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                                                                   EXHIBIT 10.06

                              CONSULTANCY AGREEMENT

This Consultancy Agreement (the "Agreement") is made, this the 8th day of
January 2004 by and between:

1.       CanArgo Energy Corporation ("CanArgo") a corporation established and
         existing under the legislation of the State of Delaware, USA, and;

2.       Europa Oil Services Limited ("Europa"), a company established and
         existing under the legislation of British Virgin Islands and having its
         registered office at Palm Grove House, PO Box 438, Road Town, Tortola,
         British Virgin Islands.

WHEREAS:

A.       Europa are a consultancy company involved in the international oil and
         gas business, and;

B.       CanArgo wish to participate in the Samgori (Block XIB) Production
         Sharing Contract ("PSC") in the Republic of Georgia, and;

C.       Europa can assist CanArgo in negotiating an acceptable participation in
         the PSC, and;

D.       Europa are aware that Georgian Oil Samgori Ltd ("GOSL"), a company
         owned by Joint Stock Company National Oil Company Georgian Oil
         ("Georgian Oil") has acquired 100% of the Contractor Interest in the
         PSC through the acquisition of National Petroleum Limited ("NPL")`s
         interest in the PSC through the Assignment Agreement between NPL and
         GOSL dated December 16, 2003 (the "Assignment"), and are also aware
         that GOSL is seeking a partner in the PSC.

NOW THEREFORE IT IS HEARBY AGREED AS FOLLOWS:

1.       Europa shall assist CanArgo in negotiation with GOSL of a binding
         Farm-In Agreement (to be agreed within three months of the date of this
         Agreement) whereby CanArgo (or its nominee) shall gain the following:-

         1.1      A fifty per cent (50%) interest in the Contractor's share (as
                  defined in the PSC) in the PSC (that is 50% of GOSL's share).

         1.2      A fifty per cent (50%) controlling interest in Ioris Valley
                  Oil and Gas Ltd ("IVOG"), the operating company under the PSC,
                  and currently owned 50% by GOSL and 50% by Georgian Oil, or,
                  in the event that a new operating company has been appointed
                  pursuant to the PSC, CanArgo shall acquire a fifty per cent
                  (50%) controlling interest in such an operating company on the
                  same terms as CanArgo would have acquired its interest in
                  IVOG.

         1.3      Sole-risk rights whereby the rights of CanArgo (or its
                  nominee) under the PSC and under the Assignment shall not be
                  jeopardised in the event of GOSL not wishing to fund its share
                  of any work programme.

2.       CanArgo shall negotiate in good faith with GOSL, on the basis of the
         draft Farm-In Agreement (which Europa acknowledge sight of), to
         conclude such negotiations within three months of the date of this
         Agreement.

3.       CanArgo accepts that under the terms of the proposed Farm-In Agreement
         it (or its nominee) will have certain obligations to fund the Work
         Programme specified under the Assignment as follows:

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         3.1      To fund one hundred percent of the horizontal section of the
                  first well under the Project (as specified in the Option
                  Agreement)

         3.2      Based on the results of the first well under the Project to
                  fund fifty per cent (50%) of the horizontal section of the
                  second well determined by the Project;

         3.3      To fund fifty per cent (50%) of the remainder of the Work
                  Programme.

4.       CanArgo shall remunerate Europa according to this Article 4

         4.1      Remuneration shall be staged as follows.

         a        Upon the assignment of fifty per cent (50%) of the Contractor
                  Percentage Interest in the PSC to CanArgo (or its nominee),
                  following the receipt of consent from the State Agency and
                  from Georgian Oil to this assignment and the waiver of their
                  respective pre-emption rights under the PSC, CanArgo shall
                  issue to Europa (or its nominee) four million (4,000,000)
                  restricted shares of CanArgo common stock;

         b        In the event that production of oil from activities carried
                  out under the Work Programme exceed 300 barrels of oil per day
                  for a continuous period of thirty (30) days CanArgo shall
                  issue to Europa (or its nominee) a further four (4,000,000)
                  million restricted shares of CanArgo common stock;

         c        In the event that the average production of oil from the PSC
                  reaches a minimum of 2,000 barrels of oil per day, on the days
                  on which the field is open, during a period of six (6)
                  continuous months, CanArgo shall issue to Europa (or its
                  nominee) a further two (2,000,000) million restricted shares
                  of CanArgo common stock;

         d        In the event that the average production of oil from the PSC
                  reaches a minimum of 3,000 barrels of oil per day, on the days
                  on which the field is open, during a period of six (6)
                  continuous months, CanArgo shall issue to Europa (or its
                  nominee) a further two (2,000,000) million restricted shares
                  of CanArgo common stock, in addition to the common stock
                  previously issued pursuant to Articles 5.1(a) and 5.1(b);

         e        In the event that the average production of oil from the PSC
                  reaches a minimum of 4,000 barrels of oil per day, on the days
                  on which the field is open, during a period of six (6)
                  continuous months, CanArgo shall issue to Europa (or its
                  nominee) a further two (2,000,000) million restricted shares
                  of CanArgo common stock, in addition to the common stock
                  previously issued pursuant to Articles 5.1(a) to 5.1(c)
                  inclusive;

         f        In the event that the average production of oil from the PSC
                  reaches a minimum of 5,000 barrels of oil per day, on the days
                  on which the field is open, during a period of six (6)
                  continuous months, CanArgo shall issue to Europa (or its
                  nominee) a further two (2,000,000) million restricted shares
                  of CanArgo common stock, in addition to the common stock
                  previously issued pursuant to Articles 5.1(a) to (d)
                  inclusive.

         4.2      Europa accepts that CanArgo does not have sufficient
                  authorised share capital to issue to Europa the full
                  16,000,000 common shares which may be required under the terms
                  of this Agreement. In the event that CanArgo is not able to
                  issue the shares as specified in Article 5.1 above when such
                  shares were otherwise due to be issued, then CanArgo shall pay
                  Europa, in cash, interest at a rate of LIBOR plus 3% ("Default
                  Interest") on the monetary equivalent of such due and
                  outstanding shares of CanArgo common stock until such time as
                  all of the outstanding shares have been issued. The monetary
                  equivalent of the shares which CanArgo

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                  is obligated to, but has not yet issued to Europa shall be
                  calculated as at the days on which the shares were due to be
                  issued. Such Default Interest shall accrue on a daily basis
                  and will be paid monthly by CanArgo to Europa. As soon as
                  CanArgo has available common shares to meet the shortfall,
                  these shall be issued to Europa and the Default Interest shall
                  immediately cease.

         4.3      It is accepted that the shares of common stock which may be
                  issued as remuneration will be "restricted" under the terms of
                  the United States Securities Act of 1933, as amended (the
                  "Securities Act"), or any U. S. state securities laws and,
                  unless so registered, may not be offered or sold within the
                  United States to, or for the account or benefit of, U.S.
                  persons except pursuant to an exemption from, or in a
                  transaction not subject to, the registration requirements of
                  the Securities Act and applicable state securities laws.
                  However CanArgo undertake to register such shares in any
                  registration statement filed by CanArgo after the shares have
                  been issued.

5.       This Agreement shall be governed and construed in accordance with the
         laws of England. The parties hereto submit to the non-exclusive
         jurisdiction of the English courts as regards any claim, dispute or
         matter arising out of or relating to this Agreement and its
         implementation or effect. This Agreement hereby supersedes any and all
         other agreements, oral or written, between the Parties and constitutes
         the entire agreement among the Parties hereto in respect of the subject
         matter of this Agreement. This Agreement may only be amended by an
         agreement in writing executed by all the Parties.

6.       Except as otherwise specifically provided, all notices authorised or
         required between the Parties by any of the provisions of this
         Agreement, shall be in writing in English and delivered in person or by
         registered mail or by courier service or by any electronic means of
         transmitting written communications which provides confirmation of
         complete transmission, and addressed to such Parties as designated
         below. The addresses for service of notices on each of the parties is
         as follows:

         CEC :
         PO Box 291
         St Peter Port
         Guernsey
         GY1 3BR

         Europa Oil Services Ltd :
         Palm Grove House, PO Box 438
         Road Town, Tortola
         British Virgin Islands

IN WITNESS WHEREOF this Agreement has been duly executed on behalf of each of
the parties on the day and year first before written.

SIGNED by                                   SIGNED by
On behalf of CanArgo Energy Corporation     On behalf of Europa Oil Services Ltd

     __________________________________          _______________________________

Name __________________________________     Name _______________________________

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