[RZB LOGO]


     April  22,  1998



Penn  Octane  Corporation
900  Veterans  Blvd.,  #240
Redwood  City,  CA  94063

Attention:  Mr.  Jerry  Richter

Gentlemen:

     We  wish  to advise you that effective April 22, 1998 the terms of our line
letter  dated  October  14, 1997 are amended as follows: The aggregate principal
sum and face amount available under the credit facility is Seven million dollars
($7,000,000)  instead  of six million dollars ($6,000,000).  All other terms and
conditions  remain  unchanged.

This  amendment  letter  forms an integral part of the line letter dated October
14,  1997.

                                        Very  truly  yours,

                                        RZB  FINANCE  LLC

                                        By:      Pearl  Geffers
                                           --------------------

                                        By:

Accepted  and  Agreed  to  on  this
__24___  day  of  _April,  1998
 ------            -----

Penn  Octane  Corporation

By:     J.B.  Richter  -  President
        ---------------------------

By:     Ian  T.  Bothwell  -  V.P.
        --------------------------


RZB  FINANCE  LLC 1133 Avenue of the Americas, 16th Floor, New York, NY. 10036 -
-----------------
Telephone  -  (212)  845-4100,  Fax  -  (212)  944-2093,  Telex:
7500227 RZBLLCNY - A WHOLLY OWNED SUBSIDIARY OF RAIFFEISEN ZENTRALBANK STERREICH
AG  (RZB-AUSTRIA)  -
Head  Office:  A-1030  Vienna, Am Stadtpark 9, Postal address: A-1011 Vienna, PO
Box  50  -  Member  of  UNICO  Banking  Group
RZB  FINANCE  LLC 1133 Avenue of the Americas, 16th Floor, New York, NY. 10036 -
-----------------
Telephone  -  (212)  845-4100,  Fax  -  (212)  944-2093,  Telex:
7500227 RZBLLCNY - A WHOLLY OWNED SUBSIDIARY OF RAIFFEISEN ZENTRALBANK STERREICH
AG  (RZB-AUSTRIA)  -
Head  Office:  A-1030  Vienna, Am Stadtpark 9, Postal address: A-1011 Vienna, PO
Box  50  -  Member  of  UNICO  Banking  Group

<PAGE>
PROMISSORY  NOTE


PROMISSORY  NOTE  (the  "Note")  of  the  Borrower  named below delivered to RZB
                         ----
Finance  LLC  ("RZB")  dated  April  22,  1998
                ---

1.     SPECIAL  TERMS
       --------------

     The following terms and provisions shall apply to this Note; definitions of
terms  in  this  or  other sections of this Note expressed in the singular shall
include  the  plural  and  vice  versa.
                           ----  -----

     Borrower:  Penn  Octane  Corporation
     --------

     a  ___Delaware_____________  Corporation
           --------
     (jurisdiction  of  incorporation)

     Principal  Amount  of  this  Note:
     ----------------------------------

     Seven  Million  Dollars

     ($7,000,000)

     Margin:  1%  p.a.
     ------

     Loan  Documents:  Amendment to Line Letter dated April 22, 1998 between the
     ---------------
Borrower  and  RZB, Line Letter dated October 14, 1997, between the Borrower and
RZB, General Security Agreement dated October 14, 1997, between the Borrower and
RZB,  Continuing Agreement for Letters of Credit dated October 14, 1997, between
the  Borrower  and  RZB,  Guaranty  and Agreement dated October 14, 1997 between
Jerome  Richter (the "Guarantor") and RZB, and all other agreements from time to
time  executed  by the Borrower or the Guarantor for the benefit of RZB, in each
case  as  amended,  modified  or  supplemented  from  time  to  time.

     Minimum  Repayment  Amount:  $100,000
     --------------------------


2.     PRINCIPAL  AND  INTEREST
       ------------------------

     FOR  VALUE  RECEIVED,  the Borrower promises to pay to the order of RZB, ON
DEMAND,  the  Principal  Amount of this Note specified in Section 1 or, if less,
the  then-outstanding  principal  amount  of  all  loans  (each  a  "Loan"  and
                                                                     ----
collectively,  the  "Loans")  made  to  the Borrower by RZB pursuant to the Loan
                     -----
Documents.  In no event shall the maturity date of any Loan be more than 30 days
after  the  date  such  Loan  is  made.

     The  Borrower  promises also to pay interest on the unpaid principal amount
of  each  Loan  (after  as  well as before judgment) from the date thereof until
maturity  (whether  on demand, by acceleration or otherwise) at a rate per annum
equal  to the Margin specified in Section 1 plus the Base Lending Rate from time
to  time in effect, such interest to be payable on the last Business Day of each
calendar  month  and  at  such  maturity.

     Notwithstanding  the  preceding  sentence,  the  Borrower  shall  also  pay
interest  at  a rate per annum equal to 2% plus the Margin plus the Base Lending
Rate  from  time  to  time  in  effect, on any principal of the Loan and, to the
extent permitted by law, on any interest or other amount payable by the Borrower
hereunder  which  shall  not  be  paid  in  full when due (whether on demand, by
acceleration  or otherwise) from such due date until paid in full (after as well
as  before  judgment),  such  interest  to  be  payable  on  demand.

     All  interest shall be computed on the basis of the number of days actually
elapsed  in  a  360-day  year.

     Definitions
     -----------

     The term "Business Day" means any day other than a Saturday, Sunday, or any
               ------------
day  which  shall  be in New York City a legal holiday or a day on which banking
institutions  are  authorized  by  law  to  close.

     The term "Base Lending Rate" means, for any day, the higher of (i) the rate
               -----------------
announced  by  The  Chase  Manhattan  Bank (the "Bank") from time to time at its
principal  office  in  New York, New York as its prime rate for domestic (United
States)  commercial  loans in effect on such day and (ii) the Federal Funds Rate
in  effect  on  such  day plus 1/2%.  (Such Base Lending Rate is not necessarily
intended  to  be  the  lowest rate of interest charged by the Bank in connection
with  extensions  of credit.)  Each change in the Base Lending Rate shall result
in  a  corresponding  change  in  the  interest  rate  and  such change shall be
effective  on  the  effective  date  of  such  change  in the Base Lending Rate.

     The  term  "Federal  Funds  Rate" means, for any day, the overnight federal
                 --------------------
funds rate in New York City, as published for such day (or, if such day is not a
Business  Day,  for  the  next  preceding  Business  Day) in the Federal Reserve
Statistical  Release H.15 (519) or any successor publication, or if such rate is
not  so  published  for  any  day  which  is  a Business Day, the average of the
quotations for such day on overnight federal funds transactions in New York City
received  by  the  Bank  from three federal funds brokers of recognized standing
selected  by  the  Bank.

3.     ALL  PAYMENTS
       -------------

     Each  payment  by the Borrower pursuant to this Note shall be made prior to
1:00  P.M.  (New York time) on the date due and shall be made without set-off or
counterclaim to RZB at such account as RZB shall designate, or in the absence of
such  designation, to RZB at its office, presently located at 1133 Avenue of the
Americas, New York, NY 10036, or as RZB may otherwise direct and in such amounts
as may be necessary in order that all such payments (after withholding for or on
account of any present or future taxes, levies, imposts, duties or other similar
charges  of  whatsoever  nature  imposed  by  any  government  or  any political
subdivision  or  taxing  authority thereof, other than any tax on or measured by
the  net income of RZB pursuant to the income tax laws of the jurisdiction where
RZB's principal or lending office is located) shall not be less than the amounts
otherwise specified to be paid under this Note.  Each such payment shall be made
in  lawful currency of the United States of America and in immediately available
funds.  If the stated due date of any payment required hereunder is other than a
Business Day, such payment shall be made on the next succeeding Business Day and
interest  at  the  applicable  rate  shall accrue thereon during such extension.

     The  Borrower  will  have  the  right to repay all or any portion of a Loan
prior  to  demand  only  if  RZB has been notified prior to 10:00 a.m. (New York
time)  on  the  day of any repayment, provided that each partial repayment shall
not  be less than the Minimum Repayment Amount.  All repayments pursuant to this
paragraph  shall  be  accompanied  by the payment of all accrued interest on the
principal  amount  so  paid.

4.     REPRESENTATIONS  AND  WARRANTIES
       --------------------------------

     The Borrower represents and warrants that all acts, filings, conditions and
things  required  to  be  done  and  performed  and to have happened (including,
without limitation, the obtaining of necessary governmental approvals) precedent
to the issuance of this Note to constitute this Note the duly authorized, legal,
valid and binding obligation of the Borrower, enforceable in accordance with its
terms,  have been done, performed and have happened in due and strict compliance
with  all  applicable  laws.

5.     DEFAULT
       -------

     Without  limiting the right of RZB to demand payment of the Loans evidenced
hereby  at any time in its sole discretion, if any of the following events shall
occur:  default  in  payment  of  any amount due hereunder to the holder hereof,
whether on demand or otherwise; suspension or liquidation by the Borrower of its
usual  business  or  suspension  or expulsion of the Borrower from any exchange;
calling of a meeting of creditors; assignment by the Borrower for the benefit of
creditors;  dissolution,  bulk  sale  or notice thereof effected or given by the
Borrower;  creation  of  a security interest in any assets of the Borrower which
are  or  shall  be subject to liens granted to the holder hereof by the Borrower
without  consent  of  the  holder  hereof;  insolvency  of any kind, attachment,
distraint,  garnishment,  levy,  execution,  judgment,  application  for  or
appointment  of  a  receiver  or custodian, filing of a voluntary or involuntary
petition  under any provision of the U.S. Bankruptcy Code or amendments thereto,
of, by or against the Borrower or any property or rights of the Borrower; filing
of  a  petition  or institution of any proceeding by or against the Borrower for
any  relief  under any bankruptcy or insolvency laws or any laws relating to the
relief  of  debtors, readjustment of indebtedness, reorganizations, compositions
or  extensions;  any  governmental authority or any court at the instance of any
governmental  authority  shall  take  possession  of any substantial part of the
property  of the Borrower or shall assume control over the affairs or operations
of  the Borrower; any statement, representation or warranty made by the Borrower
in  any  document, agreement or financial statement delivered to RZB shall prove
to  be  false  in any material respect when made; failure of the Borrower or any
other  party  thereto  to  comply  with  any  term of any of the Loan Documents;
failure  of  the  Borrower,  on  request,  to  furnish  to  RZB  any  financial
information,  or to permit inspection by RZB of any books or records; any change
in, or discovery with regard to, the condition or affairs of the Borrower which,
in  RZB's  opinion,  increases  its  credit risk; or if RZB for any other reason
deems  itself  insecure;  then, the indebtedness evidenced by this Note, and all
accrued  interest  thereon shall become absolute, due and payable without demand
or  notice  to  the  Borrower.  Upon default in the due payment of this Note, or
whenever  the  same  or  any  installment  of principal or interest hereof shall
become due in accordance with any of the provisions hereof (whether on demand or
otherwise),  RZB  may,  but shall not be required to, exercise any or all of its
rights  and  remedies,  whether  existing  by  contract,  law or otherwise, with
respect  to  any  collateral  security  delivered in respect of the indebtedness
evidenced  hereby.

6.     MISCELLANEOUS
       -------------

     This  Note  is  delivered pursuant to, and entitled to the benefits of, the
Loan  Documents.

     The  Loans  and principal repayments thereof may be recorded on the records
of  RZB  and, prior to any transfer of, or any action to collect, this Note, the
outstanding  principal  amount  of  each  Loan  shall  be endorsed on this Note,
together with the date of such endorsement.  Any such recordation or endorsement
shall  constitute  prima  facie  evidence  of the accuracy of the information so
                   -----  -----
recorded  or  endorsed (provided, however, that the failure of RZB to record any
of  the  foregoing  shall  not  limit  or otherwise affect the obligation of the
Borrower  to  repay  all  the  Loans  (including interest thereon) and its other
obligations  hereunder  and  under the Loan Documents).  The Bank may charge any
account  of  the  Borrower  with  the  Bank for amounts payable under this Note.

     Each payment of principal of, or interest on, the Loans shall constitute an
acknowledgment  of the indebtedness of the Borrower under the Loan Documents and
this  Note.  The  Borrower:

     a.     waives  presentment, demand, protest and other notice of any kind in
connection  with  this  Note,  and

     b.     agrees  to  pay  to  the  holder  hereof,  on  demand, all costs and
expenses  (including  reasonable  legal  fees)  incurred  in connection with the
enforcement  and  collection  of  this  Note.

     THIS  NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE  STATE  OF  NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), BUT
THIS  SHALL  NOT  LIMIT  THE  RATE OF INTEREST WHICH MAY BE CHARGED BY RZB UNDER
OTHER  APPLICABLE  LAW.

     The  Borrower hereby agrees that ANY LEGAL ACTION OR PROCEEDING AGAINST THE
BORROWER  WITH RESPECT TO THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW  YORK  IN  THE  CITY  OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN  DISTRICT  OF NEW YORK as RZB may elect, and, by execution and delivery
hereof,  the  Borrower accepts and consents to, for itself and in respect to its
property,  generally  and  unconditionally,  the  jurisdiction  of the aforesaid
courts  and  agrees  that such jurisdiction shall be exclusive, unless waived by
RZB  in  writing, with respect to any action or proceeding brought by it against
RZB  and  any questions relating to usury.  Nothing herein shall limit the right
of  RZB  to  bring  proceedings  against the Borrower in the courts of any other
jurisdiction.  Service  of process out of any such courts may be made by mailing
copies thereof by registered or certified mail, postage prepaid, to the Borrower
at its address for notices as specified herein and will become effective 30 days
after  such mailing.  The Borrower agrees that Sections 5-1401 and 5-1402 of the
General  Obligations  Law of the State of New York shall apply to this Note and,
to  the  maximum extent permitted by law, waives any right to stay or to dismiss
any  action  or  proceeding brought before said courts on the basis of forum non
                                                                       ----- ---
conveniens.
-----------

     AFTER  REVIEWING  THIS  PROVISION SPECIFICALLY WITH ITS RESPECTIVE COUNSEL,
EACH  OF  THE  BORROWER  AND RZB HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES  ANY  AND  ALL  RIGHTS  IT  MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION  BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE
OR  ANY  COURSE  OF  CONDUCT,  COURSE  OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN),  OR  ACTIONS  OF  THE  BORROWER  OR RZB.  THIS PROVISION IS A MATERIAL
INDUCEMENT  FOR  RZB  MAKING  THE  LOANS  TO  THE  BORROWER.

     Nothing  contained in this Note shall be deemed to establish or require the
payment  of  a  rate  of  interest  in  excess  of the maximum rate permitted by
applicable  law (the "Maximum Rate").  If the amount of interest payable for any
                      ------------
interest  payment  period  ending  on  any  interest  payment date calculated in
accordance  with  the  provisions  of  this  Note  (said amount, the "Calculated
                                                                      ----------
Interest")  exceeds  the  amount  of  interest  that  would  be payable for such
      --
interest  payment  period  had  interest  for  such interest payment period been
      -
calculated  at  the  Maximum  Rate, there shall be paid on such interest payment
date  an amount of interest calculated on the basis of the Maximum Rate for such
interest  payment  period.  If  on any subsequent interest payment date, (i) the
Calculated  Interest  for  the interest payment period ending on such subsequent
interest payment date (the "Current Interest Period") is less than the amount of
                            -----------------------
interest that would be payable for such Current Interest Period had interest for
such  Current  Interest  Period been calculated on the basis of the Maximum Rate
and (ii) any portion of the excess (if any) of Calculated Interest for any prior
interest  payment  period  over interest calculated at the Maximum Rate for such
prior  interest  payment  period  (the  "Outstanding  Interest  Amount") remains
                                         -----------------------------
unpaid,  then  on  such subsequent interest payment date there shall be paid, as
provided  herein,  additional  interest  for  such Current Interest Period in an
amount  equal  to  the lesser of (i) the theretofore unpaid Outstanding Interest
Amounts  for  all  prior  interest  payment periods or (ii) an amount that, when
added  to  the  amount  of Calculated Interest payable for such Current Interest
Period,  results  in the payment of interest for such Current Interest Period at
the  Maximum  Rate.

     IN  WITNESS  WHEREOF,  the  undersigned  has  caused  this  Note to be duly
executed  and  delivered  by  its  duly  authorized  officer(s).



PENN  OCTANE  CORPORATION.


By____J.B.  Richter__________________
      -------------
  Name:
  Title:

Address  of  Borrower  for  Notices:

____________________________________

____________________________________

____________________________________