Exhibit 10.1



                             DATED November 9, 2005











                             (1)  OOO ZAURALNEFTEGAZ

                                       and

                          (2)  CASPIAN FINANCE LIMITED







                                 LOAN AGREEMENT










                              Covington & Burling
               Registered Foreign Lawyers and Solicitors - London
                                   265 Strand
                                London WC2R 1BH

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THIS  LOAN  AGREEMENT  is  made  on November 9, 2005.


PARTIES:

OOO  ZAURALNEFTEGAZ,  a limited liability company incorporated under the laws of
-------------------
the  Russian  Federation  under  the  main  state  registration  number  (ORGN)
1024500513950,  located  at  27  Lenin  Street,  Kurgan,  640000, Kurgan Oblast,
Russian Federation ("ZNG"); and

CASPIAN  FINANCE  LIMITED,  a  company  incorporated  in England and Wales under
-------------------------
company  number  05530897  and  whose  registered office is at Millennium Bridge
House, 2 Lambeth Hill, London EC4V 2AJ United Kingdom (the "LENDER").


WHEREAS:

(A)  All  rights  and  obligations  of  Baltic Petroleum Limited ("BP") pursuant
     to  a  loan  agreement  dated  28 April 2005 (the "INTERIM LOAN AGREEMENT")
     between  it  as lender and ZNG as borrower have been assigned to the Lender
     pursuant  to  a  deed of novation entered into among BP, ZNG and the Lender
     immediately prior to the execution of this Agreement.

(B)  In  addition  to  assuming  the  obligation  to  make  the  loan  under the
     Interim  Loan Agreement (the "INTERIM LOAN"), the Lender is willing to make
     available  to ZNG an additional loan facility upon and subject to the terms
     and conditions set out in this Agreement.

IT  IS  THEREFORE  AGREED  AS  FOLLOWS:

1.   DEFINITIONS

     For  the  purposes  of this Agreement the following definitions will apply:

     "ADVANCE"  means  any amount advanced or to be advanced by the Lender under
      the  Loan;

     "AGREEMENT"  means  this  agreement;

     "ASSUMED  COMMITMENT"  means  the  amount  of  US$1,739,658,  representing
     the  principal,  accrued  interest  and costs outstanding under the Interim
     Loan, together with pre-trading expenses of ZNG advanced to it by BP;

     "AVAILABLE  FACILITY"  means  the  Commitment  from  time  to time less the
     aggregate of each Advance then drawn down and outstanding;

     "BP  (E&P)"  means  Baltic  Petroleum  (E&P)  Limited;

     "BUDGET"  means  the  budget  for  ZNG  as  agreed  between  the parties, a
     copy of which is annexed at Annex 1;

     "COMMITMENT"  means  the  amount  of  up  to US$6,874,325, representing the
     Assumed Commitment and the New Commitment;

     "DRAWDOWN  NOTICE"  means  a  notice  complying  with  clause  5  (Drawdown
     Notices) below;

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     "EVENT  OF  DEFAULT" has the meaning given in clause 11 (Events of Default)
      below;

     "JOINT  VENTURE  AGREEMENT"  means  the  joint  venture  agreement  between
     SEG and BP (E&P) dated 14th October 2005;

     "JV  CO"  means  Zauralneftegaz  Limited;

     "LOAN"  means  the  loan  made  available to ZNG under clause 2 (The Loan);

     "NEW  COMMITMENT"  means  the  amount  of  up to US$5,134,667; "OUTSTANDING
     ADVANCES" means amounts drawn down under the Loan but not repaid;

     "SEG"  means  Siberian  Energy  Group  Inc;  and

     "WORK  PROGRAMME"  means  the  work  programme for ZNG's business as agreed
     between the parties, a copy of which is annexed at Annex 2.

2.   THE LOAN

2.1  The  Lender  hereby  agrees  to  lend to ZNG, upon and subject to the terms
     of this Agreement, a loan in principal amount equal to the Commitment.

2.2  The  Interim  Loan  shall  be  subject  to the terms of this Agreement, and
     the  Interim  Loan  Agreement shall terminate and have no further force and
     effect.

3.   TERM

     Subject  to  clause  11  (Events  of  Default), the Loan shall be available
     until  the  date  which  is  the  sixth  anniversary  of  the  date of this
     Agreement,  following  which  all Outstanding Advances shall, together with
     accrued interest and costs and expenses due hereunder, forthwith be repaid.

4.   DRAWDOWN

4.1  Subject  to  clauses  3  (Term)  and  10  (Conditions Precedent) below, the
     Lender shall make an Advance to ZNG subject to:

     (a)  a  Drawdown  Notice  in  respect  of such Advance having been received
          by the Lender;

     (b)  the amount of the Advance does not exceed the Available Facility;

     (c)  the  representations  and  warranties  referred  to  in  clause  12
          (Representations  and  Warranties)  below would be true if repeated on
          the intended Drawdown Date; and

     (d)  no Event of Default has occurred and is continuing.

4.2  Each  Advance  shall  be  paid  by  the  Lender direct to the following US$
     denominated  account  (or  to  any other account nominated by the Lender in
     writing):

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Corresponding  bank:      XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Beneficiary  bank:        XXXXXXXXXXXXXXXXXXXXXXXXXX
                          XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                          XXXXXXXXXXXXXXXXXXXXXXX

Payee:                    XXXXXXXXXXXXXXXXXXXXXXXXXXX

Account  name:            OOO  "Zauralneftegaz"

Account  number:          XXXXXXXXXXXXXXXXXXXXXXX

4.3  ZNG  shall  be  responsible  for  satisfying  all  requirements  of Russian
     Federation  law and regulation in respect of the Loan, each Advance and any
     matter  contemplated  by  this Agreement and shall indemnify the Lender for
     any  loss or damage (including legal fees) it may suffer as a result of the
     Loan,  any  Advance or this Agreement being in contravention of such law or
     regulation.  ZNG  shall  provide  to  the  Lender  such  information  or
     documentation  that  it  may  from  time  to  time  request  in  writing to
     demonstrate  that all requirements of Russian Federation law and regulation
     in  respect  of the Loan, each Advance and any other matter contemplated by
     this  Agreement  have been satisfied and that ZNG is in compliance with its
     obligations under this Agreement.

4.4  ZNG  shall  procure  that  in  respect of each Advance a sum of 2% (or such
     other  amount  as may from time to time be stipulated by applicable Russian
     banking and currency control regulations) in respect thereof is placed in a
     special  deposit  account  to  satisfy Russian banking and currency control
     regulations  (the "RETENTION REQUIREMENT"). Such amounts shall be repaid to
     the  Lender  immediately  upon  release  to  ZNG  from such special deposit
     account.

4.5  An  Advance  equal  to  the  Assumed  Commitment shall be treated as having
     been drawn down as at the date hereof.

5.   DRAWDOWN  NOTICES

5.1  Each  Drawdown  Notice  must  be  in the form set out in Schedule 1 to this
     Agreement  or  in  such  other  form as may be acceptable to the Lender and
     shall  relate to only one of the purposes set forth in clause 8.1 for which
     the  Advance  will  be utilized. The Drawdown Notice shall specify the date
     upon  which such Advance is to be made (the "DRAWDOWN DATE") and the amount
     of the Advance.

5.2  Unless  otherwise  agreed  by  the  Lender,  a  Drawdown  Notice  must  be
     received by the Lender not less than 10 days prior to the proposed Drawdown
     Date.

6.   INTEREST  AND  DEFAULT  INTEREST

6.1  Interest will be charged on the Outstanding Advances at the following
     rates:

     (a)  during the first two years of the term, 14% per annum;

     (b)  during the third year of the term, 13% per annum; and

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     (c)  thereafter, 12% per annum.

6.2  Interest  will  be  calculated  and  accrue on a daily basis (calculated on
     a  year  of  365  days  and  the actual number of days elapsed) and will be
     payable as follows:

     (a)  until  the  earlier  of  (i)  the date on which ZNG's monthly turnover
          as  shown  by  its  monthly management accounts exceeds US$100,000 and
          (ii) the third anniversary of this Agreement, interest shall be rolled
          up and, at the end of such period, be added to the principal amount of
          the Loan; and

     (b)  thereafter,  on  a  monthly  basis  on  the final day of each calendar
          month.

6.3  In  the  event  that  any  monies  from  time to time payable to the Lender
     hereunder  are  not  paid on the due date, interest shall be payable on the
     amount due, from the date payment was due to the date payment is made, at a
     rate  equivalent  to 6% per annum. Any such interest will be calculated and
     accrue on a daily basis.

7.   REPAYMENT

7.1  All  Outstanding  Advances,  together  with  accrued interest and costs and
     expenses due hereunder shall be repaid on the sixth anniversary of the date
     of this Agreement.

7.2  ZNG  may  with  the  prior  written  consent of the Lender repay in US$ all
     or  any part (provided, in the case of part only, it is of an amount of not
     less  than  US$50,000)  of  the Outstanding Advances, together with accrued
     interest thereon. Any amounts repaid may not be reborrowed.

8.   PURPOSE

8.1  The  New  Commitment  shall  be  available  for,  and  shall  be  applied
     strictly  by  ZNG  in  the  amounts  set  out  in  the  Budget  and for the
     corresponding  purpose  stated  in the Work Programme. Of the amounts to be
     advanced  under  the  Loan  which  are  detailed  in  the  Budget  and Work
     Programme:

     (a)  the  following  amounts  shall  be  available  to  be  drawn  down
          following  execution of this Agreement, subject to compliance with all
          applicable  terms  of  the  Agreement in respect of each Advance to be
          made:

          PURPOSE                                                   AMOUNT (US$)
          -------                                                   ------------

          Payment  to  OOO  Business  Standard  in  respect
          of the gathering and co-ordination  of  data  in
          respect  of  the new licences detailed in Schedule 2           100,000

          Payment of 50% of amounts owed to Messrs. Repin and
          Potapov                                                        170,000

          Payment to Mylarshikov for overdue rent (subject to
          clause 8.3)                                                     44,000

          Payment of mineral tax (for second quarter of 2005)           3,864.52

          Payment of accrued salaries of ZNG employees for
          August and September 2005                                       32,000

          TOTAL                                                       348,864.52

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(b)  the  following  amounts  shall  be  available  to  be drawn down subject to
     the  prior  satisfaction of the additional condition set out at clause 10.2
     and  compliance with all other applicable terms of the Agreement in respect
     of each Advance to be made:

     PURPOSE                                                        AMOUNT (US$)
     -------                                                        ------------
     Further payment to OOO Business Standard in                   Up to 340,000
     respect of the gathering and co-ordination
     of data in respect of the new licences detailed
     in Schedule 2
     Payment of amounts owed to Basneftegeofizika                     204,482.91
     Payment of outstanding invoice of Basneftegeofizika
     (amount must be agreed in writing with the Lender)            Up to 100,000
     Payment of amounts owed to Bazhenov Expedition                    20,351.17
     Payment of remaining amounts owed to Messrs.
     Repin and Potapov     170,000
     Payment to Mylarshikov for overdue rent
     (subject to clause 8.3)                                              44,000
     Payment of mineral tax (for third quarter of 2005)                 3,864.52

     TOTAL                                                      UP TO 882,698.60

8.2  No  Advance  under  the  New  Commitment  may  be  utilised for any purpose
     other  than those stated in clause 8.1 without the prior written consent of
     Lender.  The  Budget and the Work Programme may only be revised, updated or
     amended with the prior written consent of the Lender.

8.3  ZNG  shall  only  make  the  payments  to Mylarshikov in respect of overdue
     rent  that  are  referred to in clauses 8.1(a) and 8.1(b) above in exchange
     for  a  duly notarised written undertaking in English from Mylarshikov that
     such  amounts  are in full and final settlement of all overdue rent owed to
     it by ZNG and confirming a one year extension of the lease for the premises
     currently  occupied by ZNG in Kurgan City, Kurgan from October 2005 for the
     same  services  as  currently  received, together with an option for ZNG to
     extend  such  lease for a further period of one year from the expiration of
     such extension, both leases to be at a monthly rent of US$2,800.

9.   SECURITY

     The  Loan  shall  initially  be  unsecured  by ZNG, but the Lender reserves
     the  right  (at  its  sole  discretion) to request security (in the form of
     fixed  or  floating  charges  (or  the  equivalent  under  the  law  of any
     applicable jurisdiction)) over all or some of the assets and/or undertaking
     of  ZNG  (subject  to  such  assets  and undertaking being capable of being
     charged)  at  any  time  prior  to any drawdown or whilst any monies remain
     outstanding  under  the  Loan.  The Lender agrees and acknowledges that any
     such  security  will  or  may rank after any security interests existing at
     such  time and that the ability of ZNG to give such security may be subject
     to  appropriate  inter-creditor  agreements  or  priority  agreements being
     entered  into  with  other  lenders  and/creditors  of  ZNG. If security is
     required  by  the  Lender,  ZNG  shall  grant  the  same  as  soon as shall
     reasonably  be practicable thereafter. ZNG will pay the Lender's reasonable
     costs  of putting such security in place, including the cost of negotiating
     and documenting such security.

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10.  CONDITIONS  PRECEDENT

10.1 No  drawdown  may  be  made  until  each  of the following conditions shall
     have  been  satisfied  (or  waived  by  the Lender) or, if a drawdown shall
     previously  have  been  made,  no  further  drawdown  may be made until (if
     applicable) the conditions in sub-clauses (f), (h) and (i) below shall have
     been satisfied (or waived by the Lender):

     (a)  the  Lender  has  received  a  copy,  duly  notarised  as being a true
          copy by the General Director of ZNG, of a resolution of the authorised
          body  of  ZNG (in terms satisfactory to the Lender) authorising ZNG to
          enter  into  and  perform  its  obligations  under  this Agreement and
          authorising a person to execute this Agreement;

     (b)  there  shall  have  been  received  by  the Lender this Agreement duly
          executed by a duly authorised person for and on behalf of ZNG;

     (c)  there  shall  have  been  received  by  Lender  a copy, duly notarised
          as  being  a  true copy, of the current Charter of ZNG together with a
          copy, notarised as aforesaid, of the Certificate of Registration (OGRN
          Certificate) of ZNG;

     (d)  JV  Co  shall  have  entered  into  the  guarantee, the pledge and the
          debenture  with  the  Lender  in  the  form  annexed hereto at Annex 3
          (together the "SECURITY DOCUMENTS" and each a "SECURITY DOCUMENT");

     (e)  there  shall  have  been  received  by  the Lender a certified copy of
          a  resolution  of  the  board  of  JV Co (in terms satisfactory to the
          Lender)  authorizing  JV  Co to enter into and perform its obligations
          under  the Security Documents, and authorizing a person to execute the
          Security Documents;

     (f)  the  Lender  shall  have  received  written  evidence  in  a  form
          satisfactory  to  it that any previous Advance or Advances has or have
          been applied by ZNG strictly in accordance with clause 8 (Purpose);

     (g)  all  outstanding  liabilities  of  ZNG  to  its  creditors (other than
          those  amounts  detailed  in  clauses 8.1(a)and 8.1(b)) as at the date
          hereof  have  been  satisfied  in  full  or SEG has provided to ZNG an
          indemnity,  in  a  form  satisfactory to the Lender, in respect of any
          such outstanding liabilities;

     (h)  if  security  shall  have  been  requested  under  clause 9 (Security)
          above,  such  security  shall have been granted to the satisfaction of
          the Lender; and

     (i)  an Event of Default has not occurred and is not continuing.

10.2 In  addition  to  satisfaction  of  the  conditions  contained  in  clause
     10.1,  drawdown  of  any  amounts  referred  to  in  clause 8.1(b) shall be
     conditional  on  receipt by the Lender of a duly notarised copy of a letter
     in  English to ZNG from the relevant licence authority(ies) of the Ministry
     of Natural Resources of the Russian Federation confirming that the licences
     detailed in Schedule 2 have been awarded to ZNG in a form acceptable to the
     Lender.

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11.  EVENTS  OF  DEFAULT

11.1 Each  of  the  events  set  out  in  clause  11.2  below  is  an  "EVENT OF
     DEFAULT".  On  or  at any time after the occurrence of an Event of Default,
     the  Lender  may  by  notice  to  ZNG  (i) cancel the Loan (in which case a
     Drawdown  Notice may not be issued) and/or (ii) declare that all or part of
     the  Outstanding  Advances,  together  with  accrued interest and all other
     amounts  accrued,  be  immediately due and payable (whereupon they shall be
     paid within 5 days) or declare that all or part of the Outstanding Advances
     be  payable  on  demand  (whereupon  they  shall  be  paid within 5 days of
     demand).

11.2 The events referred to in clause 11.1 above are:

     (a)  any  liquidator,  trustee  in  bankruptcy,  judicial  custodian,
          compulsory  manager,  receiver, administrative receiver, administrator
          or  the  like  is  appointed in respect of ZNG or JV Co or any part of
          their respective assets;

     (b)  an  order  is  made  or  an  effective  resolution  passed  for  the
          winding up of ZNG or JV Co;

     (c)  either  ZNG  or  JV  Co  stops  payment  of  all  or  any class of its
          debts  or announces an intention to do so, or a moratorium is declared
          in  respect  of  any  of  its  indebtedness  or ceases to carry on its
          business  or  substantially  the whole of its business or threatens to
          cease  to carry on the same or substantially changes the nature of its
          business;

     (d)  an  encumbrancer  takes  possession  or  a  receiver  or administrator
          (or  an equivalent person in any jurisdiction) is appointed in respect
          of any property of ZNG or JV Co;

     (e)  ZNG  makes  default  in  the  payment  on  the  due  date of any money
          which may have become due hereunder;

     (f)  any  distress,  execution,  sequestration  or  other  processes  are
          levied  or enforced upon or sued out against the property of ZNG or JV
          Co and is not discharged within seven days of being levied;

     (g)  either  ZNG  or  JV  Co  becomes  insolvent  or  is  unable to pay its
          debts  (in  the  case of ZNG, within the meaning ascribed to it by the
          Federal  Russian  Law  on  Insolvency  (Bankruptcy)  or  any statutory
          modification  or re-enactment thereof for the time being in force), or
          either  ZNG  or  JV Co certifies that it is unable to pay its debts as
          and when they fall due;

     (h)  ZNG  fails  to  comply  with  any  of  the  covenants,  conditions,
          undertakings  or  provisions  contained  in  this  Agreement  or  any
          agreements or documents supplemental hereto in each case which ZNG has
          failed  to  remedy within 7 days of receipt of written notice from the
          Lender  requiring  it  to  do  the  same,  or if any representation or
          warranty  given  herein  by  ZNG to the Lender proves to be materially
          untrue;

     (i)  ZNG  applies  any  Advance  (or  part  thereof)  other  than  for  the
          applicable purpose set out in clause 8 (Purpose);

<PAGE>

     (j)  any  event  or  series  of  events occurs which, in the opinion of the
          Lender  acting reasonably, might have a material and adverse effect on
          the  financial  condition  of ZNG or the ability of ZNG to comply with
          its obligations under this Agreement;

     (k)  if  there  is  an  event  of default under the Joint Venture Agreement
          (except to the extent suffered by BP(EP));

     (l)  if  at  any  time  it  is  or becomes unlawful for JV Co to perform or
          comply  with any or all of its obligations under any Security Document
          or any obligation under a Security Document ceases to be legal, valid,
          binding  and  enforceable  or  any Security Document or any obligation
          thereof  is  required  by  applicable  law or regulation to be waived,
          amended, modified or abandoned;

     (m)  any  Security  Document  does  not  create  the  security  interest it
          purports to create, is not effective or is challenged by JV Co or ZNG;
          and

     (n)  there  shall  not  have  occurred  any  material adverse change in the
          business,  operations,  assets,  position  (financial,  trading  or
          otherwise),  profits  or prospects of ZNG or any event or circumstance
          that may result in such a material adverse change.

12.  REPRESENTATIONS  AND  WARRANTIES

12.1 As  a  condition  of  the  Loan being available, ZNG hereby undertakes with
     and represent and warrants to the Lender as follows:

     (a)  ZNG  is  a  limited  liability  company  duly incorporated and validly
          existing  under  the  laws of the Russian Federation and has the power
          and  authority  to  own  its properties and assets and to carry on its
          business as it is now being conducted and to enter into this Agreement
          and  any  other  documents contemplated hereby and to borrow money and
          perform  its  obligations  hereunder  and  has ZNG taken all necessary
          action  to  authorise  the execution, delivery and performance of this
          Agreement and each such other document;

     (b)  this  Agreement  and  each  other  document  contemplated  hereby
          (including  any documents which may be required in connection with any
          security  requested  under  clause  9 above) constitutes or will, when
          executed,  constitute  a  legally  binding obligation of ZNG and is or
          will be, when executed, enforceable in accordance with its terms;

     (c)  the  execution,  delivery  and  performance  by  ZNG of this Agreement
          does  not  and  will not exceed any power granted to ZNG by or violate
          any provision of:

          (i)  any  law  or  regulation  or  any  order  or  decree  of  any
               governmental authority, agency or court, to which ZNG is subject;
               and/or

          (ii) the Charter of ZNG, as amended;

     (d)  ZNG  is  not  in  default  in respect of any material obligation under
          any  agreement  to which it is a party or by which it may be bound and
          no  litigation,  arbitration or administrative proceedings are pending
          or  threatened  which  are material in the context of the Loan and the
          Advances made or to be made hereunder;

<PAGE>

     (e)  there  is  no  provision  of  any instrument or agreement and no other
          obligation by which ZNG or any of its assets is bound and no judgment,
          injunction  or  other  order or award of any judicial, administrative,
          governmental  or  other  authority  or  of  any  arbitrator  which  is
          contravened  by  the execution and delivery of this Agreement or which
          would  be  contravened  by the performance or observance of any of the
          obligations of ZNG in or pursuant to this Agreement;

     (f)  ZNG  has  not  taken  any  corporate  action  nor have any other steps
          been  taken  or  legal  proceedings  started  or (to the best of ZNG's
          belief)  threatened  against  ZNG  for  its winding up, dissolution or
          reorganisation  or  for  the  appointment  of  a  receiver, trustee or
          similar officer of it or of any of its assets or revenues;

     (g)  no  Events  of  Default  exist  or might result from the making of any
          Advance;

     (h)  there  does  not  exist  any  event  or  circumstance  which  has,  or
          could have, a material adverse effect on the business of ZNG or on its
          ability to perform its obligations under this Agreement;

     (i)  repayment  of  the  Loan  and  payment  of other amounts due hereunder
          by  ZNG to the Lender will be an unconditional obligation of ZNG which
          shall  rank  at  least pari passu with all of the other liabilities of
          ZNG; and

     (j)  all  information  as  provided  by  ZNG  to  the  Lender in connection
          with this Agreement is true, complete and accurate in all respects and
          ZNG  has  not  concealed  any facts which, if disclosed, may adversely
          affect  the  Lender's  decision regarding the provision of the Loan to
          ZNG.

12.2 ZNG  shall  cause  all  the  above representations and warranties to remain
     valid  throughout the term of this Agreement. ZNG shall promptly notify the
     Lender  of  facts  which  would  change  any  of  its  representations  and
     warranties or render any of them inaccurate, untrue or misleading.

12.3 The  representation  and  warranties  set  out  above  shall  survive  the
     execution  of  this Agreement and the making of Advance hereunder and shall
     be deemed to be repeated by ZNG on each day so long as any amount is or may
     be outstanding hereunder with reference to the facts and circumstances then
     subsisting, as if made at each such time.

13.  NOTIFICATION  OF  EVENTS  OF  DEFAULT

     Immediately  upon  becoming  aware  of  the  same, ZNG undertakes to notify
     the  Lender  by  fax (and by notice in writing sent by first class post) of
     the occurrence of any event or matter which constitutes or might constitute
     an Event of Default pursuant to clause 11 (Events of Default) and ZNG shall
     at  the  same  time inform the Lender of any action taken or proposed to be
     taken in connection therewith.

14.  COSTS  AND  CHARGES

14.1 ZNG  will  reimburse  the  Lender  on  demand  for  all  costs  or expenses
     incurred  by  the  Lender  in the enforcement (or in seeking to enforce) of

<PAGE>

     this  Agreement  and  the Security Documents or in protecting or preserving
     (or attempting to protect or preserve) any of its rights hereunder.

14.2 ZNG  will  reimburse  the  Lender  on  repayment  of the Loan hereunder for
     all  costs or expenses (including but not limited to legal fees and subject
     to a maximum of $150,000) incurred by the Lender in the preparation of this
     Agreement and the Security Documents.

15.  GROSS  UP

     ZNG  shall  not  withhold  Russian  profits  tax from any amount payable by
     ZNG under this Agreement provided that the Lender has, prior to the date of
     payment  of  such  amount,  provided  to ZNG a document confirming that the
     Lender  is  a resident of the United Kingdom for the purposes of the income
     tax  treaty  between the United Kingdom and the Russian Federation and that
     is  certified by the tax authority of the United Kingdom (the "NON-RESIDENT
     CERTIFICATE"). The Lender shall use its reasonable endeavours to obtain the
     Non-Resident  Certificate  from  the  tax  authority  of the United Kingdom
     following  the  date  hereof  and  shall  as soon as reasonably practicable
     following  receipt  thereof  from  the  tax authority in the United Kingdom
     forward  the same to ZNG; PROVIDED THAT if the Lender should fail to obtain
     the  Non-Resident  Certificate  for  any reason and therefore provide it to
     ZNG,  ZNG  shall make such withholding or deduction on account of any taxes
     it  is  required  to  make in respect of any payment made hereunder and the
     amount payable by ZNG shall be increased to such extent that the net amount
     received  by the Lender after such withholding or deduction shall equal the
     gross amount received to be paid under this Agreement. ZNG shall account to
     the  appropriate  authority  for  any  taxes withheld or deducted and shall
     provide  the  Lender  with such evidence that it has done so if required by
     the Lender.

16.  SET  OFF

     The  Lender  may  set  off  any  indebtedness  of ZNG hereunder against any
     indebtedness  of the Lender to ZNG. ZNG shall not withhold, set off, deduct
     or  counterclaim  any  payments  due  to  the  Lender hereunder against any
     amounts owed to it by the Lender.

17.  WAIVER

     No  failure  to  exercise  nor  any  delay in exercising on the part of the
     Lender  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 of
     the Lender prevent any further or other exercise thereof or the exercise of
     any  other right or remedy. The rights and remedies of the Lender hereunder
     are cumulative and are not exhaustive of any rights or remedies provided by
     law.

18.  NOTICES

     Any  notice  to  be  given  pursuant  to  the terms of this Agreement shall
     be  given in writing to the party due to receive such notice at the address
     stated  below  or such other address as may have been notified to the other
     parties  in  accordance  with  this  clause.  Notice  shall  be  delivered

<PAGE>

     personally  or sent by first class pre-paid recorded delivery or registered
     post (air mail if overseas) or by facsimile transmission to the numbers and
     parties  detailed  below  and  shall  be  deemed to be given in the case of
     delivery  personally on delivery and in the case of posting (in the absence
     of evidence of earlier receipt) 48 hours after posting (six days if sent by
     air  mail)  and  in the case of facsimile transmission on completion of the
     transmission  provided  that  the  sender  shall  have  received  printed
     confirmation of transmission.

ZNG:                                 Attn:                   Fax:
---                                  ----                    ---
c/o Zauralneftegaz Limited          Company  Secretary       +44  20  7667  6471
18b Charles Street
London W1J 5DU
United  Kingdom

With  a  copy  to:
-----------------

Siberian  Energy  Group  Inc.
275  Madison  Avenue                Attn:                    Fax:
6th  floor
New  York,  NY  10016               David  Zaikin            +1  (905)  771-9198
USA

The Lender:                         Attn.:                   Fax:
----------

Caspian Finance Limited             Joel McDonald            020 7429 6001
c/o Salans
Millennium Bridge House
2 Lambeth Hill
London EC4V 2AJ
United Kingdom

19.  ASSIGNMENT

     ZNG  may  not  assign  or  transfer  all  or  any  part  of  its  rights or
     obligations  hereunder,  save with the prior written consent of the Lender.
     The  Lender may at any time assign or otherwise transfer all or any part of
     its rights and obligations hereunder.

20.  LAW  AND  DISPUTES

     This  Agreement  shall  be  governed  by  and  construed in accordance with
     the  laws of England. Any dispute arising out of or in connection with this
     Agreement,  including  any  question  regarding  its existence, validity or
     termination,  or  the  legal  relationships  established by this Agreement,
     shall be referred to and finally resolved by arbitration under the Rules of
     the London Court of International Arbitration, which Rules are deemed to be
     incorporated  by  reference  into  this clause. All arbitration proceedings
     shall  be  conducted  in  English  before  a  single  arbitrator in London.
     Judgment  on  any  resulting  award  may  be  entered  in  any court having
     jurisdiction  over  the  affected  party,  and  may be executed against the
     assets of the affected party in any jurisdiction. The arbitrator shall have
     jurisdiction to award, and shall award, the prevailing party its reasonable
     attorneys fees, costs and expenses.

<PAGE>

21.  THIRD  PARTIES

      No  term  of  this Agreement  shall  be  enforceable  under  the Contracts
     (Rights of Third Parties) Act 1999 by a third party.

22.  LANGUAGE

     This  Agreement  will  be  executed  in  English and in Russian. In case of
     any  conflict  between  the  English and Russian versions, the terms of the
     English  version  should  prevail.

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

<PAGE>

                                   SCHEDULE 1

                         FORM OF REQUEST FOR AN ADVANCE

To:       Caspian  Finance  Limited  (the  "LENDER")

From:     OOO  Zauralneftegaz  ("ZNG")

Date      [ ]  20
                             REQUEST FOR AN ADVANCE

We  refer  to  the  facility agreement dated [        ] 2005 between ZNG and the
Lender  (the "AGREEMENT").  Terms defined in the Agreement have the same meaning
in  this  letter  and  references  to  clauses  in this letter are references to
clauses  of  the  Agreement.

We  wish  to  borrow  an  Advance  subject  to  the  terms and conditions of the
Agreement  as  follows:

          (a)  Amount:

          (b)  Purpose:

          (c)  Drawdown Date:

          (d)  Payment instructions:

We  confirm  that  the  conditions  set out in clause 4 will be satisfied on the
Drawdown  Date  for  the  proposed  Advance.
Yours  faithfully

By:

Authorised  Signatory
for  and  on  behalf  of
OOO  Zauralneftegaz

<PAGE>

<PAGE>

                                     ANNEX 2
                                 WORK PROGRAMME

                                 WORK PROGRAMME
     Reg.  No  WPZL4
               -----
                                                          11/10/2005
     WORK PROGRAM FOR ZNG LTD IN KURGAN REGION FOR 2005 AND SECOND QUARTER 2006


               1.   ACQUISITION  OF  UP  TO  FIVE  NEW  LICENSES  HELD  BY  ZNG
                    KURGAN

               2.   CREATION  OF  THE  JOINT  VENTURE  BY  THE  SIGNING  OF  THE
                    JOINT VENTURE AGREEMENT

               3.   NOTE  THAT  ACTIVITIES  ARE  CONTINGENT  UPON  ACCEPTABLE
                    RESULTS  AND  REPORTS  FROM  PREVIOUS ACTIVITIES. FAILURE TO
                    ACHIEVE  ACCEPTABLE RESULTS WILL RESULT IN A RE-PLANNING AND
                    A REVISED WORK PROGRAM.

<TABLE>
<CAPTION>

                                                      2005               2006               2006
TYPE OF WORKS                                     4TH QUARTER        1ST QUARTER         2ND QUARTER        LOCATION
<S>                                                   <C>                <C>                 <C>               <C>
Geochemical  analysis  of
Palaeozoic  rocks
(using data from previously
drilled wells)                                       Report                                                  Eastern part of
                                                                                                             Kurgan Region

Geochemical  modelling  of
Palaeozoic basin in the eastern
part of Kurgan Region                                                  Report                                 Eastern part of
                                                                                                              Kurgan Region

                                                                   August - October
Interpretation of 2D seismic                                           Report
(OAO Bashneftegeofizika)

Zapadno-Suerskiy block Reinterpret
existing seismic data                                                  Report                                 Mokrousovskiy,
                                                                                                              Privolniy and Orlovo-
                                                                                                              Pashkovskiy licenses

Scan/copy of all well logs and reports               Report                                                   V. Eret - ZNG KURGAN

Locate further samples for geochemical
biostratigraphical analysis                          Report &
                                                     Samples                                                  A. Belonosov

Duplication of the Oceangrove analyse
by Dr. Belonosov/Prof. Bozhko                        Report                                                   Novosibirsk, Moscow

Bazhenov  Expedition  (Moscow)  to
prepare quotation for semi-regional
and block specific gravity and magnetic
survey                                               Quote
                                                  (September)

Collation of the seismic and gravimetric                              Oct - Nov
data (Bazhenovskaya expedition)                                         Report                                Zapadno-Suerskiy block

<PAGE>

Planning  of  exploration  well                                        Nov - Dec
(Institute  of  Geology  Ministry                                    1 well project
of  NaturalResources,  Local
Authorities  and ZNG)including
the obtaining of all permits.                                                                                 Zapadno-Suerskiy block

Technical  and ecological analysisof                                                      Beginning of
the project (Institute of Geology oil&gas,ZNG)                                            November 2005       Zapadno-Suerskiy block

Mobilisation  of  the  drilling  equipment                                                 On receipt         Zapadno-Suerskiy block
(contractor  will  be chosen after a competitive                                         of the positive
bidding  procedure,  procedures for which will be                                       conclusion of the
written by BalticPetroleum)                                                             geological analysis

Gravimetric  +  Magnetic  mapping  at 1:100,000
scale (Bazhenovskaya expedition)                                       Min 957 sq km      March (Proposed)    Mokrousovskiy block

Gravimetric  +  Magnetic  mapping  at 1:100,000
scale (Bazhenovskaya expedition)                                       Min 500 sq km                          Privolniy block

Gravimetric  +  Magnetic  mapping  at 1:100,000
scale (Bazhenovskaya expedition)                                       Min 200 sq km                          Orlovo-Pashkovskiy
                                                                                                              block

2D  Seismic  (contractor  will  be chosen after                                         Surveysize dependent  Mokrousovskiy block
a competitive bidding procedure,procedures for which                                      on gravimetric/
will be written by Baltic Petroleum)                                                      magnetic results

2D  Seismic  (contractor  will  be chosen after                                         Surveysize dependent
a competitive bidding procedure, procedures for which                                      on gravimetric/
will be written by Baltic Petroleum)                                                      magnetic results    Privolniy block

2D  Seismic  (contractor  will  be chosen after a                                        Surveysize dependent
competitive bidding procedure,procedures for which                                         on gravimetric/
will be written by Baltic Petroleum)                                                       magnetic results   Orlovo-Pashkovskiy
                                                                                                              block

</TABLE>

<PAGE>

                                    ANNEX 3
                               Security Documents

          1.Guarantee

          2.Pledge

          3.Debenture





<PAGE>

OOO ZAURALNEFTEGAZ

Signed: /s/ Oleg Zhuravlev
       --------------------------

Name (print): Oleg Zhuravlev
             --------------------

Position: President/CEO
         ------------------------

CASPIAN FINANCE LIMITED

Signed: /s/ Simon Escott
       -------------------------

Name (print): Simon Escott
             -------------------

Position: Director
         -----------------------

<PAGE>