Society  for  Testing  and  Materials
               Propane  content:  propane  +  ethane  +  propylene
               Butane  content:  normal-butane + butylenes + pentane and heavies
               Determination of quality shall follow the latest revision of ASTM
               procedures


                                  Page 22 of 22
<PAGE>
                                                                   TRD-DP-037/02


                                    AMENDMENT


          THIS  AMENDMENT  NO. 1 TO THE AGREEMENT (the "Amendment"), dated as of
April  11,  2002,  is  by  and  between  PENN  OCTANE CORPORATION, a corporation
organized  under  the  laws  of the State of Delaware, United States of America,
having  its  principal  place  of business at 77-530 Enfield Lane, Building "D",
Palm  Desert,  California  92211, United States of America ("Seller") and P.M.I.
TRADING  LIMITED,  a corporation organized under the laws of Ireland, having its
principal  place of business at Mexico City, Mexico ("Buyer") (each of Buyer and
Seller,  "Party"  and  collectively,  the  "Parties").

     WHEREAS,  Seller  and Buyer are parties to that certain Agreement, dated as
of  March 1, 2002, with respect to the sale and delivery of LPG Mix by Seller to
Buyer,  on  the  terms  and  conditions  specified  therein  (the  "Agreement");

     WHEREAS,  the  Parties  desire  to  amend  the Agreement upon the terms and
subject  to  the  conditions  provided  herein;

     NOW,  THEREFORE, in consideration of the premises, covenants and agreements
contained  herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:

     1.     Amendment.     Seller and Buyer agree that, effective as of the date
            ---------
hereof,  the  Agreement  is  hereby  amended  as  follows:

          a.     Amendment  to  Product Quantity Inspection.  Article 3.04.2 (e)
                 -------------------------------------------
is  hereby  amended  and  restated  in  its  entirety  as  follows:

     (e)  For  customs and inventory-management purposes, LPG Mix pumped through
     Seller's  pipeline  from the Injection Point to the Delivery Point shall be
     measured  on  a daily basis at the Micromotion measurement device installed
     at  the  Delivery Point. Readings by such device shall be registered by the
     Inspector,  Mexican  authorities,  PGPB's  customs  broker,  Buyer's
     Representative  and  Seller's  representative. A reading of the quantity of
     LPG  Mix pumped will be calculated on the basis of the differential between
     the  reading  taken at 00:00 hrs. and the reading taken the previous Day at
     00:00  hrs.,  converted to volume in Gallons corrected at 60 F, through the
     determination  of the average of the specific gravity of samples taken from
     the  loaded  tanks,  through either a GC analysis or by the Pressure Thermo
     Hydrometer  Method  (ASTM  D-1657).

     Additionally, for verification and customs purposes, LPG Mix pumped through
     Seller's  pipeline  from the Injection Point to the Delivery Point shall be
     measured  on  a  weekly  basis  every Monday at the Micromotion measurement
     device  installed  at  the  Delivery Point. Readings by such device will be
     witnessed  by  the  Inspector,  Mexican authorities, PGPB's customs broker,


                                   Page 1 of 5
<PAGE>
                                                                   TRD-DP-037/02

     Buyer's  Representative  and  Seller's  representative.  A  reading  of the
     quantity  of  LPG  Mix  pumped  will  be  calculated  on  the  basis of the
     differential between the current reading and the reading taken the previous
     Monday  at  the same time converted to volume in Gallons corrected at 60 F,
     through the determination of the average of the specific gravity of samples
     taken  at  the  Injection  Point  on the immediate preceding five (5) Days,
     through  either  a  GC analysis or by the Pressure Thermo Hydrometer Method
     (ASTM D-1657). The Inspector will take line samples and will test the batch
     pumped  at  the  time  of  the  readings

          b.  Amendment to  Terminal-Related  Provision:  Regulatory Compliance.
              ------------------------------------------------------------------
Article  VII  is hereby amended by adding the following as Article 7.04 thereof:

     7.04  TERMINAL REGULATORY COMPLIANCE. Seller warrants that the terminals at
           ------------------------------
     the  Delivery  Point  and  the  Alternative  Delivery  Point, respectively,
     comply,  and  conveants that such terminals will comply at all times during
     the term of the Agreement, with all local, state and federal laws, rules or
     regulations applicable to terminals, including without limitation, all such
     laws,  rules  or  regulations concerning permits and insurance required for
     owning,  leasing,  using,  or operating a terminal at the Delivery Point or
     Alternative  Delivery  Point.

          c.  Amendment  to  Change  of  Circumstances.  Article  VIII is hereby
              ----------------------------------------
amended  and  restated  in  its  entirety  as  follows:

     A  significant  increase in PGPB's gas plant production of Propane, Butane,
     and/or  LPG  Mix in the Northeast region of Mexico and a prompt utilization
     of  such  output  shall  constitute  a  Change  of  Circumstance under this
     Agreement.  The  Party  affected  by such Change of Circumstance shall have
     thirty (30) Days from the occurrence of the Change of Circumstance event to
     notify  the  other  Party,  and  upon  such notification, the Parties shall
     renegotiate  in  good faith the affected terms of this Agreement. If, after
     such  thirty  (30)  Day  period,  the  Parties  cannot  come  to a mutually
     acceptable  resolution,  then either Party may terminate the Agreement with
     sixty  (60)  Days'  prior written notice to the other Party with no further
     liability  to  the  other  Party  under  is  Agreement.

     In  the  event  of  the deregulation of the Mexican LPG market and Seller's
     sale,  either  directly or indirectly through any Affiliate or, in the case
     of  third  parties, through any third party that Seller knows or has reason
     to  know  will  engage  in  the sale, of Propane, Butane and/or LPG Mix for
     distribution  in Mexico, then Seller shall provide written notice to Buyer,
     specifying  the  amount  of  Propane,  Butane and/or LPG Mix that Seller is
     selling (either directly or indirectly), at least twelve (12) Days prior to
     the  beginning of the delivery Month under this Agreement. Buyer shall then
     have  the  option of reducing the Monthly Volume it is required to purchase
     for  that  delivery  Month  by the amount of Propane, Butane and/or LPG Mix
     that  Seller  is  selling,  and  any Buyer's Shortfall Computation shall be
     reduced  by  the  amount  of  Product so sold by Seller, either directly or
     indirectly  by  Seller  in  Mexico.  Buyer  shall  also  have the option of


                                   Page 2 of 5
<PAGE>
                                                                   TRD-DP-037/02

     reducing  the  Monthly  Volume  it is required to purchase for any delivery
     Month by the amount of Propane, Butane and/or LPG Mix that Buyer learns, by
     and  other  means,  that  seller  is selling, either directly or indirectly
     through  any  Affiliate or, in the case of third parties, through any third
     party  that  Seller  knows or has reason to know will engage in the sale of
     Propane,  Butane and/or LPG Mix for distribution in Mexico, and any Buyer's
     Shortfall  Computation shall be reduced by the amount of Product so sold by
     Seller,  either  directly  or  indirectly,  in  Mexico.

     The  deregulation  of  the  Mexican LPG market shall constitute a Change of
     Circumstance  under  this  Agreement. Anytime during the term hereof Seller
     shall  have  the right upon the occurrence of the Change of Circumstance or
     thereafter  to  notify Buyer of its desire to renegotiate of affected terms
     of  the Agreement. Upon such notification, the Parties shall renegotiate in
     good  faith  the  affected  terms  of this Agreement. If, after thirty (30)
     Days,  the  Parties  cannot  come to a mutually acceptable resolution, then
     Seller  may  terminate  the  Agreement  with sixty (60) Days' prior written
     notice  to Buyer. Upon such notification and the passage of sixty (60) Days
     this  Agreement  will  terminate except that any and all sums due to either
     Party  hereunder  shall  be  paid  promptly.

          d.  Amendment  to  Sepcficiations.  Exhibit  "A" is hereby amended and
              -----------------------------   ------------
restated  in  its  entirety  as  follows:

<TABLE>
<CAPTION>
------------------------------------  -------------  -----  ----------------------
TEST/COMPONENT                        SPECIFICATION  UNITS  METHOD
------------------------------------  -------------  -----  ----------------------
<S>                                   <C>            <C>    <C>
PROPANE                                      90 MIN  % VOL  GC (ASTM D-2163-91)
                                                            (1996)
------------------------------------  -------------  -----  ----------------------
BUTANE                                       10 MAX  % VOL  GC (ASTM D-2163-91)
                                                            (1996)
------------------------------------  -------------  -----  ----------------------
ETHANE                                        2 MAX  % VOL  GC (ASTM D-2163-91)
                                                            (1996)
------------------------------------  -------------  -----  ----------------------
BUTYLENE                                      1 MAX  % VOL  GC (ASTM D-2163-91)
                                                            (1996)
------------------------------------  -------------  -----  ----------------------
PROPYLENE                                     2 MAX  % VOL  GC (ASTM D-2163-91)
                                                            (1996)
------------------------------------  -------------  -----  ----------------------
PENTANES &                                    2 MAX  % VOL  GC (ASTM D-2163-91)
HEAVIES                                                     (1996)
------------------------------------  -------------  -----  ----------------------
VAPOR PRESSURE AT                           200 MAX  PSIG   ASTM D-1267-95 (2001)
100 F DEG.                                                  OR
                                                            GC (ASTM D-2163-91)
                                                            (1996)
------------------------------------  -------------  -----  ----------------------
SPECIFIC GRAVITY                                  -      -  ASTM D-1657 (1998) OR
                                                            GC (ASTM D-2163-91)
                                                            (1996)
                                                            ASTM D-2598-96 (2001)
------------------------------------  -------------  -----  ----------------------
CORROSION COPPER STRIP AT 100 F DEG.              1         ASTM D-1838-91 (2001)
------------------------------------  -------------  -----  ----------------------


                                   Page 3 of 5
<PAGE>
                                                                   TRD-DP-037/02

------------------------------------  -------------  -----  ----------------------
OTHER DELETERIOUS
SUBSTANCES                            NONE
------------------------------------  -------------  -----  ----------------------
ODORIZATION                           LPG MIX SHALL      -                      -
                                      BE ODORIZED
                                      (STENCHED) AS
                                      PER OFFICIAL
                                      U.S. AND
                                      MEXICAN
                                      REGULATIONS
------------------------------------  -------------  -----  ----------------------
</TABLE>

     Notes:    GC:  Gas  chromatograph
               ASTM:  American  Society  for  Testing  and  Materials
               Propane  content:  propane  +  ethane  +  propylene
               Butane  content:  normal-butane + butylenes + pentane and heavies
               Determination of quality shall follow the latest revision of ASTM
               procedures

     2.     Miscellaneous.
            --------------

     a.     Entire  Agreement.  This Amendment embodies the entire agreement and
            ------------------
understanding between the Parties hereto and supercedes all prior agreements and
understanding  relating  to  the  subject  matter  hereof.

     b.     Status of Agreement  This Amendment shall be construed in connection
            -------------------
with,  and  as part of, the Agreement, and all other terms and conditions of the
Agreement,  as  amended,  shall  remain  in  full  force  and  effect.

     c.     Counterparts.  This  Amendment  may  be  executed  in  any number of
            -------------
counterparts,  all  of  which  taken  together shall constitute one and the same
agreement,  and  either  of  the parties hereto may enter into this Amendment by
executing  such  a  counterpart.

     d.     Governing Law.  This Amendment shall be governed by and construed in
            -------------
accordance  with  the  laws  of  the  State  of New York, without regards to its
conflicts  of  law  principals.


                      [This space intentionally left blank]


                                   Page 4 of 5
<PAGE>
                                                                   TRD-DP-037/02

     IN  WITNESS  WHEREOF,  the  parties hereto have caused this Amendment to be
duly  executed  and  delivered  as  of  the  day  and  year first above written.


     "SELLER"                                    "BUYER"

PENN  OCTANE  CORPORATION                P.M.I.  TRADING  LIMITED


By:    /s/  Jorge  Bracamontes           By:    /s/  Rodrigo  Aranda


Name:  Jorge  Bracamontes                Name:  Rodrigo  Aranda


Title: Executive  Vice-President         Title: Signatory


Date:  22-/April/-2002                   Date:  April  22,  2002


                                   Page 5 of 5
<PAGE>