Exhibit 10.04

                                December 9, 2002



<<FirstName>>  <<LastName>>
<<Company>>
<<Company1>>
<<Address1>>
<<Address2>>
<<City>>,  <<State>>  <<Zip>>

     RE:  AMENDMENT  -  PROMISSORY NOTE ("NOTE") OF PENN OCTANE CORPORATION (THE
          "COMPANY")  CURRENTLY HELD BY YOU WITH A DUE DATE OF DECEMBER 15, 2002
          AND  RELATED  AGREEMENTS  AND  INSTRUMENTS

Dear Holder Of The Promissory Notes:

     Reference  is made to the promissory note(s) which is currently held by you
in  connection  with one or more of the following transactions with the Company:

     i.)    The  promissory  note(s)  originally  issued  by  the  Company  in
            connection with the private placement on or around December 17, 1999
            (the  "Original  Notes"),  as  amended  (the  "Restructured Notes"),
     ii.)   The  promissory  note(s)  originally  issued  by  the  Company
            contemporaneously  with  the  issuance  of  the  Original Notes (the
            "Original  Other  Notes"),  as  amended  (the  "Other  Restructured
            Notes"),  and/or
     iii.)  The  promissory  note(s)  originally  issued  by  the  Company
            contemporaneously  with  the restructuring of the Original Notes and
            the  Original  Other  Notes  (the  "New  Notes").
     iv.)   The  promissory note originally issued in June 2002 (the "Additional
            Note").

     The Restructured Notes, the Other Restructured Notes, the New Notes and the
     Additional  Note are collectively referred to as the "Promissory Notes" and
     all  of  the  underlying  agreements  pertaining  to  the Promissory Notes,
     including  the  purchase  agreement,  the  note agreement, the common stock
     purchase  warrant  agreement,  the  registration  rights agreement, and all
     related  amendments,  if any, are collectively referred to as the "Original
     Documents".

     The  Promissory  Notes,  including  unpaid  interest are due and payable on
December  15,  2002.  The  Company  is  not  able  to repay the Promissory Notes
without  incurring  significant  additional  costs.  Accordingly,  the  Company
desires  to  extend the payment date of the Promissory Notes in order to be able
to  pay  down  the  Promissory  Notes  from  ordinary  working  capital.


<PAGE>
Amendment To Promissory Notes
December 9, 2002
Page 2 of 4


     As  you  are  aware,  the Company has reported net income since the quarter
ended  January  31,  2002  and  expects  to  continue to achieve these favorable
results.  Since  last  year,  the  Company  has  been able to reduce its working
capital  deficit significantly.  Unfortunately, the timing and manner of certain
reductions  in  working  capital  components  forced the Company to experience a
significant strain on its cash flow including the utilization of funds which had
originally  been  designated  for paying down a portion or all of the Promissory
Notes.

     The  Company  therefore  wishes  to  extend  the  payment  due  date on the
Promissory  Notes  until  December  15,  2003, with amortization of principal in
equal monthly installments beginning March 2003, or sooner, at the option of the
Company.  In  addition,  the  Company  will  continue  to  pay  interest  on the
Promissory  Notes at a rate of 16.50% per annum, payable quarterly.  The Company
will  also  extend  the expiration date of the warrants currently held by you in
connection  with  the  original  issuance of the Promissory Notes.  Finally, the
Company  agrees  to  pay  you a fee equal to 1.5% of the principal amount of the
Promissory  Notes  which remain outstanding, if any, at the close of business on
December  15,  2002,  March  15,  2003,  June  15,  2003 and September 15, 2003.

     For  good  and valuable consideration, the receipt and sufficiency of which
are  hereby  acknowledged,  the  Company and you hereby agree that your Original
Documents  shall  be, and hereby are, amended, effective from and after December
15,  2002,  to  the  fullest  extent  necessary  to  effectuate  the  following:

     1.   Promissory  Notes. The Promissory Notes held by you are hereby amended
          -----------------
          to  the  full  extent  necessary  to  effectuate  the  following:

               (a)  Extend  the  payment  due  date  from "December 15, 2002" to
                    "December  15,  2003".
               (b)  Principal  payments  shall  be  due  in  equal  monthly
                    installments  beginning  March  15,  2003.  In addition, the
                    Company  will  use  its  bests  efforts  to  make additional
                    principal  payments  on  the Promissory Notes from available
                    working  capital, if any, in order to pay down the principal
                    due  on  the  Promissory  Notes  earlier  than the due date.
               (c)  The  Promissory  Notes  may  be repaid by the Company at any
                    time  without  penalty.
               (d)  Payment  of  interest on the Promissory Notes outstanding at
                    the  rate of 16.50% per annum on January 1, 2003 (originally
                    due  December  15,  2002),  March  15,  2003, June 15, 2003,
                    September  15,  2003  and  December  15,  2003.

     2.   Additional Payment. The Company will pay to you a fee equal to 1.5% of
          ------------------
          the  amount  of your Promissory Notes which are outstanding on each of
          the  following dates; December 15, 2002, March 15, 2003, June 15, 2003


                                        2
<PAGE>
Amendment To Promissory Notes
December 9, 2002
Page 3 of 4


          and September 15, 2003. The fee will be payable in accordance with the
          interest  payment dates described in 1(d) above. The fee is not due on
          any  principal  balance  which  is paid down during any of the interim
          periods.


     3.   Warrants.  The  Company  will  extend  the  expiration  date  on those
          --------
          warrants  which  you received in connection with the original issuance
          of the Promissory Notes and related amendments. The current expiration
          date  on  those  warrants shall be changed from "December 15, 2004" to
          "December  15,  2006".

     4.   Declining  Noteholders.  Notwithstanding  anything  to  the  contrary
          ----------------------
          contained  in  your  Original Documents, you hereby agree that, to the
          extent  that any other holders of the Promissory Notes do not agree to
          this  amendment  letter  by  December  13,  2002  (collectively,  the
          "Declining  Promissory Noteholders"), the Company shall be entitled to
          repay  such  Declining Promissory Noteholders all amounts owing by the
          Company  to  such  Declining  Promissory  Noteholders  under  their
          respective  Original  Documents without, by virtue thereof, in any way
          breaching  or  otherwise  being  in  default  of  any of your Original
          Documents.  Any  such  amounts  paid,  shall  be  excluded  from  the
          definition  of  "Financing"  provided  for in your Original Documents.

     If  you  are  in  agreement with the terms of this amendment letter, please
indicate  so  by  signing  below  and faxing an executed copy to Ian Bothwell at
(760) 772-8588 no later than the close of business on December 13, 2002.

Very truly yours,

Penn Octane Corporation



By:
    --------------------------------------------
Its:  Vice President and Chief Financial Officer





                                        3
<PAGE>
     The  undersigned holder of the Promissory Note and other Original Documents
referred  to  in this amendment letter hereby acknowledges his/her/its agreement
to  all of the provisions of this amendment letter and intention to be so bound.
The  undersigned  also  agrees to keep the contents of this amendment letter and
any documents or discussions regarding the same strictly confidential and not to
use  the  same for any purpose pending public disclosure thereof by the Company;
provided,  however, that the undersigned may consult with his, her or its agents
and  advisors  with  respect  to  the  transactions  contemplated hereby and, in
connection  therewith,  disclose the terms and contents of this amendment letter
and  any  other  documents  relating  to  the  subject matter thereof or hereof.

<<FirstName>>  <<LastName>>
<<Company>>
<<Company1>>


By:  _________________________________

Its: _________________________________

Date: ________________________________

Promissory Note Amount:  $ <<NoteAmt>>
                          ------------



Name and Telephone Number of Holder:

______________________________________

______________________________________

______________________________________


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