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                                                                    EXHIBIT 10.1

                          REGISTRATION RIGHTS AGREEMENT

      REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of February 11,
2004 by and between CANARGO ENERGY CORPORATION, a Delaware corporation, with its
principal office located at P.O. Box 291 Suite 10 Borough House Rue du Pre St.
Peter Port Guernsey GY1 3RR Channel Islands (the "Company"), and CORNELL CAPITAL
PARTNERS, LP, a Delaware limited partnership (the "Investor").

      WHEREAS:

      A.    In connection with the Standby Equity Distribution Agreement by and
between the parties hereto of even date herewith (the "Standby Equity
Distribution Agreement"), the Company has agreed, upon the terms and subject to
the conditions of the Standby Equity Distribution Agreement, to issue and sell
to the Investor that number of shares of the Company's common stock, par value
$0.10 per share (the "Common Stock"), which can be purchased pursuant to the
terms of the Equity Line Credit Agreement for an aggregate purchase price of up
to Twenty Million Dollars ($20,000,000) . Capitalized terms not defined herein
shall have the meaning ascribed to them in the Standby Equity Distribution
Agreement.

      B.    To induce the Investor to execute and deliver the Standby Equity
Distribution Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 Act"), and applicable state securities laws.

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
hereby agree as follows:

      1.    DEFINITIONS.

      As used in this Agreement, the following terms shall have the following
meanings:

            a.    "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.

            b.    "Prospectus" means the Prospectus (including, without
limitation, any preliminary Prospectus and any final Prospectus filed pursuant
to Rule 424(b) under the 1933 Act, including any Prospectus that discloses
information previously omitted from a Prospectus filed as part of an effective
registration statement in reliance on Rule 430A under the 1933 Act) included in
the Registration Statement, as amended or supplemented by any Prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement and by all other
amendments and supplements to such Prospectus, including all material
incorporated by reference in such Prospectus and all documents filed after the
date of such Prospectus by the Company under the 1934 Act and incorporated by
reference therein.

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            c.    "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").

            d.    "Registrable Securities" means the Investor's Shares, as
defined in the Standby Equity Distribution Agreement and shares of Common Stock
issuable to Investors pursuant to the Standby Equity Distribution Agreement;
provided, however, a share of Common Stock shall cease to be a Registrable
Security for purposes of this Agreement when it no longer is a Restricted
Security.

            e.    "Registration Statement" means a registration statement under
the 1933 Act which covers the Registrable Securities providing for the
registration of, and the sale on a continuous basis or delayed basis by the
holders of, all of the Registrable Securities pursuant to Rule 415 under the
1933 Act, including the Prospectus contained therein and forming a part thereof,
any amendments to such registration statement and supplements to such
Prospectus, and all exhibits and other material incorporated by reference in
such registration statement and Prospectus.

            f.    "Restricted Security" means any share of Common Stock issued
or issuable to the Investor pursuant to the Standby Equity Distribution
Agreement, except any such share that (i) has been registered pursuant to an
effective registration statement under the 1933 Act and sold in a manner
contemplated by the Prospectus included in the Registration Statement, (ii) has
been transferred in compliance with the resale provisions of Rule 144 under the
1933 Act (or any successor provision thereto) or is transferable pursuant to
paragraph (k) of Rule 144 under 1933 Act (or any successor provision thereto),
or (iii) otherwise has been transferred and a share of Common Stock not subject
to transfer restrictions under 1933 Act has been delivered by or on behalf of
the Company.

      2.    REGISTRATION.

            a.    Mandatory Registration. The Company shall prepare and file
with the SEC a Registration Statement on Form S-1, SB-2, S-3, F-1 or on such
other form as is available. The Company shall use commercially reasonable best
efforts to cause such Registration Statement to be declared effective by the SEC
prior to the first sale to the Investor of the Company's Common Stock pursuant
to the Standby Equity Distribution Agreement.

            b.    Sufficient Number of Shares Registered. In the event the
number of shares available under a Registration Statement filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities which
the Investor has purchased pursuant to the Standby Equity Distribution
Agreement, the Company shall amend the Registration Statement, or file a new
Registration Statement (on the short form available therefore, if applicable),
or both, so as to cover all of such Registrable Securities which the Investor
has purchased pursuant to the Standby Equity Distribution Agreement as soon as
practicable, but in any event not later than fifteen (15) days after the
necessity therefore arises. The Company shall use commercially reasonable best

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efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof. For purposes of
the foregoing provision, the number of shares available under a Registration
Statement shall be deemed "insufficient to cover all of the Registrable
Securities" if at any time the number of Registrable Securities issuable on an
Advance Notice Date is greater than the number of shares available for resale
under such Registration Statement.

      3.    RELATED OBLIGATIONS.

            a.    The Company shall keep the Registration Statement effective
pursuant to Rule 415 at all times until the earlier of (i) the date on which the
Investor shall have sold all the Registrable Securities issued to the Investor
covered by such Registration Statement or (ii) the date on which the Registrable
Securities issued to the Investor may first be sold pursuant to Rule 144 (K)
under the 1933 Act (the "Registration Period"), which Registration Statement
(including any amendments or supplements thereto and Prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading. Provided that there are no outstanding Advance Notices, or
notwithstanding if the Registration Statement has been suspended or withdrawn by
the SEC, the Company may during the Registration Period suspend the use of the
Prospectus for a period not to exceed fifty (50) calendar days (whether or not
consecutive) in any twelve (12) month period if the Board of Directors of the
Company determines in good faith that because of pending mergers or other
business combination transactions, the planned acquisition or divestiture of
assets, pending material corporate developments and similar events, it is in the
best interests of the Company to suspend such use, and prior to or
contemporaneously with suspending such use, the Company provides the Investor
with prior written notice of such suspension, which notice need not specify the
nature of the event giving rise to such suspension. At the end of any such
suspension period, provided that there are no outstanding Advances, the Company
shall provide the Investor prior written notice of the termination of such
suspension.

            b.    The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the Prospectus used in connection with such
Registration Statement, which Prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the Investor thereof as set forth in such Registration Statement.
In the case of amendments and supplements to a Registration Statement which are
required to be filed pursuant to this Agreement (including pursuant to this
Section 3(b)) by reason of the Company's filing a report on Form 10-K, Form 10-Q
or Form 8-K or any analogous report under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), the Company shall have incorporated such report by
reference into the Registration Statement, if applicable, or shall file such
amendments or supplements with the SEC on the same day on which the 1934 Act
report is filed which created the requirement for the Company to amend or
supplement the Registration Statement.

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            c.    The Company shall furnish to the Investor without charge, (i)
at least one copy of such Registration Statement as declared effective by the
SEC and any amendment(s) thereto, including financial statements and schedules,
all documents incorporated therein by reference, all exhibits and each
preliminary Prospectus, (ii) ten (10) copies of the final Prospectus included in
such Registration Statement and all amendments and supplements thereto (or such
other number of copies as such Investor may reasonably request) and (iii) such
other documents as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by such
Investor.

            d.    The Company shall use its commercially reasonable best efforts
to (i) register and qualify the Registrable Securities covered by a Registration
Statement under such other securities or "blue sky" laws of such jurisdictions
in the United States as the Investor reasonably requests, (ii) prepare and file
in those jurisdictions, such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (w) make any change to its certificate of incorporation or by-laws,
(x) qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify the Investor
of the receipt by the Company of any notification with respect to the suspension
of the registration or qualification of any of the Registrable Securities for
sale under the securities or "blue sky" laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or threat of any
proceeding for such purpose.

            e.    As promptly as practicable after becoming aware of such event
or development, each of the parties hereto shall notify the other party in
writing of the happening of any event as a result of which the Prospectus
included in a Registration Statement, as then in effect, includes an untrue
statement of a material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (provided that in no
event shall such notice contain any material, nonpublic information), and the
Company agrees promptly to prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to the Investor. The Company
shall also promptly notify the Investor in writing (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to the Investor by
facsimile on the same day of such effectiveness), (ii) of any request by the SEC
for amendments or supplements to a Registration Statement or related Prospectus
or related information, and (iii) of the Company's reasonable determination that
a post-effective amendment to a Registration Statement would be appropriate.

            f.    The Company shall use its commercially reasonable efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the

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suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction within the United States of America and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

            g.    The Company shall make available for inspection by (i) the
Investor and (ii) one firm of accountants or other agents retained by the
Investor (collectively, the "Inspectors") all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably deemed necessary by each
Inspector, and cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree, and the Investor hereby agrees, to hold in
strict confidence and shall not make any disclosure (except to the Investor) or
use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
or any other agreement of which the Inspector and the Investor has knowledge;
and, provided, that, if the foregoing inspection and information gathering would
otherwise disrupt the Company's conduct of its business, such inspection and
information gathering shall, to the maximum extent possible, be coordinated on
behalf of the Investor and the other parties entitled thereto by one firm of
counsel designated by and on behalf of the Investor. The Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.

            h.    The Company shall hold in confidence and not make any
disclosure of information concerning the Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with Securities Laws,
(ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning the Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to the Investor and allow the Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

            i.    The Company shall use its commercially reasonable best efforts
either to cause all the Registrable Securities covered by a Registration
Statement (i) to be listed on each securities exchange on which securities of
the same class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of

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such exchange or to secure the inclusion for quotation on the Oslo Stock
Exchange and the National Association of Securities Dealers, Inc. OTC Bulletin
Board for such Registrable Securities. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section 3(i).

            j.    The Company shall cooperate with the Investor to the extent
applicable, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable Securities to
be offered pursuant to a Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as the Investor may
reasonably request and registered in such names as the Investor may request.

            k.    The Company shall use its commercially reasonable best efforts
to cause the Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of such
Registrable Securities.

            l.    If required, the Company shall make generally available to its
security holders as soon as practicable, but in any event no later than eighteen
(18) months after (i) the effective date (as defined in Rule 158(c) under the
1933 Act) of the Registration Statement, and (ii) the effective date of each
post-effective amendment to the Registration Statement, as the case may be, an
earnings statement of the Company and its Subsidiaries complying with Section
11(a) of the 1933 Act and the rules and regulations of the SEC thereunder
(including, at the option of the Company, Rule 158).

            m.    The Company shall otherwise use its commercially reasonable
best efforts to comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.

            n.    Within two (2) Business Days after a Registration Statement
which covers Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investor)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.

            o.    The Company shall take all other commercially reasonable
actions necessary to expedite and facilitate disposition by the Investor of
Registrable Securities pursuant to a Registration Statement.

      4.    OBLIGATIONS OF THE INVESTOR.

      a.    The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
the first sentence of 3(e), the Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until the Investor's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(e) or
receipt of notice that no supplement or amendment is required and, if so
directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the

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Prospectus covering such Registrable Securities current at the time of receipt
of such notice. Notwithstanding anything to the contrary, the Company shall
cause its transfer agent to deliver unlegended certificates for shares of Common
Stock to a transferee of the Investor in accordance with the terms of the
Standby Equity Distribution Agreement in connection with any sale of Registrable
Securities with respect to which the Investor has entered into a contract for
sale prior to the Investor's receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e) and for which the Investor has not yet settled; provided,
however, that the Investor shall indemnify and hold the Company harmless from
and against any claims or Indemnified Damages (as each such term is defined
herein) relating to or arising from such sale or delivery after receipt of any
such notice.

      b.    Provided there are no Advance Notices outstanding, notwithstanding
if the Registration Statement has been suspended or withdrawn by the SEC, it
shall be a condition precedent to the obligation of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of the Investor that such Investor shall promptly furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it
as shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. At least seven (7) business days prior to
the first (1st) anticipated filing date of the Registration Statement, the
Company shall promptly notify the Investor in writing of the information the
Company requires from the Investor (the "Requested Information") if such
Investor elects to have any of its Registrable Securities included in the
Registration Statement. If at least two (2) Business Days prior to the
anticipated filing date the Company, of which such anticipated filing date the
Investor shall have been notified in writing, has not received the Requested
Information from the Investor, the Company shall be relieved of its obligation
to file a Registration Statement including the Registrable Securities of the
Investor and shall have no further obligations to the Investor hereunder.

      c.    The Investor by its acceptance of the Registrable Securities agrees
to cooperate with the Company in connection with the preparation and filing of
the Registration Statement hereunder, unless the Investor has notified the
Company in writing of its election to exclude all of the Registrable Securities
from the Registration Statement.

      5.    EXPENSES OF REGISTRATION.

      All expenses other than underwriting discounts and commissions incurred by
the Company in connection with registrations, filings or qualifications pursuant
to Sections 2 and 3, including, without limitation, all registration, listing
and qualification fees, printers, legal and accounting fees for the Company
shall be paid by the Company.

      6.    INDEMNIFICATION.

      With respect to Registrable Securities which are included in a
Registration Statement under this Agreement:

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            a.    To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend the Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if
any, who controls the Investor within the meaning of the 1933 Act or the 1934
Act (each, an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement of
a material fact contained in any final Prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto with the SEC)
or the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading; or (iii) any violation or
alleged violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation there under relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). The Company shall
reimburse the Investor and each such controlling person promptly as such
expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not be
available to the extent such Claim is based on a breach of its obligations
hereunder or on a failure of the Investor to deliver or to cause to be delivered
the Prospectus made available by the Company, if such Prospectus was timely made
available by the Company pursuant to Section 3(e); and (z) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person.

            b.    In connection with a Registration Statement, the Investor
agrees to indemnify, hold harmless and defend, to the same extent and in the
same manner as is set forth in Section 6(a), the Company, each of the directors,
officers, employees, agents, representatives of and each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act (each an
"Indemnified Party"), against any Claim or Indemnified Damages to which

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any of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or is based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs (x) in reliance upon and in conformity with written information
furnished to the Company by the Investor expressly for use in connection with
such Registration Statement or (y) on a breach of the Investor's obligations
hereunder or on a failure of the Investor to deliver or to cause to be delivered
the Prospectus made available by the Company, if such Prospectus was timely made
available by the Company pursuant to Section 3 (e); or (z) if any claim is
settled without the prior written consent of the Company, which consent shall
not be unreasonably withheld; and, subject to Section 6(d), the Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to the Investor as a result of the sale of
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any Prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
Prospectus was corrected and such new Prospectus was delivered to the Investor
prior to the Investor's use of the Prospectus to which the Claim relates.

            c.    Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any

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action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such claim or litigation. Following indemnification as provided
for hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

            d.    The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.

            e.    The indemnity agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

      7.    CONTRIBUTION.

      To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities (after deducting any
fees, discounts and commissions applicable thereto).

      8.    REPORTS UNDER THE 1934 ACT.

      With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any similar rule or regulation of the SEC that
may at any time permit the Investors to sell Registrable Securities of the
Company to the public without registration ("Rule 144") the Company agrees to:

            a.    make and keep public information available, as those terms are
understood and defined in Rule 144, and;.

            b.    file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains

                                       10
<PAGE>

subject to such requirements (it being understood that nothing herein shall
limit the Company's obligations under Section 6.3 of the Standby Equity
Distribution Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144.

      9.    AMENDMENT OF REGISTRATION RIGHTS.

      Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only by a written agreement. Any amendment or waiver effected
in accordance with this Section 9 shall be binding upon the Investor and the
Company. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.

      10.   MISCELLANEOUS.

            a.    A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.

            b.    Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of good transmission is mechanically or electronically generated
and kept on file by the sending party) if such facsimile is sent or received by
the receiving party after 12:00 noon United States Eastern Time (5:00 pm London,
England Time) or at any time on a day which is not a Trading Day, such notice
shall be deemed received on the immediately succeeding Trading Day in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:

If to the Company, to:            CanArgo Energy Corporation
                                  P.O. Box 291
                                  Suite 10
                                  Borough House
                                  Rue du Pre
                                  St. Peter Port
                                  Guernsey GY1 3RR, Channel Islands
                                  Attention: Dr. David Robson/Vincent McDonell
                                  Telephone: + (44) 1481 729980
                                  Facsimile: + (44) 1481 729982

                                       11
<PAGE>

With a copy to:                   McGrigor Donald
                                  Pacific House
                                  70 Wellington Street
                                  Glasgow, G2 6SB United Kingdom
                                  Attention: Paul Davidson
                                  Telephone: + (44) 141 248 6677
                                  Facsimile: + (44) 141 204 1351

If to the Investor, to:           Cornell Capital Partners, LP
                                  101 Hudson Street - Suite 3606
                                  Jersey City, New Jersey 07302
                                  Attention: Mark Angelo
                                             Portfolio Manager
                                  Telephone: +1 (201) 985-8300
                                  Facsimile: +1 (201) 985-8266

With copy to:                     Butler Gonzalez LLP
                                  1416 Morris Avenue - Suite 207
                                  Union, New Jersey 07083
                                  Attention: David Gonzalez, Esq.
                                  Telephone: +1 (908) 810-8588
                                  Facsimile: +1 (908) 810-0973

Any party may change its address by providing written notice to the other
parties hereto at least five days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.

            c.    Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

            d.    The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and the Investor. All other
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
Jersey, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New Jersey or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of New Jersey. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the Superior Courts of the State of New Jersey, sitting in
Hudson County, New Jersey and the Federal District Court for the District of New
Jersey sitting in Newark, New Jersey, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or

                                       12
<PAGE>

proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

            e.    This Agreement, the Standby Equity Distribution Agreement, the
Escrow Agreement and the Placement Agent Agreement, and all documents and
instruments delivered in connection therewith constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof
and this Agreement and the rights and obligations of the parties hereunder may
not be assigned by either party hereto. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the Standby Equity Distribution Agreement, the Escrow
Agreement and the Placement Agent Agreement and all documents and instruments
delivered in connection therewith supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.

            f.    This Agreement shall inure to the benefit of and be binding
upon the successors of each of the parties hereto.

            g.    The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

            h.    This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

            i.    Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

                                       13
<PAGE>

            j.    The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.

            k.    This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       14
<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

                                    COMPANY:
                                    CANARGO ENERGY CORPORATION

                                    By: ________________________________________
                                    Name: Vincent McDonell
                                    Title: Director & Chief Financial Officer

                                    INVESTOR:
                                    CORNELL CAPITAL PARTNERS, LP

                                    By: Yorkville Advisors, LLC
                                    Its: General Partner

                                    By: ________________________________________
                                    Name: Mark Angelo
                                    Title: Portfolio Manager

                                       15
<PAGE>

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

INSERT
Attention:

            Re:   CANARGO ENERGY CORPORATION

Ladies and Gentlemen:

      We are counsel to CanArgo Energy Corporation, a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Standby Equity Distribution Agreement (the "Standby Equity Distribution
Agreement") entered into by and between the Company and Cornell Capital
Partners, LP (the "Investor") pursuant to which the Company issued to the
Investor shares of its Common Stock, par value $0.10 per share (the "Common
Stock"). Pursuant to the Standby Equity Distribution Agreement, the Company also
has entered into a Registration Rights Agreement with the Investor (the
"Registration Rights Agreement") pursuant to which the Company agreed, among
other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement) under the Securities Act of 1933, as amended (the
"1933 Act"). In connection with the Company's obligations under the Registration
Rights Agreement, on ____________ ____, the Company filed a Registration
Statement on Form ________ (File No. 333-_____________) (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") relating to
the Registrable Securities which names the Investor as a selling stockholder
thereunder.

      In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

                                        Very truly yours,

                                        _________________________________

                                        By: ____________________________________
cc: CORNELL CAPITAL PARTNERS, LP

<PAGE>

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