Anhydride
Petroleum (Canada) Inc.
Box 685, 440  10816 MacLeod Trail S.
Calgary, Alberta T2J-5N8

Fax: (403)
201-8971

January 17, 2003

PNG
Ventures, Inc.Vancouver, British Columbia

Attention:
Alan Brown, President

Re:   
Athabasca Oil Prospect Letter Agreement

This
letter agreement supercedes any and all prior letter agreements.

Anhydride
Petroleum (Canada) Inc. (APC), a wholly owned subsidiary of Uranium
Power Corporation and PNG Ventures, Inc. (PNG) settled this
agreement whereby PNG may earn a working interest in a well known as the AOC
7-32-89-10 W4M together with certain petroleum and natural gas licenses located
in North East Alberta and beneath the Athabasca Tar Sands.

All
funds are stated in Canadian dollars.

PNG shall
issue to Uranium Power Corporation 750,000 restricted common shares of PNG upon
PNGs receipt of the subscription agreement duly signed by Uranium Power
Corporation in the form attached hereto as Schedule B. Such shares
to have piggyback registration rights;

I
 Interest in the 7-32 Well

|A. |  | Subject to a 9.5% gross over riding royalty payable to third parties, PNG may
earn up to a 12.5% working interest before payout reduced to a 9.375% working
interest after payout in the AOC 7-32-89-10 W4M well (the 7-32 Well)
by paying 12.5% of the costs associated with the 7-32 Well through to
abandonment or completion on the following schedule:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1) |  | $100,591.86
on December 24, 2002 (paid); and
|-- |  | --------------------------------------------

|2) |  | $82,000.00
by 11:00 a.m. on January 17, 2003.
|-- |  | ---------------------------------------------

| | Notwithstanding
this paragraph A, PNGs working interest in the 7-32 Well before and after  payout
is subject to dilution as described in paragraphs D, E and J below.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|B. |  | All
payments to APC shall be made by delivery to Mr.  George Orr by way of  bankdrafts  or
solicitor's  trust  cheques  made  payable to APC.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

1

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|C. |  | Deleted.
|-- |  | --------

|D. |  | This agreement expressly contemplates that 12.5% of the 7-32 Well costs shall
exceed $182,591. PNG will have 7 business days after its receipt of a written
notice to pay its share of the additional costs. In no event will PNG be
required to make payment before February 11, 2003.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
at January 17, 2003 it is estimated 12.5% of the 7-32 Well costs exceed the  $182,591
amount by $32,500, which is payable on or before 4:00 p.m. February 11,  2003. APC
intends to conduct further operations affecting the 7-32 Well beyond  that conducted
during the deepening operations. Prior to commencement of any and  all subsequent
operations APC shall deliver to PNG an Authority for Expenditure  (AFE)
estimating PNGs share of costs associated with the  proposed operations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the event PNG fails to pay the $32,500 or the AFE costs on the later of February  11,
2003 and 7 business days after delivery to PNG of the written AFE by APC,  PNGs
interest ownership of 7-32 Well will be proportionately diluted and  its interest in the
Property (as defined in paragraph K below) will be  additionally diluted. PNG will then
have no further rights to participate in the  7-32 Well unless it is current in paying
its 7-32 Well costs when they are due  and payable in accordance with this agreement.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|E. |  | Within forty-five days following the earlier of completion or abandonment of the
7-32 Well. a formal calculation of the actual interest earned by PNG will be
provided by APC. Any excess of costs paid by PNG at APCs election maybe
returned to PNG in cash or converted into additional working interests. See
Schedule A attached.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F. |  | APC and or Uranium Power Corporation have incurred certain third party expenses
on behalf of PNG, such as for news releases, such costs to be netted against
amounts paid in calculating PNGs pro-rata interest earned. Such costs are
agreed to not exceed $3,500.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|G. |  | APC
to be the operator of the 7-32 Well.
|-- |  | ----------------------------------------

|H. |  | PNG
shall pay its ongoing  proportionate  share of all  license and surface  rentals,  taxes
and/or any  Government  fees and  assessments related to the 7-32 Well.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|I. |  | The parties shall execute a formal 1990 CAPL Agreement (Canadian Association of
Petroleum Landmen) and a PASC 1988 Accounting Procedure Agreement not later than
45 days after the date the completion or abandonment of 7-32 Well. APC and PNG
agree to the elections described in Schedule C 1990 CAPL Agreement
Optional Choices in 1990 CAPL attached hereto and the elections described in
Schedule D 1988 PASC Accounting Schedule Optional Choices in 1988
PASC attached hereto.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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II
 Additional Lands

|J. |  | Provided the $82,000 is paid by PNG to APC on January 17, 2003, PNG shall have
the right, subject to a 9.5% gross over riding royalty payable to third parties,
to earn up to a 12.5% working interest before payout and 9.375% working interest
after payout in the Property (as defined in paragraph K below) by paying to APC
$67,500 (the Property Payment) on or before 1 p.m. Pacific January
31, 2003, such interest subject to pro-rata dilution (as calculated pursuant to
Schedule A) if PNG does not maintain a 12.5% working interest before
payout and a 9.375% working interest after payout in the 7-32 Well.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|K. |  | The
additional lands include the following:
|-- |  | -------------------------------------------

|1. |  | the
Athabasca Prospect covering 96 sections located within Township 89 and 90  Ranges 10 and
11, West of the 4th Meridian (below the Woodbend  formation) and more
particularly known as Petroleum and Natural Gas license  numbers 5401070160, 5401070162,
541070163 and 5494040101 (which includes the  7-32 Well);
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | the
Firebag  Prospect  covering 31 sections  located 85  Kilometers  North East of the
Athabasca  Prospect by  Petroleum  and  Natural Gas License Numbers 5401090094 and
5401100080 (below the Woodbend formation); and
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | an
area of mutual interest which shall include all lands within Townships 86 to  102
inclusive, ranges 5 to 13 West of the 4th Meridian in the Province of  Alberta (the AMI)
in which PNG shall have the right to participate  in the purchase of additional licenses
as to its proportionate share. If PNG  acquires any petroleum and natural gas licenses
within the AMI it will offerthe  licences to APC at PNGs cost including expenses,
(collectively, defined as  the Property).
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|L. |  | The
Property Payment described in paragraph J will be included in the 7-32 Well costs.
|-- |  | --------------------------------------------------------------------------------------

|M. |  | PNG
shall pay its ongoing  proportionate  share of all  license  and  surface  rentals,
taxes,  and any  Government  fees and  assessments on the Property.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|N. |  | APC undertakes that the six petroleum and natural gas Licenses referred to in
paragraph K are free and clear of any encumbrances and the annual government
rentals have been paid and that the Property represents all of APCs
current interests in north-eastern Alberta.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|O. |  | APC
is the operator of the Property.
|-- |  | ------------------------------------

3

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|P. |  | Notices
 Any notice or other writing required or permitted to be given
hereunder or for the purposes hereof shall be sufficiently given if delivered or
telecopied to the party to whom it is given at:
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | if
to APC:
|--- |  | ----------

| | Anhydride
Petroleum (Canada) Inc.
Box 685, 440 - 10816 MacLeod Trail S.
Calgary, Alberta T2J 5N8
Attention: Doug W. Cannaday, President
Telecopier no. (403) 201-8971
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | if
to PNG:
|--- |  | ----------

| | PNG
VenturesSuite 205  1271 Howe StreetVancouver, British Columbia  V6Z 1R3Attention:
Alan Brown, PresidentTelecopier no. (604) 687-6652
| | -----------------------------------------------------------------------------------------------------------------------------------------

This
agreement may be executed by the parties hereto in as many counterparts as may
be necessary or by telecopied facsimile and each such agreement or telecopied
facsimile so executed shall be deemed to be an original and, provided that all
of the parties have executed a counterpart, such counterparts together shall
constitute a valid and binding agreement, and notwithstanding the date of
execution shall be deemed to bear the date as set forth below.

Time
shall be of the essence of this Agreement and of every covenant, agreement, and
condition contained in this agreement.

In
Witness whereof the parties have executed this letter agreement effective the
17th day of January 2003.

Anhydride
Petroleum (Canada) Inc.

_________________________
Doug Cannaday, President

PNG
Ventures, Inc.

_________________________
Alan Brown, President

4

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Schedule
A

|A) |  | Formula
for calculating working interest before payout:
|-- |  | -------------------------------------------------------

12.5%
* (Paid 7-32 Well cost + Paid Property Payment)
(Total 7-32 Well cost + Property Payment)

|B) |  | Formula
for calculating working interest after payout:
|-- |  | ------------------------------------------------------

9.375%
* (Paid 7-32 Well cost + Paid Property Payment)
(Total 7-32 Well cost + Property Payment)

|C) |  | For
example, if PNG stops payments after January 17, 2003 and has paid $182,591,  PNG will
have 12.5% working interest before payout and a 9.375% working interest  after payout,
subject to dilution related to total 7-32 Well costs through to  the earlier of the 7-32
Wells completion or abandonment and the Property  Payment.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
an example,  if the Total 7-32 Well costs are as follows:
| | ------------------------------------------------------------

| |  |                                                  
| |  | -------------------------------------------------
| |  | Paid by PNG as of January 18, 2003               
| |  | Estimated additional costs to January 17, 2003   
| |  | Estimated complete or abandonment $400,000 @12.5%
| |  |                                                  
| |  | Estimated Total 7-32 Well costs                  

| | and
Property Payment not made then PNG would have earned a 6.862% working interest  before
payout as follows:
| | -------------------------------------------------------------------------------------------------------------

12.5% * ($182,591 + $0)
($265,091 + $67,500)

| | and
which reduces to a 5.147% working interest after payout in the 7-32 Well only.
| | ----------------------------------------------------------------------------------

| | By
making the Property Payment on January 31, 2003 PNG will have earned the right  to
participate in both the 7-32 Well and the Property.
| | -----------------------------------------------------------------------------------------------------------------------------------------

| | Thus,
should PNG make the Property Payment on January 31, 2003 and no other payments  relating
to the 7-32 Well, then its working interest before payout in both the  7-32 Well and
Property will be 9.400% which reduces after payout to7.050%.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
PNG makes the January 31, 2003 Property Payment and 12.5% of the 7-32 Well costs  to
abandonment or completion, it will have earned a 12.5% working interest  before payout
which reduces to a 9.375% working interest after payout in both  the 7-32 Well and
Property.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5

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