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                                 EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made this _____ day of October, 1997 by and
between  Energy BioSystems Corporation, a Delaware corporation (the "Company"),
and Michael A. Pacheco ("Employee").

                           W  I  T  N  E  S  S  E  T  H  :

     WHEREAS, the Company wishes to employ Employee and Employee wishes to be
employed by the Company on the terms and subject to the conditions set forth
below;

     NOW, THEREFORE, in consideration of the foregoing recital and of the mutual
covenants herein set forth, the Company and Employee hereby agree as follows:

     1.   EMPLOYMENT.  Effective as of October ___, 1997 (the "Effective Date"),
          the Company hereby employs Employee and Employee accepts such
          employment, effective as of the Effective Date, for the compensation
          and on the terms and subject to the conditions herein set forth.

     2.   COMPENSATION.  The Company shall pay Employee an initial monthly
          salary equivalent to Employee's current monthly salary payable in
          accordance with the Company's normal pay practices, which shall be
          reviewed no less than annually and from time to time changed (but not
          to be decreased to an amount below the initial monthly salary) at the
          discretion of the Board of Directors of the Company.  Employee shall
          also be entitled to all rights and benefits for which he shall be
          eligible under group insurance and other fringe benefits which may be
          in force from time to time (including any profit-sharing, option or
          other incentive compensation plan either Company-wide or specific to
          the Employee) and provided to the Company's employees generally.

     3.   DUTIES.  Prior to the termination hereof, Employee agrees to devote
          his full time and attention to the service of the Company and, in
          furtherance thereof, to use his best efforts and to perform such
          duties as may be assigned to him from time to time by or under
          authority of the Board of Directors of the Company.  Employee agrees
          that he will not undertake any other employment, consulting services
          or business venture during the period of his employment hereunder,
          unless the Company, by action of the Board, shall consent thereto in
          writing.  The foregoing shall not be construed as preventing Employee
          from engaging in such personal and business investment activities as
          are essentially passive in nature and do not conflict with or
          adversely affect in any material respect the performance or discharge
          of Employee's duties and responsibilities hereunder.

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     4.   TERM AND TERMINATION.

     4.1  The term of this Agreement shall commence on the Effective Date and
          continue until July 18, 2000 unless earlier terminated as hereinafter
          provided.

     4.2  This Agreement shall terminate automatically on the death of Employee.

     4.3  The Company shall have the right to terminate Employee's employment
          for cause by giving notice in writing to Employee.  As used herein,
          the term "cause" shall mean (i) dishonesty; (ii) conviction of any
          crime other than misdemeanors or minor traffic violations; (iii)
          material breach of any provision of this Agreement; (iv) commission of
          any action or omission to take any action in bad faith and to the
          detriment of the Company; (v) willful refusal or failure of Employee
          to obey the lawful directions of the Board of Directors of the
          Company; or (vi) failure to adequately perform the duties and
          responsibilities assigned to Employee pursuant to  this Agreement,
          which failure shall continue for a period of thirty (30) days after
          receipt of written notice from the Board of Directors indicating with
          specificity the acts or omissions upon which the Board intends to
          terminate his employment.

     4.4  The Company shall have the right to terminate Employee's employment in
          the event of complete disability by giving notice in writing to
          Employee.  As used herein, the term "complete disability" shall mean
          the inability of Employee, due to illness or injury, to perform his
          duties hereunder for a period of 180 consecutive days.

     4.5  The foregoing notwithstanding, the Company may terminate Employee's
          employment for whatever reason it deems appropriate by one month's
          prior notice in writing.

     4.6  Employee shall have the right to terminate Employee's employment at
          any time following the occurrence of a Change in Control, as defined
          below, if Employee's duties or responsibilities are materially reduced
          in connection with or following the Change in Control from those in
          effect immediately prior to the Change in Control, except in
          connection with the termination of Employee's employment pursuant to
          Sections 4.2, 4.3, 4.4, 4.5 or 4.7.  For purposes of this Agreement, a
          "Change in Control" shall be deemed to have occurred if:

                    (i)  any individual, entity or group (within the meaning of
               Section 13(d) or 14(d)(2) of the Securities and Exchange Act of
               1934) shall become (directly or indirectly) the "beneficial
               owner" (within the meaning of Rule 13d-3 promulgated under such
               Act) of more than 50% of the combined voting power of the then
               outstanding securities of the Company entitled to vote generally
               in the election of directors ("Voting Power"); or

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                    (ii) the Company's stockholders shall approve a merger or
               consolidation, sale or disposition of all or substantially all of
               the Company's assets or a plan of liquidation or dissolution of
               the Company, other than (A) a merger or consolidation in which
               the voting securities of the Company outstanding immediately
               prior thereto will become (by operation of law), or are to be
               converted into, voting securities of the surviving corporation or
               its parent corporation that, immediately after such merger or
               consolidation, (x) are owned by the same person or entity or
               persons or entities that owned the voting securities of the
               Company immediately prior thereto and (y) possess at least 75% of
               the Voting Power held by the voting securities of the surviving
               corporation or its parent corporation, or (B) a merger or
               consolidation effected to implement a recapitalization of the
               Company (or similar transaction) in which no person acquires more
               than 50% of the Voting Power.

     4.7  The foregoing notwithstanding, Employee shall have the right to
          terminate Employee's employment for whatever reason Employee deems
          appropriate by one month's prior notice in writing.

     4.8  In the event of termination of Employee's employment pursuant to
          Sections 4.2, 4.3, 4.4 or 4.7 hereof, the Company shall pay Employee
          his salary at the then current  rate up to the date of such
          termination, and Employee shall be entitled to no further
          compensation hereunder.

     4.9  In the event of termination of Employee's employment pursuant to
          Sections 4.5 or 4.6 hereof, the Company shall pay Employee severance
          compensation for the lesser of a period of (i) six (6) months from the
          date of such termination, (ii) the remaining term of this Agreement,
          or (iii) a period ending on the date on which Employee becomes
          employed by another entity, payable as and when Employee would
          otherwise be paid his salary under Section 2 hereof.

     5.   NONDISCLOSURE; INVENTIONS; NON-COMPETITION.

     5.1  For the purposes of this Agreement the terms set forth below shall
          have the following meanings:

     5.1.1     CONFIDENTIAL INFORMATION.  That secret proprietary information of
               the Company of whatever kind or nature disclosed to Employee or
               known by Employee (whether or not invented, discovered or
               developed by Employee).  Such proprietary information shall
               include information relating to the design, manufacture and
               application of the Company's products, know-how and research and
               development relating to the Company's products, sources of supply
               and material, operating and other cost data, lists of present,
               past or prospective customers, customer proposals, and price
               lists and

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               data relating to pricing of the Company's products or
               services, any of which information is not generally known in the
               industry, and shall specifically include, without limitation, all
               information contained in manuals, memoranda, formulae, plans,
               drawings and designs, specifications, supply sources, and records
               of the Company.

     5.1.2     CONCEPTS AND IDEAS.  Those concepts and ideas known to Employee
               relating to the Company's activities and products.

     5.1.3     INVENTIONS.  Those discoveries and developments, whether or not
               patentable, relating to the Company's activities and products
               (whether made by Employee acting alone or in conjunction with
               others) made on or after the date on which Employee was first
               employed by the Company in any capacity and prior to three years
               after the termination of Employee's employment with the Company.
               The term "Invention" shall also include any other discovery or
               development made by Employee on or after the date on which
               Employee was first employed by the Company in any capacity and
               prior to the termination of this Agreement, except for any
               invention or discovery for which no equipment, supplies,
               facility, or trade secret information of the Company was used and
               which was developed entirely on the Employee's own time and (i)
               which does not relate (a) to the business of the Company, or (b)
               to the Company's actual or demonstrably anticipated research or
               development, or (ii) which does not result from any work
               performed by the Employee for the Company.  Such term shall not
               be limited to the meaning of "invention" under the United States
               patent laws.  Listed below by descriptive title for purposes of
               identification are all inventions made by Employee prior to the
               date on which Employee was first employed by the Company in any
               capacity which he considers to be his property and which are
               hereby excluded from this Agreement:

                                         NONE

     5.2  All Inventions and all Concepts and Ideas shall be the property of and
          are hereby assigned to the Company free of any reserved or other
          rights of any kind on the part of Employee in respect thereof.

     5.3  Employee will promptly make full disclosure of any such Inventions and
          Concepts and Ideas to the Company.  Further, Employee will, at the
          Company's cost and expense, promptly execute formal applications for
          patents and also do all other acts and things (including, among
          others, the execution and delivery of instruments of further assurance
          or confirmation) deemed by the Company to be necessary or desirable at
          any time or times in order to effect the full assignment to the
          Company of Employee's right and title to such Inventions and Concepts
          and Ideas, without, during the term of this Agreement, further
          compensation beyond Employee's agreed salary.  Employee further
          understands that the absence of a request by the Company

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          for information, or for the making of an oath, or for the execution
          of any document, shall in no way be construed to constitute a
          waiver of the Company's rights under this Agreement.

     5.4  Except as required by Employee's duties hereunder, Employee will not,
          directly or indirectly, use, publish, disseminate or otherwise
          disclose any Confidential Information, Concepts and Ideas or
          Inventions relating to the past, present or planned business of the
          Company without the prior written consent of the Company, unless any
          such items are,  prior to such disclosure, part of the written public
          knowledge or become part of the written public knowledge through no
          fault of Employee or are disclosed to Employee by a third party having
          the right to do so.

     5.5  All documents, procedural manuals, guides, specifications, plans,
          drawings, designs and similar materials, lists of present, past or
          prospective customers, customer proposals, invitations to submit
          proposals, price lists and data relating to pricing of the Company's
          products and services, records, notebooks and similar repositories of
          or containing Confidential Information and Inventions, including all
          copies thereof, that are or come into Employee's possession or control
          by reason of Employee's employment, whether prepared by Employee or
          others, are the property of the Company, will not be used by Employee
          in any way adverse to the Company, will not be removed from the
          Company's premises except as Employee's normal duties require and, at
          the termination of Employee's employment with the Company, will be
          left with or forthwith returned by Employee to the Company.

     5.6  During the term of Employee's employment with the Company and for a
          period of  five (5) years thereafter, Employee shall not, individually
          or on behalf of or in conjunction with any other person or entity,
          directly or indirectly, own, manage, operate, control or be employed
          by, solicit the Company's past, present or prospective employees or
          customers on behalf of, or, otherwise participate in any manner in any
          corporation, partnership, proprietorship or other business entity
          which is engaged in the development or sale of technology for the
          microbial desulfurization of hydrocarbons or in any activity or
          development of any product directly competitive with any of the
          activities engaged in or products developed by the Company at the time
          of Employee's termination; provided, however, that Employee may own
          not more than 1% of the outstanding capital stock of a company in a
          competitive business whose stock is publicly traded.

     6.   EXPENSES.  Employee shall be entitled to reimbursement for reasonable
          expenses incurred in the performance of services hereunder, provided
          that the same are accounted for in accordance with the Company's
          general requirements.

     7.   SURVIVAL; REMEDIES.  Employee's duties under sections 5.2, 5.3, 5.4,
          5.5, and 5.6 of this Agreement shall survive termination of this
          Agreement and Employee's

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          employment with the Company.  Employee acknowledges that a remedy
          at law for any breach or threatened breach by Employee of the
          provisions of this Agreement may be inadequate and Employee
          therefore agrees that the Company shall be entitled to injunctive
          relief in case of any such breach or threatened breach.

     8.   ASSIGNMENT.  This Agreement and the rights and obligations of the
          parties hereto shall bind and inure to the benefit of each of the
          parties hereto and shall also bind and inure to the benefit of any
          successor or successors of the Company by reorganization, merger or
          consolidation and any assignee of all or substantially all of its
          business and properties, but, except as to any such successor or
          assignee of the Company, neither this Agreement nor any rights or
          benefits hereunder may be assigned by the Company or by Employee.

     9.   GOVERNING LAW.  This Agreement shall be construed in accordance with
          and governed for all purposes by the laws and public policy of the
          State of Texas applicable to contracts executed and wholly performed
          within such state.

     10.  SEPARABILITY.  In case any one or more of the provisions contained in
          this Agreement shall, for any reason, be held to be invalid, illegal
          or unenforceable in any respect, such invalidity, illegality or
          unenforceability shall not affect any other provisions of this
          Agreement, but this Agreement shall be construed as if such invalid,
          illegal or unenforceable provision had never been contained herein.
          If, moreover, any one or more of the provisions contained in this
          Agreement shall for any reason be held to be excessively broad as to
          duration, geographical scope, activity or subject, it shall be
          construed by limiting and reducing it, so as to be enforceable to the
          extent compatible with the applicable law as it shall then appear.

     11.  WAIVER.  If either party should waive any breach of any provision of
          this Agreement,  he or it shall not thereby be deemed to have waived
          any preceding or succeeding breach of the same or any other provision
          of this Agreement.  No party shall be deemed to waive any rights
          hereunder unless such waiver be in writing and signed by such party.

     12.  ENTIRE AGREEMENT.  The foregoing is the entire Agreement of the
          parties with respect to the subject matter hereof and may not be
          amended, supplemented, cancelled or discharged except by written
          instrument executed by both parties hereto.

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     IN WITNESS WHEREOF, the parties have executed this Agreement on the day,
month and year first above stated.


                              ___________________________________
                              Michael A. Pacheco

                              ENERGY  BIOSYSTEMS  CORPORATION


                              By:___________________________________
                                   Ramon Lopez
                                   Chairman of the Board



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