Gross Overriding Royalty Agreement


    
      

    

    Exhibit 10.57

    
 

    GROSS
      OVERRIDING ROYALTY AGREEMENT

    


    


    THIS
      DEED is
      made
      this ________ day of December 2006

    


    


    


    BETWEEN

    


    


    (1) BALTIC
      PETROLEUM (E&P) LIMITED,
      a
      company incorporated in England under company number 05303991 and whose
      registered office is at 6-8 Underwood Street, London N1 7JQ, United Kingdom
      (“Grantee”);
      and

    


    (2)
      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 (“Grantor”).

    


    


    


    WHEREAS

    


    


    (A)   The
      Grantee is a 50% shareholder
      in Zauralneftegaz Limited (“ZL”),
      a
      company incorporated in England under company number and incorporated in England
      under company number 05525360 whose registered office is at 6-8 Underwood
      Street, London N1 7JQ, United Kingdom. Siberian Energy Group Inc (“SEG”),
      a
      corporation incorporated under the laws of the State of Nevada, United States
      and whose principal place of business is at 275 Madison Avenue, 6th
      Floor,
      New York, NY 10016, United States is the other 50% shareholder in ZL .


    


    (B)   ZL
      owns all of the
      participatory interests in the Grantor. The Grantor has entered into a loan
      agreement dated 9th
      November
      2005 with Caspian Finance Limited (“CF”)
      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, which is an associated company of the
      Grantee.

    


    (C)   On
      26th
      July
      2006 the Grantee entered into a deed with SEG and ZL relating to the possibility
      of additional loans being made to the Grantee by CF and of the Grantee entering
      a GOR Agreement with the Grantor as a condition of the same.

    


    (D)   CF
      and the Grantee are on
      this day entering into a new loan agreement in relation to the loans detailed
      in
      recital (C) above and accordingly the Grantor is entering into this GOR
      Agreement in favour of the Grantee on the terms hereinafter appearing.


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

         

      

    

    
 

    NOW
      THEREFORE THIS AGREEMENT WITNESSES
      as
      follows:

    


    
      	
              1.

            	
              Definitions

            


    

    


    
      	 	
              In
                this Agreement, unless the context otherwise
                requires:

            


    

    


     

    
      	 	
              1.1

            	
              “Acreage”
                means the lands more particularly described in the Schedule attached
                hereto, in which the Grantor holds any right or interest and includes
                the
                Petroleum Substances which, upon or under such lands, together with
                the
                right to explore for and recover same insofar as such rights are
                granted
                by the Documents;

            


    

     

    
      	 	
              1.2

            	
              “Documents”
                means the Oil, Petroleum Substances and/or Gas Licences, leases,
                farmouts,
                options or other agreements to which the Grantor is or becomes a
                party,
                including any extensions or renewals thereof and any new grant acquired
                in
                addition to the Licences or pertaining to the
                Acreage;

            


    

     

    
      	 	
              1.3

            	
              “Gas”
                means and refers to all natural gas produced from the premises (including
                casinghead gas) and all of its constituent elements, including but
                not
                limited to sulphur contained in the gas, and natural gasoline, condensate,
                distillate, butanes, propanes, and other hydrocarbons condensed,
                absorbed,
                or separated out of or from the gas after it leaves the lease, including
                without limitation casinghead gas and flared or vented
                gas;

            


    

     

    
      	 	
              1.4

            	
              “Licence(s)”
                means the exploration licences in the Kurgan region of the Russian
                Federation held by the Grantor at the Acreage (as more particularly
                detailed in the Schedule) and including any other licences obtained
                by the
                Grantor;

            


    

     

    
      	 	
              1.5

            	
              “Oil”
                means and refers to any hydrocarbons produced from the premises,
                regardless of gravity, capable of being produced in liquid form at
                the
                well by ordinary production methods including without limitation
                condensate, distillate and other liquid hydrocarbons recovered from
                oil or
                gas run through a separator or other equipment at the lease.
                

            


    

     

    
      	 	
              1.6

            	
              “Petroleum
                Substances” means the Grantor’s share of Oil, petroleum and natural Gas
                and related hydrocarbons, all other gases and all minerals and substances
                (whether condensate, liquid or solid and whether hydrocarbons or
                not) in
                association with any of the foregoing or found in any water contained
                in
                an Oil and/or Gas reservoir but only insofar as and to the extent
                that the
                same are granted;

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

         

      

    


    


     

    
      	
              2.

            	
              Interpretations

            


    

     

    
      	 	
              2.1

            	
              References
                to a statute or statutory provision include that statute or provision
                as
                from time to time modified or re-enacted or consolidated whether
                before or
                after the date of this Agreement so far as such modification or
                re-enactment or consolidation applies or is capable of applying to
                any
                transactions entered into in accordance with this Agreement and (so
                far as
                liability thereunder may exist or can arise) shall include also any
                past
                statutory provision (as from time to time modified or re-enacted
                or
                consolidated) which such provision has directly or indirectly
                replaced.

            


    

     

    
      	 	
              2.2

            	
              The
                expressions “holding company” and “subsidiary” shall have the same
                meanings in this Agreement as their respective definitions in the
                Act.

            


    

     

    
      	 	
              2.3

            	
              References
                to this Agreement include any Recitals and Schedules to it and this
                Agreement as from time to time amended and references to Clauses
                and
                Schedules are to Clauses of and Schedules to this
                Agreement.

            


    

     

    
      	 	
              2.4

            	
              Headings
                shall be ignored in construing this
                Agreement.

            


    

     

    
      	 	
              2.5

            	
              Any
                provision of this Agreement which is expressed to bind more than
                one
                person shall, save where inconsistent with the context, bind them
                jointly
                and each of them severally.

            


    

     

    
      	 	
              2.6

            	
              References
                to time of day are to London, United Kingdom time unless otherwise
                stated.

            


    

     

    
      	 	
              2.7

            	
              References
                to the winding-up of a person include the amalgamation, reconstruction,
                reorganisation, administration, dissolution, liquidation, merger
                or
                consolidation of such person and any equivalent or analogous procedure
                under the law of any jurisdiction in which that person is incorporated,
                domiciled or resident or carries on business or has
                assets.

            


    

     

    
      	 	
              2.8

            	
              Any
                reference to books, records or other information means books, records
                or
                other information in any form including paper, electronically stored
                data,
                magnetic media, film and microfilm.

            


    

     

    
      	 	
              2.9

            	
              Any
                reference to any English legal term or concept (including for any
                action,
                remedy, method of judicial proceeding, document, legal status, statute,
                court, official governmental authority or agency) shall, in respect
                of any
                jurisdiction other than England, be interpreted to mean the nearest
                and
                most appropriate analogous term to the English term in the legal
                language
                in that jurisdiction as the context reasonably requires so as to
                produce
                as nearly as possible the same effect in relation to that jurisdiction
                as
                would be the case in relation to
                England.

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    
      	 	
              2.10
                

            	
              Any
                previously undefined reference to a term commonly used in the oil
                and gas
                industry shall be as defined from time to time on www.glossary.oilfield.slb.com
                or
                any successor website.

            


    

     

    
      	
              3.

            	
              Gross
                Overriding Royalty

            


    

     

    
      	 	
              3.1

            	
              The
                Grantor hereby reserves out, grants, sets over and conveys to the
                Grantee
                an interest in the Licences, the Petroleum Substances and the Documents
                in
                the form of a gross overriding royalty of 3% (THREE
                PERCENTUM)
                percent of the Grantor’s gross interest in all Petroleum Substances
                (and/or turnover of the Grantee deriving therefrom) to be found to
                exist
                or deemed to exist within, upon or under the Licences or in the Acreage
                and which are produced, marketed and/or saved therefrom (hereinafter
                called the “Royalty”).

            


    

     

    
      	 	
              3.2

            	
              The
                Royalty shall be paid free and clear of any and all cost or expense
                of
                every kind and nature whatsoever incurred in (inter alia) connection
                with
                maintaining, renewing and extending, exploring, drilling, re-completing,
                side-tracking, producing, co-mingling of wells and reservoirs, and
                processing, treatment and compressing and operating costs of such
                Petroleum Substances subject to the provisions of Clause 8 hereof
                and save
                that the no Royalty shall be payable on any VAT validly charged by
                the
                Grantor on any sale of Petroleum Substances on behalf of the Grantee
                under
                the terms hereunder. 

            


    

     

    
      	 	
              3.3

            	
              The
                Royalty will apply until the Grantor has received the total aggregate
                figure of US$ 20,000,000 (TWENTY
                MILLION DOLLARS)
                from the gross sales of all or any Petroleum Substances production
                produced or occuring at the Wellhead in the Acreage, such value to
                be
                calculated by reference to the best prevailing
                market price
                of
                the relevant Petroleum Substances at the wellhead in Kurgan, Western
                Siberia, Russian Federation and
                in the event the sale price is in roubles then the conversion rate
                for
                dollars shall be at the rate between $ (dollars) to R (rouble) being
                the
                mid price on the relevant day as detailed in the Financial
                Times.

            


    

     

    4.    Term

     

    The
      term
      of payment for the said Royalty shall be until the same has been discharged
      in
      full in accordance with the terms hereof and shall not be affected by any
      matter, including but not limited to any change in control or ownership of
      the
      Grantee or the Grantor or any shut in or lockout at the Acreage and the term
      shall, if neccesary, last for the maximum period allowed under the rule against
      perpetuities, currently 80 years.

     

    5.     Sale
      of Petroleum Substances

     

    The
      Grantor, except during such period as the Grantee exercises its election to
      take
      the Royalty in kind shall for and on behalf of and as agent for the Grantee
      deliver to purchasers of the Petroleum Substances for sale for the credit of
      the
      Grantee the Petroleum Substances that are attributable to the Royalty. All
      sales
      and deliveries made by the Grantor for the credit of the Grantee shall be made
      on the same terms and conditions and in the same proportions as all other sales
      of Petroleum Substances by the Grantor so that the Grantee will be entitled
      to
      any market available to the Grantor with respect to the Licences or Acreage.
      The
      Grantor will arrange for the Grantee to receive payment for the proceeds of
      the
      sale of the Petroleum Substances attributable to the Royalty directly from
      the
      purchaser or purchasers of such Petroleum Substances; PROVIDED ALWAYS that
      in
      the event that any purchaser makes payment to the Grantor for any portion of
      the
      proceeds of the sale of the Petroleum Substances attributable to the Royalty,
      such proceeds shall constitute trust funds in the hands of the Grantor, and
      shall be paid in cash to the Grantee on or before the 3rd day following receipt
      or deemed receipt of the production proceeds. The Grantor shall not be required
      to make any payment to the Grantee in respect of any sales hereunder until
      it
      has received payment from the relevant purchaser (provided that it shall
      promptly notify the Grantee of such receipt of payment).

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    6.    Right
      to Take in Kind 

     

    The
      Grantee shall have the right to elect from time to time upon not less than
      1
      week’s prior written notice to the Grantor to take the Royalty share of
      production in kind in respect of any one or more of the Petroleum Substances.
      Any such election may be changed from time to time by the Grantee.

     

    7.    Storage
      and Deliverability 

     

    If
      the
      Grantee exercises his right to take Royalty production in kind, the Grantor
      shall, at no cost to the Grantee, remove all basic sediment or other impurities
      and water from such Royalty production so as to render the same fit for
      acceptance by pipelines or rail or rail tankers in accordance with good industry
      practice, and shall also, at no cost to the Grantee, provide tankage sufficient
      to store thirty (30) days Royalty production of Oil and shall deliver such
      production to them from time to time at the wellhead in the case of Gas and
      at
      the outlet valve of the said storage facilities in the case of Oil.

     

    8.    Transportation
      and Plant Charges

     

    The
      Grantee’s share of any Oil in the Petroleum Substances under clause 3.1 shal be
      subject only to reasonable, lawful and agreed deduction for transportation
      as
      may be required by the Grantee. 

     

    9.    Books
      and Records

     

    The
      Grantor shall maintain in Kurgan complete and accurate records of the Petroleum
      Substances produced and saved from the Licences and of the monies received
      therefrom in accordance with local government and other authorities requirements
      and shall furnish to the Grantee with each payment made hereunder, a statement
      (verified by statutory declaration if requested by the Grantee) giving
      sufficient detail for the Grantee to ascertain the accuracy of the payment
      of
      Royalty made therewith, including copies of the monthly production reports
      filed
      with the relevant local authorities.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    10.    Development

     

    The
      Grantor is obligated to conduct any operations upon the Licences in accordance
      with good Oil and Gas field practices.

     

    11.    Forfeiture
      and Surrender

     

    The
      Grantor shall not allow the Documents to become subject to forfeiture and shall
      not surrender Licences or other interests included therein or any part
      thereof.

     

    
      	
              12.

            	
               Lien
                for Royalty

            


    

     

    
      	 	
              (a)

            	
              The
                Grantee shall be entitled to and shall have a lien upon the Grantor’s
                share of all Petroleum Substances from time to time produced from
                the
                Licences to secure the payment of the gross overriding royalty granted
                to
                the Grantee under this Agreement. Such lien shall not operate to
                release
                the Grantor from its liability for monies due to the Grantee. Such
                lien
                shall attach to the Grantor’s share of the Petroleum Substances sold or
                otherwise disposed of from the Licences. Upon default occurring in
                payment
                by the Grantor of monies payable to the Grantee, the Grantee shall
                notify
                the Grantor of same and request the default to be remedied within
                fourteen
                days. If the default is not remedied within the said fourteen days,
                such
                lien shall operate as an assignment to the Grantee in respect of
                the
                consideration thereafter payable to the Grantee for the Petroleum
                Substances sold up to the amount owed to the Grantee and not so paid
                by
                the Grantor.

            


    

     

    
      	 	
              (b)

            	
              Service
                of a copy of this Agreement upon the Grantor and any purchaser of
                Petroleum Substances together with written notice from the Grantee
                shall
                constitute written authorization on the part of the Grantor for such
                purchaser to pay to the Grantee the proceeds from any sale or sales
                of the
                Grantor’s share of the Petroleum Substances up to the amount owed to the
                Grantee by the Grantor and such purchaser is authorized to rely upon
                the
                statement of the Grantee as to the amount owed to the Grantee by
                the
                Grantor.

            


    

     

    
      	 	
              (c)

            	
              The
                books and records kept by the Grantee shall constitute written proof
                of
                the existence of such default, although no purchaser shall be obliged
                to
                examine same before acting upon such notice of
                default.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    
      
        	
                13.

              	
                Further
                  Assurances

              


      

       

      Each
        party shall do and perform all such acts and things and execute and deliver
        all
        such instruments, documents in writing, and give all such further assurances
        as
        may be necessary to give full effect to the provisions and intent of this
        Agreement.

    

     

    14.    Successors
      and Assigns

     

    This
      Agreement shall enure to the benefit of and be binding upon the successors
      and
      permitted assigns of the parties hereto. The Grantee shall be able at any time
      to assign the the benefit of this Agreement and its rights and obligations
      hereunder to an associated company of Grantee.

     

    15.    Supersedes
      Prior Agreements

     

    This
      Agreement supersedes all other agreements, documents, writings and verbal
      understandings among the parties relating to the Acreage and
      Documents.

     

    16.    Public
      announcements

    
 

    
      	 	
              16.1
                

            	
              Shareholder
                approval 

            


    

     

    
      	 	 	
              None
                of the parties shall make any public announcement or issue any circular
                relating to this Agreement or any matters or information provided
                pursuant
                hereto without the prior written approval of the other Parties. This
                does
                not affect any announcement or circular required by law or any regulatory
                body or the rules of any recognised stock exchange, but the Party
                with an
                obligation to make an announcement or issue a circular shall consult
                with
                the other Party/Parties so far as is reasonably practicable before
                complying with such obligation.

            


    

     

    
      	 	
              16.2
                

            	
              Oral
                statements 

            


    

     

    
      	 	 	
              The
                Parties intend that any oral statements made or replies to questions
                given
                by either Parties relating to the Group shall be consistent with
                any such
                public announcements or circulars.

            


    

     

    17    Confidential
      Information

     

    
      	 	 	
              The
                parties shall use all reasonable endeavours to keep confidential
                and to
                ensure that their respective Associated Companies and their respective
                officers, employees, agents and professional and other advisers keep
                confidential any information (the “Confidential Information”):

            


    

     

    relating
      to the customers, business, assets or affairs of either party which they may
      have or acquire through ownership of an  interest
      in the Company; or relating to the customers, business, assets or affairs of
      the
      other parties or any member of their group which they may have or  acquire
      through being a Party hereto or through the exercise of its rights or
      performance of its obligations under this Agreement.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    18.    Restrictions

     

    
      	 	
              18.1
                

            	
              No
                party may use for its own business purposes or disclose to any third
                party
                any Confidential Information without the consent of the other
                parties.

            


    

     

    
      	 	
              18.2

            	
              This
                Clause does not apply to:

            


    

     

    
      	 	
              (a)

            	
              information
                which is or becomes publicly available (otherwise than as a result
                of a
                breach of this Clause);

            


    

     

    
      	 	
              (b)

            	
              information
                which is independently developed by the relevant party or acquired
                from a
                third party, to the extent that it is acquired with the right to
                disclose
                it;

            


    

     

    
      	 	
              (c)

            	
              information
                which was lawfully in the possession of the relevant party free of
                any
                restriction on disclosure;

            


    

     

    
      	 	
              (d)

            	
              information
                which following disclosure under this Clause, becomes available to
                the
                relevant party from a source which is not bound by any obligation
                of
                confidentiality in relation to such
                information;

            


    

     

    
      	 	
              (e)

            	
              the
                disclosure by a party of Confidential Information to its principal
                shareholders or its directors or employees or to those of its Associated
                Companies who need to know that confidential information in its reasonable
                opinion for purposes relating to this Agreement but those principal
                shareholders, directors and employees shall not use that Confidential
                Information for any other purpose;

            


    

     

    
      	 	
              (f)

            	
              the
                disclosure of information to the extent required to be disclosed
                by law or
                any court of competent jurisdiction, any governmental official or
                regulatory authority (including the London Stock Exchange, the Financial
                Services Authority, the Panel on Takeovers and Mergers and the United
                States Securities and Exchange Commission) or any binding judgment,
                order
                or requirement of any other competent
                authority;

            


    

     

    
      	 	
              (g)

            	
              the
                disclosure of information to any tax authority to the extent reasonably
                required for the purposes of the tax affairs of the party concerned
                or any
                member of its group; or

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    
      	 	
              (h)

            	
              the
                disclosure to a party’s professional advisers of information reasonably
                required to be disclosed for purposes relating to this
                Agreement.

            


    

     

    
      	 	
              18.3

            	
              Each
                party shall inform any shareholder, officer, employee or agent or
                any
                professional or other adviser advising it in relation to matters
                relating
                to this Agreement, or to whom it provides Confidential Information,
                that
                such information is confidential and shall instruct
                them:

            


    

     

    (a) to
      keep
      it confidential; and

     

    (b) not
      to
      disclose it to any third party (other than those persons to  whom
      it
      has already been or may be disclosed in accordance with  the
      terms
      of this Clause).

     

    19.    Notices

     

    
      	 	
              19.1

            	
              Addresses

            


    

     

    
      	 	 	
              Any
                notice, claim or demand in connection with this Agreement shall be
                in
                writing in English (each a “Notice”) shall be sufficiently given if
                delivered or sent to the recipient at its fax number, telex number
                or
                address set out in the Schedule or any other fax number, telex number
                or
                address notified to the sender by the recipient for the purposes
                of this
                Agreement.

            


    

     

    
      	 	
              19.2

            	
              Form

            


    

     

    
      	 	 	
              Any
                Notice shall be in writing in English and may be sent by messenger,
                telegram, telex, fax or prepaid first class post (first class in
                the case
                of service in the United Kingdom and airmail in the case of international
                service). Any Notice shall be deemed to have been received on the
                next
                working day in the place to which it is sent, if sent by telegram,
                telex
                or fax, or 60 hours from the time of posting, if sent by
                post.

            


    

     

    20.    Whole
      agreement and remedies

     

    
      	 	
              20.1

            	
              Whole
                agreement

            


    

     

    
      	 	 	
              This
                Agreement contains the whole agreement between the parties relating
                to the
                subject matter of this Agreement at the date hereof to the exclusion
                of
                any terms implied by law which may be excluded by contract and supersedes
                any previous written or oral agreement between the Parties in relation
                to
                the matters dealt with in this Agreement. In this Clause “this Agreement’
                includes all documents entered into pursuant to this Agreement.
                

            


    

     

    
      	 	
              20.2

            	
              JV
                Agreement

            


    

    
       

      Nothing
        in this Agreement shall vary or alter the terms of the JV
        Agreement.

       

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    
      	 	
              20.3

            	
              Legal
                advice

            


    

     

    
      	 	 	
              Each
                party to this Agreement confirms it has received independent legal
                advice
                relating to all the matters provided for in this Agreement, including
                the
                provisions of this Clause, and agrees, having considered the terms
                of this
                Clause and the Agreement as a whole, that the provisions of this
                Clause
                are fair and reasonable.

            


    

     

    
      	 	
              20.4

            	
              No
                inducement

            


    

     

    
      	 	 	
              Each
                of the Parties acknowledges that it has not been induced to enter
                into
                this Agreement by any representation, warranty or undertaking not
                expressly incorporated into it.

            


    

     

    21.    General

     

    
      	 	
              21.1

            	
              Survival
                of rights, duties and obligations

            


    

     

    
      	 	 	
              Termination
                of this Agreement for any cause shall not release a Party from any
                liability which at the time of termination has already accrued to
                another
                Party or which thereafter may accrue in respect of any act or omission
                prior to such termination.

            


    

     

    
      	 	
              21.2

            	
              No
                partnership

            


    

     

    
      	 	 	
              Nothing
                in this Agreement shall be deemed to constitute a partnership between
                the
                Parties nor constitute any party the agent of any other party for
                any
                purpose.

            


    

     

    
      	 	
              21.3

            	
              Release

            


    

     

    
      	 	 	
              Any
                liability to any party under this Agreement may in whole or in part
                be
                released, compounded or compromised or time or indulgence given by
                that
                party in its absolute discretion as regards any party under such
                liability
                without in any way prejudicing or affecting its rights against any
                other
                party under the same or a like liability, whether joint and several
                or
                otherwise.

            


    

     

    
      	 	
              21.4

            	
              Waiver

            


    

     

    
      	 	 	
              No
                failure of any party to exercise, and no delay by it in exercising,
                any
                right, power or remedy in connection with this Agreement (each a
“Right”)
                shall operate as a waiver of that Right, nor shall any single or
                partial
                exercise of any Right preclude any other or further exercise of that
                Right
                or the exercise of any other Right. The Rights provided in this Agreement
                are cumulative and not exclusive of any other Rights (whether provided
                by
                law or otherwise). Any express waiver of any breach of this Agreement
                shall not be deemed to be a waiver of any subsequent
                breach.

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

     

    
      	 	
              21.5

            	
              Payments

            


    

     

    
      	 	 	
              All
                payments due under this Agreement shall be paid in full without any
                deduction or withholding other than as required by law or under this
                Agreement and the paying party shall not be entitled to assert any
                credit
                set off or counterclaim against any other party in order to justify
                withholding payment of any such amount in whole or in
                part.

            


    

     

    
      	 	
              21.6

            	
              Variation

            


    

     

    
      	 	 	
              No
                variation of this Agreement shall be effective unless in writing
                and
                signed by or on behalf of each of the
                parties.

            


    

     

    
      	 	
              21.7

            	
              Assignment
                

            


    

     

    
      	 	
              21.7.1.

            	
              This
                Agreement shall be binding on and inure to the benefit of the parties
                and
                their successors and permitted assigns. The parties may not assign
                or
                transfer all or any part of their rights or obligations under this
                Agreement nor any benefit arising under or out of this Agreement
                without
                the prior written consent of the other
                parties.

            


    

     

    
      	 	
              21.7.2

            	
              Except
                as otherwise expressly provided in this Agreement, the benefit of
                the
                provisions of this Agreement may not be assigned to any Associated
                Company.

            


    

     

     

    
      	 	
              21.8

            	
              Time
                of the essence

            


    

     

    
      	 	 	
              Time
                shall be of the essence of this Agreement, both as regards any dates,
                times and periods mentioned and as regards any dates, times and periods
                which may be substituted for them by agreement in writing between
                the
                parties.

            


    

     

    
      	 	
              21.9

            	
              Further
                assurance

            


    

     

    
      	 	 	
              At
                any time after the date of this Agreement the parties shall, and
                shall use
                all reasonable endeavours to procure that any necessary third party
                shall,
                at the cost of the relevant party execute such documents and do such
                acts
                and things as that party may reasonably require for the purpose of
                giving
                to that party the full benefit of all the provisions of this
                Agreement.

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    
      	 	
              21.10

            	
              Illegality

            


    

     

    
      	 	 	
              If
                any provision in this Agreement shall be held to be illegal, invalid
                or
                unenforceable, in whole or in part, under the law of any jurisdiction,
                the
                legality, validity or enforceability of such provision or part under
                the
                law of any other jurisdiction and the legality, validity and
                enforceability of the remainder of this Agreement shall not be
                affected.

            


    

     

    
      	 	
              21.11

            	
              Counterparts

            


    

     

    
      	 	 	
              This
                Agreement may be entered into in any number of counterparts, all
                of which
                taken together shall constitute one and the same instrument. Any
                party may
                enter into this Agreement by executing any such
                counterpart.

            


    

     

    
      	 	
              21.12

            	
              Costs

            


    

     

    
      	 	 	
              Each
                party shall bear all costs incurred by it in connection with the
                preparation, negotiation and entry into this Agreement and the documents
                to be entered into pursuant to it. 

            


    

     

    
      	 	
              21.13

            	
              Language

            


    

     

    
      	 	 	
              This
                deed may be executed in English and in Russian. In case of any conflict
                between the English and Russian versions, the terms of the English
                version
                shall prevail

            


    

     

    22.    Contracts
      (Rights of Third Parties) Act 1999

     

    A
      person
      who is not a party to this Agreement has no right under the Contracts (Rights
      of
      Third Parties) Act 1999 to enforce any term of this Agreement.

     

    23.    Governing
      law and submission to jurisdiction

     

    
      	 	
              23.1

            	
              Governing
                law

            


    

     

    
      	 	 	
              This
                Agreement shall be governed by and construed in accordance with English
                law.

            


    

     

    
      	 	
              23.2

            	
              Jurisdiction

            


    

     

    
      	 	 	
              All
                the parties irrevocably agree that the courts of England are to have
                exclusive jurisdiction to settle any dispute which may arise out
                of or in
                connection with this Agreement.

            


    

     

    
      	 	
              23.3

            	
              Submission
                and waiver

            


    

     

    
      	 	 	
              All
                the parties irrevocably submit to the jurisdiction of such courts
                and
                waive any objection to proceedings in any such court on the ground
                of
                venue or on the ground that the proceedings have been brought in
                an
                inconvenient forum.

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

     

    
      	 	
              23.4

            	
              Appointment
                of Process Agent

            


    

     

    
      	 	 	
              The
                Grantee (the “Principal”)
                irrevocably appoints Tim Peara of 24 Hoop Lane, London NW11 8BU (the
                “Agent”)
                as its agent to accept service of process in England in any legal
                action
                or proceedings arising out of or in connection with this Agreement
                provided that:

            


    

    

      
        	
                23.4.1

                 

              	
                service
                  upon the Agent shall be deemed valid service upon the Principal
                  whether or
                  not the process is forwarded to or received by the Principal;

                 

              
	
                23.4.2

                 

              	
                the
                  Principal shall inform all other parties to this Agreement, in
                  writing, of
                  any change in the address of the Agent within 28 days of such
                  change;

                 

              
	
                23.4.3

                 

              	
                if
                  the Agent ceases to be able to act as a process agent or to have
                  an
                  address in England, the Principal irrevocably agrees to appoint
                  a new
                  process agent in England acceptable to the other parties and to
                  deliver to
                  the other parties within 14 Business Days a copy of a written acceptance
                  of appointment by the new process agent; and

                 

              
	
                23.4.4

                 

              	
                nothing
                  in this Agreement shall affect the right to serve process in any
                  other
                  manner permitted by law.

                 

              


      

    

    
    

    24.    Authority
      to deliver

     

    The
      signature or sealing of this Agreement by or on behalf of a party shall
      constitute an authority to the solicitors, or an agent or employee of the
      solicitors, acting for that party in connection with this Agreement to deliver
      it as a deed on behalf of that party.

     

    


     

     

    IN
      WITNESS WHEREOF
      the
      parties hereto have signed and delivered this Deed as of the day and year first
      above written.

    


    

      

        
          	
                  EXECUTED
                    as
                    a
                    DEED by

                   

                	
                  )

                   

                
	
                  Baltic
                    Petroleum (E&P) Limited

                   

                	
                  )

                   

                
	
                  acting
                    by a Director and

                   

                	
                  )

                   

                
	
                  a
                    Director/Secretary

                   

                	
                  )

                   

                


        

      



    
                                                                   
        ________________________________

    

                                                                 
      Director

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ________________________________

     

    Director/Secretary

    
 

    
      
        
          	
                  EXECUTED
                    as
                    a
                    DEED
                    by

                   

                	
                  )

                   

                
	
                  OOO
                    Zauralneftegaz

                   

                	
                  )

                   

                
	
                  acting
                    by General Director

                   

                	
                  )

                   

                


        

      

    

    


     

    


    


    Schedule

     

    Key:
      ° = Degrees, ' or ’ = Minutes, N.L. = North Latitude, E.L. = East
      Latitude

    


    


    (A)
      Southern-
      Voskesensky:
      situated in the Chastoozersky - Makushinsky administrative regions


    


    Geographical
      coordinates of corner points: 

    


    1.
      55°37' N.L., 67°15' E.L. 

    


    2.
      55°37' N.L., 67°17' E.L. 

    


    3.
      55°38' N.L., 67°14' E.L. 

    


    4.
      55°35' N.L., 67°45' E.L. 

    


    5.
      55°25' N.L., 67°35' E.L. 

    


    6.
      55°28' N.L., 67°15' E.L. 

    


    Area
      of the block is 520 km2 

    


    (B)
      Lebyazhevsky:
      situated in the Lebyazhyevsky - Makushinsky administrative regions.


    


    Geographical
      coordinates of corner points: 

    


    1.
      55°12' N.L., 66°47' E.L. 

    


    2.
      55°12' N.L., 66°54' E.L. 

    


    3.
      55°04' N.L., 66°41' E.L. 

    


    4.
      55°04' N.L., 66°25' E.L. 

    


    Area
      of the block is 170 km2. 

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    (C)
      Petuhovsky:
      situated in the Petuhovsky - Machushinksiy administration regions.


    


    Geographical
      coordinates of corner points: 

    


    1.
      55°12'N.L.,67°20'E.L., 

    


    2.
      55°12'N.L.,67°43'E.L., 

    


    3.
      54°53'N.L.,67°43'E.L.,

    


    4.
      54°
51 'N.L, 67°34'E.L., 

    


    5.
      54°52'N.L, 67°23'E.L., 

    


    Area
      of the block is 840 km2 

    


    (D)
      Privolny

    


    Geographical
      coordinates of corner points: 

    


    1.
      55°31’N.L., 67°04’E.L.

    


    2.
      55°31’N.L., 67°15’E.L.

    


    3.
      55°28’N.L., 67°15’E.L.

    


    4.
      55°27’N.L., 67°18’E.L.

    


    5.
      55°31’N.L., 67°20’E.L.

    


    6.
      55°12’N.L., 67°13’E.L.

    


    7.
      55°12’N.L., 66°58’E.L.

    


    Area
      of the block is 500km2

    


    (E)
      Mokrousovsky

    


    Geographical
      coordinates of corner points:

    


    1.55°57’N.L.,67°17’E.L.

    


    2.
      55°37’N.L.,67°17’E.L.

    


    3.
      55°37’N.L.,66°47’E.L.

    


    4.
      55°57’N.L.,66°47’E.L.

    


    Area
      of the block is 957km2

    


    (F)
      Orlovo-Pashkovsky

    


    Geographical
      coordinates of corner points:

    


    1.
      55°18’N.L., 68°10’E.L.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    2.
      55°19’N.L., 68°37’E.L.

    


    3.
      55°14’N.L., 68°37’E.L.

    


    4.
      55°14’N.L., 68°30’E.L.

    


    5.
      55°15’N.L., 68°30’E.L.

    


    6.
      55°15’N.L., 68°12’E.L.

    


    7.
      55°13’N.L., 68°12’E.L.

    


    8.
      55°13’N.L., 68°10’E.L.

    


    Area
      of the block is 200km2

    


    (G)
      West-Suersky

    


    Geographical
      coordinates of corner points:

    


    1.
      55°37’N.L., 66°43’E.L.

    


    2.
      55°20’N.L., 67°43’E.L.

    


    3.
      55°20’N.L., 66°15’E.L.

    


    4.
      55°37’N.L., 66°15’E.L.

    


    Area
      of the block is 925km2