SUBORDINATION AGREEMENT

     This SUBORDINATION AGREEMENT (this "Agreement") is entered
into on the 28th day of January 2000 among Chaparral Resources,
Inc. ("Borrower"), Shell Capital Services Limited (the "Facility
Agent"), and Thomas G. Murphy ("Junior Entity").

                            RECITALS:

     WHEREAS, the Borrower and the Facility Agent are, INTER
ALIA, parties to the Loan Agreement (as defined herein); and

     WHEREAS, as a condition to funding under the Loan Agreement,
the Borrower, the Facility Agent and the Junior Entity must enter
into this Agreement.

                           AGREEMENT:

     NOW, THEREFORE, in consideration of the premises and the
mutual promises herein made, and in consideration of covenants
herein contained, the parties agree as follows:

1.   Definitions and Interpretation.

     (a)  "Loan Agreement" means the loan agreement dated 1
     November 1999 between Borrower, Central Asian Petroleum
     (Guernsey) Limited, Closed Type JSC Karakudukmunay and
     Central Asian Petroleum, Inc., as Co-Obligors, Shell Capital
     Limited, Shell Capital Services Limited and the Lenders (as
     defined in the Loan Agreement).

     "Preferred Obligations" means all obligations of the
     Borrower, the Co-Obligors, or any of them, to any of the
     Finance Parties whether now existing or arising in the
     future and whether fixed, prospective or contingent under or
     in respect of any of the Finance Documents whether for
     principal outstanding, interest, fees, costs, expenses,
     indemnities or otherwise.

     "Junior Obligations" means all obligations of the Junior
     Entity to the Borrower (including, without limitation, in
     respect of the CRI Bridge Notes and the CRI Existing Notes)
     whether now existing or arising in the future and whether
     fixed, prospective or contingent, whether for principal
     outstanding, interest, fees, costs, expenses, indemnities or
     otherwise.

     (b)  Capitalized terms used and not defined herein are used
     with the meaning assigned to such term in the Loan
     Agreement.

     (c)  Any reference in this Agreement to:

          (i)    a statute shall be construed as a reference to
          such statute as from time to time amended or re-
          enacted;

          (ii)   a person includes its permitted successors and
          assigns;

          (iii)  a Finance Document or any other agreement or
          document shall be construed as a reference to that
          Finance Document or, as the case may be, such other
          agreement or document, as the same may have been, or
          may from time to time be, amended, novated or
          supplemented; and

          (iv)   the singular includes the plural and vice versa.

2.   The payment of the Junior Obligations is expressly made
     subordinate and subject in right of payment and in
     liquidation to the prior payment in full of the Preferred
     Obligations.

3.   Until the date of irrevocable final repayment, in full, of
     the Preferred Obligations and termination of all commitments
     in respect thereof, the Borrower undertakes not to pay or
     repay and the Junior Entity undertakes not to claim,
     recover, retain or receive (or seek to claim, recover,
     retain or receive) any amount whatsoever in relation to any
     Junior Obligation (including, without limitation, any
     recovery, payment or repayment arising out of any claim
     under a guarantee) or to any interest or other amount
     payable by the Borrower in respect thereof, or to any other
     indebtedness of the Borrower to any Junior Entity.

4.   If:

     (i)  there is any distribution of all or any part of the
     assets of the Borrower including, without limitation, by
     reason of the liquidation, dissolution or other insolvency
     proceeding, or assignment for the benefit of creditors; or

     (ii) the Borrower goes into liquidation or becomes subject
     to any insolvency or rehabilitation proceeding,
     administration, or voluntary arrangement,

     then until the date of final irrevocable repayment in full
     of the Preferred Obligations any payment or distribution of
     any kind or character and all and any rights in respect
     thereof payable or deliverable to the Junior Entity with
     respect to the Junior Obligations or any part thereof by the
     liquidator, administrator, administrative receiver or
     receiver (or the equivalent thereof) of the Borrower will
     forthwith be paid or delivered to the Facility Agent for
     application to the Preferred Obligations in accordance with
     the terms of the Finance Documents.

5.   Following the occurrence of any Event of Default, the Junior
     Entity will irrevocably authorise and empower the Facility
     Agent to demand, sue and prove for, collect and receive
     every payment or distribution referred to in Section 4 and
     give good discharge therefor and to file claims and take
     such other proceedings, in the Facility Agent's name, the
     name of the Junior Entity or otherwise, as the Facility
     Agent may deem necessary or advisable for the enforcement of
     the payment of debts in accordance with the priority set out
     in Section 2.

6.   The Junior Entity will, at all times, following the
     occurrence of any Event of Default, and for so long as such
     Event of Default is continuing, execute or procure the
     execution of and deliver to the Facility Agent such proxies,
     powers of attorney, assignments or other instruments as may
     be requested by it in order to enable the Facility Agent to
     vote and/or enforce any and all claims upon or with respect
     to the Junior Obligations or any part thereof and to collect
     and receive any and all payments or distributions which may
     be payable or deliverable to the Facility Agent at any time
     upon or with respect to the Junior Obligations or any part
     thereof.

7.   A liquidator or other insolvency representative of the
     Borrower or the Junior Entity will be authorised, to the
     maximum extent permitted by applicable law, to apply any
     assets or moneys it receives in accordance with the order of
     priority referred to in Section 2.

8.   If any amounts are received by the Junior Entity or any
     person acting on its behalf with respect to the Junior
     Obligations or any part thereof whether in cash or in kind
     or by way of set-off, combination of accounts or otherwise,
     the Junior Entity (or person acting on its behalf as
     aforesaid) agrees that an amount equal to the amount so
     received by the relevant Junior Entity shall be held on
     trust for the Facility Agent and shall forthwith be paid to
     the Facility Agent for application to the Preferred
     Obligations in accordance with the terms of the Finance
     Documents and that any failure to make such payment shall be
     a breach of its obligations under this Agreement.

9.   (a)  Unless otherwise agreed by the Facility Agent, the
     Junior Entity will waive, and undertake that it will not
     seek to obtain payment of any Junior Obligation, in whole or
     in part, by exercising any right of set-off it may have with
     respect to any Junior Obligation, whether created by
     contract, statute or otherwise.

     (b)  Until the date of irrevocable final repayment, in full,
     of the Preferred Obligations and termination of all
     commitments in respect thereof the Facility Agent may
     (subject to the provisions of the Finance Documents), unless
     and until such moneys or distributions in the aggregate are
     sufficient to bring about the irrevocable final repayment,
     in full, of the Preferred Obligations (if applied to
     repayment of the Preferred Obligations), (i) apply any
     moneys or property received under this Agreement from the
     Borrower, the Junior Entity or any other person against the
     Preferred Obligations in such order as it thinks fit; and
     (ii) hold in a suspense account any moneys or distributions
     received under this Agreement.

10.  The Junior Entity will not be entitled without the consent
     of the Facility Agent to accelerate any Junior Obligation
     (or any portion thereof).  The Facility Agent shall have
     complete discretion as to the granting of such consent.

11.  The Junior Entity will not under any circumstances, prior to
     the irrevocable final repayment, in full, of the Preferred
     Obligations, be subrogated to any of the rights of the
     Finance Parties or any security arising under the Finance
     Documents.

12.  This Agreement and the subordination provisions contained
     herein will terminate on the date of irrevocable final
     repayment, in full, of the Preferred Obligations, and
     termination of all commitments in respect thereof.

13.  Unless otherwise agreed by the Facility Agent, the Junior
     Entity undertakes not to commence, or join with any other
     creditor or creditors of the Borrower in commencing, any
     bankruptcy, insolvency or rehabilitation proceeding,
     administration or other voluntary arrangement against or in
     respect of the Borrower prior to irrevocable final
     repayment, in full, of the Preferred Obligations.

14.  This Agreement constitutes the entire agreement between the
     parties and supersedes all prior oral or written agreements,
     understandings, representations, warranties and course of
     conduct and dealings between the parties on the subject
     matter hereof.

15.  Time is of the essence of each party's obligations under
     this Agreement but no failure to exercise, nor any delay in
     exercising, on the part of the Facility Agent, any right or
     remedy under this Agreement shall operate as a waiver
     thereof, nor shall any single or partial exercise of any
     right or remedy prevent any further or other exercise
     thereof or the exercise of any other right or remedy.  The
     rights and remedies contained in this Agreement are
     cumulative and not exclusive of any rights or remedies
     provided by law.

16.  If, at any time, any provision of this Agreement is or
     becomes illegal, invalid or unenforceable in any respect
     under the law of any jurisdiction, neither the legality,
     validity or enforceability of the remaining provisions of
     this Agreement under the law of that jurisdiction nor the
     legality, validity or enforceability of that or any other
     provision of this Agreement under the law of any other
     jurisdiction shall in any way be affected or impaired
     thereby unless the effect of the foregoing would be
     substantially to alter the rights and obligations of the
     parties originally agreed.

17.  This Agreement shall bind the parties and each of their
     respective successors and assignees.

18.  Neither the Borrower nor the Junior Entity will assign or
     otherwise transfer any of its rights or obligations under
     this Agreement.  The Facility Agent is permitted to transfer
     its rights and/or obligations under this Agreement.

19.  (a)  All notices or other communications to Borrower or the
     Facility Agent shall be given in writing addressed to the
     relevant party at its address specified in Clause 29.2 of
     the Loan Agreement.  All notices or other communications to
     the Junior Entity shall be given in writing at its address
     set forth in the signature page of this Agreement. A written
     notice includes a notice by facsimile transmission

     (b)  Any such notice shall be deemed to be given:

          (i)    if by personal delivery or letter, when delivered;
          and

          (iii)  if by facsimile, when the answerback is
          received.

     (c)  However, a notice given in accordance with the above
     but received on a non-working day or after business hours in
     the place of receipt shall only be deemed to be given on the
     next working day in that place.

20.  Each communication and document made or delivered by one
     party to another pursuant to this Agreement shall be in the
     English language or accompanied by a translation into
     English certified (by an officer of the person making or
     delivering the same) as being a true and accurate
     translation thereof.

21.  This Agreement may not be amended except by an instrument in
     writing signed by each of the parties.

22.  This Agreement shall be governed by English law.

23.  (a)  For the exclusive benefit of the Facility Agent, each
     of the Borrower and the Junior Entity irrevocably agrees
     that the courts of England are to have jurisdiction to
     settle any disputes which may arise out of or in connection
     with this Agreement and that accordingly any suit, action or
     proceedings (together in this Section 23 referred to as
     "proceedings") arising out of or in connection with this
     Agreement may be brought in such courts, subject to the
     option referred to in Section 26.

     (b)  Each of the Borrower and the Junior Entity irrevocably
     waives and agrees not to raise any objection which it may
     have now or hereafter to the laying of the venue of any
     proceedings in any such court as is referred to in this
     Section 23 and any claim that any such proceedings have been
     brought in an inconvenient or inappropriate forum and
     further irrevocably agrees that a judgement in any
     proceedings brought in the English courts shall be
     conclusive and binding upon each Borrower and the Junior
     Entity and may be enforced in the courts of any other
     jurisdiction.

     (c)  Nothing contained in this Section 23 shall limit the
     right of the Facility Agent to take proceedings against the
     Borrower or the Junior Entity in any other court of
     competent jurisdiction, nor shall the taking of proceedings
     in one or more jurisdictions preclude the taking of
     proceedings in any other jurisdiction, whether concurrently
     or not.

24.  To the extent that the Borrower or the Junior Entity may now
     or hereafter be entitled, in any jurisdiction in which
     proceedings may at any time be commenced with respect to
     this Agreement, to claim for itself or any of its
     undertaking, properties, assets or revenues present or
     future any immunity (sovereign or otherwise) from suit,
     jurisdiction of any court, attachment prior to judgement,
     attachment in aid of execution of a judgement, execution of
     a judgement or from set-off, banker's lien, counterclaim or
     any other legal process or remedy with respect to its
     obligations under this Agreement and to the extent that in
     any such jurisdiction there may be attributed to the
     Borrower or the Junior Entity any such immunity (whether or
     not claimed), each of the Borrower and the Junior Entity
     hereby to the fullest extent permitted by applicable law
     irrevocably agrees not to claim, and hereby to the fullest
     extent permitted by applicable law waives, any such
     immunity.

25.  Each of the Borrower and the Junior Entity consents
     generally in respect of any proceedings to the giving of any
     relief or the issue of any process in connection with such
     proceedings including the making, enforcement or execution
     against any property whatsoever (irrespective of its use or
     intended use) of any order or judgement which may be made or
     given in such proceedings.

26.  If any dispute arises in relation to this Agreement,
     including any questions as to existence, validity or
     termination, such dispute shall, at the option only of the
     Facility Agent, be referred to and finally resolved by
     arbitration under the rules of the London Court of
     International Arbitration which are applicable at the time
     of reference to the arbitration and are deemed to be
     incorporated by reference into this Section 26.  Such
     arbitration shall take place in London, England and shall be
     conducted by three arbitrators, one of whom shall be
     nominated by the Borrower, one by the Facility Agent and the
     third to be agreed between the two arbitrators so nominated
     and in default he shall be nominated by the President of the
     London Court of International Arbitration.  The language in
     which such arbitration shall be conducted shall be English.
     Any award rendered shall be final and binding on the parties
     thereto and may be entered into any court having
     jurisdiction or application may be made to such court for an
     order of enforcement as the case may require.  No party may
     appeal to any court from any award or decision of the
     arbitral tribunal and, in particular, but without
     limitation, no applications may be made under section 45 of
     the Arbitration Act 1996 and no appeal may be made under
     section 69 of that Act.

27.  This Agreement may be executed in one or more counterparts,
     each of which will be deemed to be an original copy of this
     Agreement and all of which, when taken together, will be
     deemed to constitute one and the same agreement.

     IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.

                              CHAPARRAL RESOURCES, INC.

                              By: /S/ MICHAEL B. YOUNG
                                 -------------------------------
                              Name: Michael B. Young
                              Title: Treasurer


                              SHELL CAPITAL SERVICES LIMITED

                              By: /S/ MARK L.G. TURNER
                                 -------------------------------
                              Name: Mark L.G. Turner
                              Title: Attorney-in-Fact


                              THOMAS G. MURPHY

                              By: /S/ THOMAS G. MURPHY
                                 -------------------------------
                              Name: Thomas G. Murphy
                              Title:


                              Address:  19108 No. 93 Way
                                        Scottsdale, AZ  85255

                              Telephone:  480-585-5311
                              Facsimile:  480-585-6086