DESULFURIZATION TECHNOLOGY AGREEMENT

This Agreement is made by and between:

SulphCo,  Inc.,  a Nevada  corporation  with  offices at 5250 Neil  Road,  Reno,
Nevada, 89502 ("SulphCo");

And

Sinclair Oil Corporation, a Wyoming corporation,  with offices at 550 East South
Temple St., Salt Lake City, Utah 84130-2849 ("Sinclair").

Whereas:

         A.       SulphCo   represents   that  it  is  the   owner  of   certain
                  intellectual  property  rights in relation to a unique process
                  for the  removal of organic  sulfur  compounds  from fossil or
                  (petroleum-derived     fuel)    that    combines     oxidative
                  desulfurization  with the use of sonic waves ("this process is
                  hereinafter referred to as the Proprietary Technology").

         B.       Sinclair operates as an independent refiner and distributor of
                  petroleum products with refineries in Oklahoma and Wyoming.

         C.       EPA  regulations  recently  signed into effect will impose new
                  limits on sulfur levels in diesel fuel and gasoline.  Sinclair
                  wishes to introduce  and utilize  technologies  and  processes
                  that will achieve the new limits in its petroleum products.

         D.       Sinclair  and  SulphCo  have  mutually  expressed  interest in
                  forming a  business  relationship  with each  other  that will
                  allow   Sinclair  an   opportunity   to  beta  test  SulphCo's
                  Proprietary  Technology  and processes  and acquire  ownership
                  interest in SulphCo.

Therefore:

1.       Sinclair  will  undertake a due  diligence  evaluation of the Propriety
         Technology.  Such due diligence is to be completed  within 30 - 60 days
         of the  date  of  execution  of this  Agreement.  SulphCo  shall  fully
         cooperate  with and assist  Sinclair  in  performing  this  evaluation,
         including providing all necessary  documents and information  requested
         by Sinclair in a timely manner.

2.       Sinclair's due diligence evaluation of the Proprietary  Technology will
         involve a study of the practicality,  safety and the economic viability
         of its commercial implementation, including a performance review of the
         Proprietary  Technology in a laboratory  setting  either in the SulphCo
         facility  in  Reno,  Nevada  and  or  at  the  University  of  Southern
         California.

3.       At the conclusion of the evaluation  period,  Sinclair shall determine,
         in its sole  discretion,  whether  it wishes to install  and  operate a
         4,000 to 10,000 BPD industrial model of SulphCo's  desulfurization unit
         (the  "Beta  Test Unit" or the  "Unit")  and shall  give  notice of its
         determination to SulphCo.

4.       If Sinclair  determines that it will not proceed with such installation
         and  operation of the Beta Test Unit,  it will (a) promptly  return all
         proprietary  documents and other property to SulphCo;  (b) not make any
         use of  information  concerning  the  Proprietary  Technology  obtained
         during the evaluation period; and (c) not seek to acquire any ownership
         interest in SulphCo.

5.       If Sinclair  determines that it wishes to proceed with the installation
         and  operation  of the Beta Test Unit,  the parties  shall,  within two
         weeks,  negotiate  and  execute  a  mutually  agreeable  contract  (the
         "Definitive  Agreement") governing their relationship,  at a minimum to
         include the following:

         5.1.     The Beta Test Unit will be installed in an expeditious  manner
                  at a location  to be chosen by  Sinclair,  contemplated  to be
                  Tulsa, Oklahoma;
         5.2.     All Engineering  required for the  installation  and operation
                  shall be provided by SulphCo at no cost to Sinclair;
         5.3.     Sinclair  will  operate  the  Unit  in  accordance   with  the
                  operating instructions  prescribed by SulphCo for a period not
                  to exceed 90 days (the "Beta Test Period");


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         5.4.     Sinclair will allow SulphCo,  and/or the  manufacturer  of the
                  Unit,  access to the Unit with reasonable notice during normal
                  working hours (8:00 am to 4:00 pm Monday  through  Friday) for
                  the purpose of monitoring the operation of the Unit during the
                  Beta Test Period;

         5.5.     Sinclair  shall  keep and  maintain  adequate  records  of the
                  Unit's  operation,  and SulphCo  shall have access to, and the
                  right to use, such records on a reasonable basis;
         5.6.     Sinclair shall pay for all processing costs, and shall provide
                  at its own cost all  equipment  utilized  during the Beta Test
                  Period;
         5.7.     Following  the Beta  Test  Period,  Sinclair  shall  receive a
                  license,  at no  cost  to  Sinclair,  to use  the  Proprietary
                  Technology at all of its  refineries  for a period of four (4)
                  years,  and  Sinclair  shall pay a  royalty  of fifty per cent
                  (50%) of the market royalty thereafter;

         5.8.     Sinclair  will have the option to  purchase  fifteen  per cent
                  (15%) of the  outstanding  shares of SulphCo at three  dollars
                  ($3.00) per share,  to be exercised as follows:  five per cent
                  (5%) within 30 days  following the execution of the Definitive
                  Agreement,  the other ten per cent (10%) within six (6) months
                  of the execution of the  Definitive  Agreement.  Following the
                  initial exercise of this option,  Sinclair will be entitled to
                  fill one seat on the Board of Directors of SulphCo.

6.       Under no  circumstances  shall either party to this Agreement be liable
         to the  other  party  for any  consequential,  incidental  or  indirect
         damages arising from any aspect of the performance or non-  performance
         of this Agreement, whether arising in tort, contract, strict liability,
         breach of  contract,  or  otherwise,  except  for  damages  for  patent
         infringement.   The  parties   hereby  release  each  other  and  their
         affiliates,  subsidiaries, officers, employees and agents from all such
         loss or damages.

7.       SulphCo  hereby  represents  that  it  owns  and  is  entitled  to  all
         intellectual property rights associated with the Proprietary Technology
         and agrees to fully and  completely  indemnify  Sinclair  for any loss,
         damage or costs  associated  with any  contrary  intellectual  property
         claims which may be brought by third parties.

8.       The  governing law of this  Agreement  shall be the law of the state of
         Nevada and the parties hereby submit to the  jurisdiction of the courts
         of  the  state  of  Nevada,  country  of  Washoe  for  purposes  of the
         interpretation or enforcement of the terms of this Agreement.

9.       Neither this  Agreement  nor  performance  of any of its terms shall be
         subcontracted  or assigned by either  party  without the prior  written
         approval of the other.

10.      This  Agreement may not be modified  except by a writing duly signed by
         both the parties hereto.

11.      All notices  required  or  permitted  to be given under this  Agreement
         shall be sent to the other party by certified mail to the addressee and
         at the address shown below:

Dated this 3rd day of January, 2001.

For Sinclair Oil Corporation:                    For SulphCo, Inc.:


By:/s/ Peter M. Johnson                          By: /s/ Mark Cullen
-----------------------                          -------------------
Peter M. Johnson                                 Mark Cullen, President & CEO
President, Oil Division                          SulphCo, Inc.
Sinclair Oil Corporation                         5250 Neil Road
550 East South Temple                            Reno, Nevada 89502
Salt Lake City, Utah 84102


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