Document:

EXHIBIT 10.3

                                                       PRIVILEGED & CONFIDENTIAL
                                                               PB DRAFT:  4/9/04

                              EMPLOYMENT AGREEMENT

     This  Employment  (the  "Agreement")  is entered into as of this 1st day of
January,  2003  by  and between Siberian Energy Group Inc., a Nevada corporation
(the  "Company"),  and  Oleg  V.  Zhuravlev  ("Employee")  to be effective as of
January  1, 2003 (the "Effective Date").  Employee and the Company are sometimes
referred  to  individually  as  a  "Party"  and  collectively  as the "Parties."

In  consideration  of  the  mutual  covenants,  promises  and  agreements herein
contained,  the  Company  and Employee hereby covenant, promise and agree to and
with  each  other  as  follows:

     1.     Employment.  The  Company  shall  employ Employee and Employee shall
            ----------
perform  services for and on behalf of the Company upon the terms and conditions
set  forth  in  this  Agreement.

     2. Positions and Duties of Employment. Employee shall be required to devote
        ----------------------------------
his  full  energy,  skill and best efforts as required to the furtherance of his
managerial  duties  with the Company as President and Chief Executive Officer of
the  Company's  subsidiary  "Zauralneftegaz"  ("President/CEO  of  ZNG")  and as
Director  of  the  Company  ("Director  of  SEG").  While  serving  in  such
capacity(ies),  Employee  shall  have the responsibilities, duties, obligations,
rights, benefits and requisite authority as is customary for his position and as
may  be  determined  by  the  Board  of  Directors (the "Board") of the Company.

     Employee  understands  that  his  employment  as  President/CEO  of ZNG and
Director  of  SEG  involves  a  high  degree of trust and confidence, that he is
employed  for  the  purpose of furthering the Company's reputation and improving
the Company's operations and profitability, and that in executing this Agreement
he  undertakes  the  obligations set forth herein to accomplish such objectives.
Employee  agrees  that he shall serve the Company fully, diligently, competently
and  to  the  best of his ability.  Employee certifies that he fully understands
his  right  to  discuss  this  Agreement  with his attorney, that he has availed
himself  of this right to the extent that he desires, that he has carefully read
and fully understands this entire Agreement, and that he is voluntarily entering
into  this  Agreement.

     3.     Duties.  Employee  shall  perform  the  following  services  for the
            ------
Company:

     3.1     Employee  shall  serve as President/CEO of ZNG and Director of SEG,
or in such other position as determined by the Board, and in that capacity shall
work  with  the  Company to pursue the Company's plans as directed by the Board.

     3.2     Employee shall perform duties with the functions of a President/CEO
of  ZNG  and  Director  of  SEG,  subject  to  the direction of the Board of the
Company.

     3.3  During  the  term  of  this Agreement, Employee will not engage in any
other  activities  or undertake any other commitments that conflict with or take
priority over Employee's responsibilities and obligations to the Company and the
Company's  customers,  including  without  limitation those responsibilities and
obligations  incurred  pursuant  to  this  Agreement.

<PAGE>

     4.     Term.  Unless  terminated earlier as provided for in this Agreement,
            ----
the  term  of  this  Agreement  shall  commence on the Effective Date and end on
December 31, 2008 (the "Term").  If the employment relationship is terminated by
either  Party,  Employee  agrees  to  cooperate  with  the  Company and with the
Company's new management with respect to the transition of the new management in
the  operations  previously performed by Employee.  Upon Employee's termination,
Employee  agrees  to return to the Company all Company documents (and all copies
thereof),  any  other  Company property in Employee's possession or control, and
any materials of any kind that contain or embody any proprietary or confidential
material  of  the  Company.

     5.     Compensation.  Employee shall receive the following as compensation:
            ------------

     5.1     A salary at an annual rate as covered by the preexisting employment
agreement  between the Employee and "Zauralneftegaz", subject to periodic review
by  the  Board  or  the  Compensation  Committee  of  the  Board,  is payable in
accordance  with  the  Company's  customary  payroll  practices.

     5.2  At  the  discretion  of the Board or the Compensation Committee of the
Board,  a  performance-based  bonus.

     5.3  The  Company  shall  include  Employee,  if otherwise eligible, in any
profit sharing plan, executive stock option plan, pension plan, retirement plan,
medical  and/or  hospitalization  plan,  and/or any and all other benefit plans,
except  for  disability and life insurance, which may be placed in effect by the
Company  for the benefit of the Company's executives during the Term. Except for
the  fact  that  the  Company at all times shall provide Employee with all or at
least  a  portion  of Employee's medical and/or hospitalization insurance, which
shall  not be less than that afforded to the Company's other executives, nothing
in  this  Agreement  shall  limit  (i)  the  Company's  ability  to exercise the
discretion  provided  to  it  under any such benefit plan, or (ii) the Company's
discretion  to adopt, not adopt, amend or terminate any such benefit plan at any
time.

     5.4  The  Company  shall  provide  Employee  with vacation leave as per the
existing  employment  agreement with "Zauralneftegaz". The Company may modify in
its sole and absolute discretion such benefits from time to time as it considers
necessary  or  appropriate, provided that any such modification shall not affect
or modify Employee's then existing rights with respect to any previously accrued
vacation.

     5.5  Any payments which the Company shall make to Employee pursuant to this
Agreement  shall be reduced by standard withholding and other applicable payroll
deductions, including but not limited to federal, state or local income or other
taxes,  Social  Security and Medicare Taxes, State Unemployment Insurance, State
Disability  Insurance,  and  the  like.

     5.6  During  the  term  of his employment, Employee shall be reimbursed for
reasonable  expenses that are authorized by the Company and that are incurred by
Employee  for  the  benefit  of  the  Company  in  accordance  with the standard
reimbursement  practices  of the Company. Any direct payment or reimbursement of
expenses  shall  be  made  only  upon  presentation  of  an  itemized accounting
conforming  in  form and content to standards prescribed by the Internal Revenue
Service  relative  to  the  substantiation  of  the  deductibility  of  business
expenses.

<PAGE>

     6.     Stock  Options.
            --------------

     6.1     Option Grants; Exercise Prices.  During the term of this Agreement,
the  Company  agrees  to  do  the  following:

(a)  To  grant to Employee the additional option to purchase under the terms and
     conditions  of the Plan all or any part of 20,000 shares of Common Stock as
     of  January  1, 2004 and 15,000 shares of Common Stock on the first date of
     each  month  of  the  year  ended  December 31, 2004, up to an aggregate of
     200,000  shares  (the  "2004 Option Shares"), subject to, and in accordance
     with,  the  terms  and  conditions  set  forth in this Agreement (the "2004
     Option"),  at  an  exercise  price  of  $0.10  per  share.

(b)  To  grant to Employee the additional option to purchase under the terms and
     conditions  of the Plan all or any part of 20,000 shares of Common Stock as
     of  January  1, 2005 and 15,000 shares of Common Stock on the first date of
     each  month  of  the  year  ended  December 31, 2005, up to an aggregate of
     200,000  shares  (the  "2005 Option Shares"), subject to, and in accordance
     with,  the  terms  and  conditions  set  forth in this Agreement (the "2005
     Option"),  at  an  exercise  price  of  $0.30  per  share.

(c)  To  grant to Employee the additional option to purchase under the terms and
     conditions  of the Plan all or any part of 20,000 shares of Common Stock as
     of  January  1, 2006 and 15,000 shares of Common Stock on the first date of
     each  month  of  the  year  ended  December 31, 2006, up to an aggregate of
     200,000  shares  (the  "2006 Option Shares"), subject to, and in accordance
     with,  the  terms  and  conditions  set  forth in this Agreement (the "2006
     Option"),  at  an  exercise  price  of  $0.30  per  share.

(d)  To  grant to Employee the additional option to purchase under the terms and
     conditions  of the Plan all or any part of 20,000 shares of Common Stock as
     of  January  1,  2007  and  on  January  1st  of every subsequent year (the
     "Subsequent  Option  Shares, together with the 2004 Option Shares, the 2005
     Option  Shares  and the 2006 Option Shares, the "Option Shares") and 15,000
     shares  of  Common  Stock on the first date of each month of the year ended
     December  31,  2007  and  on the first day of each month of each subsequent
     year  ended December 31st (the "Subsequent Option Shares, together with the
     2004  Option Shares, the 2005 Option Shares and the 2006 Option Shares, the
     "Option Shares") up to an aggregate of 200,000 shares per year, subject to,
     and  in  accordance  with,  the  terms  and  conditions  set  forth in this
     Agreement  (each  a "Subsequent Option", together with the 2004 Option, the
     2005 Option, the 2006 Option and each Subsequent Option, the "Options"), at
     an  exercise  price  of  110%  of  the average closing prices for the three
     months  prior  to  each  grant  date.

<PAGE>

(f)  The  Options  to be granted pursuant to this Section 6.1 shall be evidenced
     by  one  or more stock option agreements in the form set forth as Exhibit A
     hereto  (the  "Stock  Option  Agreement").

     6.2     Vesting  of  Options.  Each Option shall become vested and
exercisable on the applicable grant date.

     6.3 Duration of Options.  The 2004 Option, the 2005 Option,
the  2006  Option  and each Subsequent Option shall be exercisable to the extent
and  in  the  manner provided for in the applicable Stock Option Agreement for a
period  of  [four  (4)] years from the applicable grant date; provided, however,
                                                              --------  --------
that  an  Option may be terminated earlier as provided in Section 9. Any Options
or  portion  thereof  which  have  not  been  exercised  within their respective
[four]-year  periods  shall  expire  at  the  end of each respective [four]-year
period  and  the  Company  shall cancel such unexercised Options at those times.

     6.4  Manner  of  Exercisability  and  Payment.

(a)  Subject  to  the terms and conditions of this Agreement, each Option may be
     exercised  in whole at any time, or in part, from time to time, by delivery
     of  written  notice  to the Company, at its principal executive office. The
     notice shall state which Option(s) Employee is electing to exercise and the
     number  of  Option  Shares being exercised and shall be signed by Employee.

(b)  The  notice  of  exercise  described  in  Section  6.4(a)  hereof  shall be
     accompanied  by  the  full  purchase  price  for  the  Option  Shares being
     exercised,  in  cash  or  by  check  or  (subject to the Company's consent)
     instructions from Employee to the Company directing the Company to delivery
     a specified number of Option Shares directly to a designed broker or dealer
     pursuant  to  a cashless exercise election which is made in accordance with
     such  requirements  and  procedures as are acceptable to the Company in its
     sole  discretion  and  full  payment  of  all  applicable withholding taxes
     pursuant  to  Section  6.8  hereof.

(c)  Upon  receipt  of notice of exercise and full payment for the Option Shares
     being  exercised, the Company shall take such action as may be necessary to
     effect the transfer to Employee of the number of Options Shares as to which
     such  exercise  was  effective.

(d)  Employee  shall  not  be  deemed to be the holder of, or to have any of the
     rights  of  a holder with respect to any Option Shares until (i) the Option
     shall  have  been  exercised  pursuant  to  the terms of this Agreement and
     Employee  shall  have paid the full purchase price for the number of Option
     Shares  exercised,  (ii)  the  Company  shall have issued and delivered the
     Option  Shares  to  Employee,  and  (iii)  Employee's  name shall have been
     entered  as  a stockholder of record on the books of the Company, whereupon
     Employee  shall  have full ownership rights with respect to such the Option
     Shares.

<PAGE>

(e)  Each  certificate representing Option Shares initially issued upon exercise
     of  an  Option,  unless  at  the  time  of  exercise such Option Shares are
     registered  under  the  Securities  Act of 1933, as amended, shall bear the
     following  legend  on  the  face  thereof:

     THE  SECURITIES  REPRESENTED  BY  THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     WITH  THE  UNITED  STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S.
     SECURITIES  ACT  OF  1933, AS AMENDED (THE "1933 ACT"), AND ARE 'RESTRICTED
     SECURITIES'  AS  THAT  TERM  IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THE
     SECURITIES  MAY  NOT  BE  OFFERED  FOR  SALE, SOLD OR OTHERWISE TRANSFERRED
     EXCEPT  PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT,
     OR  PURSUANT  TO  AN  EXEMPTION  FROM  REGISTRATION  UNDER  THE  1933 ACT..

     THE  SECURITIES  EVIDENCED  BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
     SET  FORTH  IN A STOCK OPTION AGREEMENT, DATED JANUARY 1, 2004, BETWEEN THE
     COMPANY  AND  OLEG  V.  ZHURAVLEV  AND  MAY  NOT  BE  TRANSFERRED EXCEPT IN
     COMPLIANCE  WITH THE TERMS OF SUCH STOCK OPTION AGREEMENT. THE COMPANY WILL
     FURNISH  WITHOUT  CHARGE  TO EACH SHAREHOLDER WHO SO REQUESTS A COPY OF THE
     STOCK  OPTION  AGREEMENT.

     6.5     Nontransferability.  There  are  substantial  restrictions  on  the
transferability  of the Options Shares.  The Options are not transferable except
by will or the laws of descent and distribu-tion, and any attempt to do so shall
void  the  Option.  The  Option  Shares  cannot  be  transferred,  pledged,
hypothecated, sold or otherwise disposed of unless they are registered under the
1933  Act or an exemption from such registration is available and established to
the  satisfaction  of  the  Company;  investors in the Company have no rights to
require that the Option Shares be registered except as set forth in Section 9 of
this  Agreement; there is no right of presentment of the Option Shares and there
is  no  obligation  by  the Company to repurchase any of the Option Shares; and,
accordingly, Optionee may have to hold the Option Shares indefinitely and it may
not  be possible for Optionee to liquidate Optionee's investment in the Company.

     6.6  Adjustment  By  Stock  Split,  Stock Dividend, Etc. If at any time the
Company  increases  or  decreases the number of its outstanding shares of Common
Stock,  or changes in any way the rights and privileges of such shares, by means
of  the  payment  of a stock dividend or the making of any other distribution on
such shares payable in its Common Stock, or through a stock split or subdivision
of  shares,  or  a  consolidation  or  combination  of  shares,  or  through  a
reclassification  or  recapitalization  involving its Common Stock, the numbers,
rights and privileges of the shares of Common Stock included in the Option shall
be  increased,  decreased  or  changed in like manner as if such shares had been
issued  and  outstanding,  fully  paid  and  nonassessable,  at the time of such
occurrence,  and  the  exercise  price  shall  be  adjusted  accordingly.

<PAGE>

     6.7  Withholding  of  Taxes.  The  Company  may take such steps as it deems
necessary  or  appropriate for the withholding of any taxes which the Company is
required  by  any  law  or  regulation  or  any  governmental authority, whether
federal, state or local, domestic or foreign, to withhold in connection with the
Option  including,  but not limited to, the withholding of all or any portion of
any  payment  owed  by the Company to Employee or the withholding of issuance of
Option  Shares  to  be  issued  upon  the  exercise  of  the  Option.

     6.8 Certain Representations, Warranties and Covenants of Employee. Employee
hereby  represents,  warrants  and  covenants  to  the  Company  that:

(a)  Employee  is  acquiring  the Option Shares for investment purposes only and
     the  Options  Shares  that  Employee  is acquiring will be held by Optionee
     without sale, transfer or other disposition for an indefinite period unless
     the  transfer  of  those  securities  is  subsequently registered under the
     federal  securities  laws  or  unless  exemptions  from  registration  are
     available.

(b)  Employee  will  not  sell,  assign, transfer, exchange, encumber, pledge or
     otherwise  dispose  of  any  of  the Option Shares acquired pursuant to the
     Options,  or grant any option or right to purchase such shares or any legal
     or  beneficial  interest  in  such  shares,  except  in accordance with the
     requirements  set  forth  below:

     (i)  Prior to the consummation of the first public offering of Common Stock
          pursuant  to  a  registration  statement  (other  than  on Form S-8 or
          successor forms) filed with, and declared effective by, the Securities
          and  Exchange  Commission (an "Initial Public Offering"), Employee may
          transfer  shares  of Common Stock only if the following conditions are
          satisfied:  (a) the proposed transfer must be pursuant to an exemption
          from  registration  in  compliance  with  the  Securities Act, and any
          applicable  state  securities laws, and the transferring Employee must
          provide  a  written  opinion from counsel acceptable to the Company to
          the  effect that no such registration is required under the applicable
          securities  laws;  (b) the proposed transfer must be permissible under
          the  provisions  of  all other applicable laws, rules, regulations and
          licenses and the transferring Employee must satisfy all pre-conditions
          and comply with all other requirements pertaining to the transfer; and
          (c)  the  Company must consent to the proposed transfer, which consent
          will  not  be  unreasonably  withheld.

     (ii) After  an Initial Public Offering, and after any applicable restricted
          period  related  to the Initial Public Offering, Employee may transfer
          shares  of  Common  Stock  as follows: (a) Employee may sell shares of
          Common Stock pursuant to an effective registration statement under the
          Securities  Act,  in  compliance  with any applicable state securities
          laws  or  blue  sky laws; (b) Employee may sell shares of Common Stock
          pursuant  to,  and in accordance with, the provisions of Rule 144; and
          (c)  Employee  may  transfer shares of Common Stock in any transaction
          that  satisfies  the  conditions discussed in Section 6.8(b)(i) above.

<PAGE>

     7.     Confidentiality.  Employee  hereby  warrants,  covenants  and agrees
            ---------------
that,  without  the  prior  express  written  approval  of the Company or unless
required by law or court order, Employee shall hold in the strictest confidence,
and shall not disclose to any person, firm, corporation or other entity, any and
all  of  the  Company's  data,  including  but  not  limited to (a) information,
drawings,  sketches,  plans or other documents concerning the Company's business
or  development  plans,  customers  or suppliers, (b) the Company's development,
design,  construction  or  sales and marketing methods or techniques, or (c) the
Company's  trade  secrets  and  other  "know-how" or information not of a public
nature, regardless of how such information came to the custody of Employee.  For
purposes  of  this Agreement, such information shall include, but not be limited
to,  information,  including  a  formula, pattern, compilation, program, device,
method,  technique  or  process,  that  (i)  derives independent economic value,
present  or  potential, from not being generally known to, and not being readily
ascertainable  by  proper  means by, other persons who can obtain economic value
from  its  disclosure  or  use,  and  (ii)  is  the  subject of efforts that are
reasonable  under  the  circumstances  to  maintain  its secrecy.  The warranty,
covenant  and  agreement  set  forth  in  this paragraph shall not expire, shall
survive this Agreement, and shall be binding upon Employee without regard to the
passage  of  time  or  other  events.

     8. Non-Compete. Employee acknowledges and recognizes the highly competitive
        -----------
nature  of  the  Company's business and that Employee's duties hereunder justify
restricting  Employee's  further  employment  following  any  termination  of
employment.  The Employee agrees that so long as the Employee is employed by the
Company,  and  (i) for a period of [two] years following the termination of this
Agreement,  Employee, except when acting at the request of the Company on behalf
of or for the benefit of the Company, will not induce customers, agents or other
sources  of  distribution  of  the  Company's  business  under contract or doing
business with the Company to terminate, reduce, alter or divert business with or
from the Company, and (ii) for a period of one year following the termination of
this  Agreement,  Employee  shall  not,  directly  or  indirectly,  either  as a
principal,  agent, employee, employer, consultant, partner, member or manager of
a  limited  liability  company,  shareholder  of  a  company  that does not have
securities registered under the Securities Exchange Act of 1934, as amended (the
"1934  Act"),  or  shareholder  in  excess  of one percent of a company that has
securities  registered  under the 1934 Act, corporate officer or director, or in
any other individual or representative capacity, engage or otherwise participate
in  any  manner  or fashion in any business that is in competition in any manner
whatsoever  with  the business activities of the Company, in or about any market
in  which  the Company has, or has publicly announced a plan for doing business.
Employee further covenants and agrees that the restrictive covenant set forth in
this  paragraph  is  reasonable  as to duration, terms and geographical area and
that the same protects the legitimate interests of the Company, imposes no undue
hardship on Employee, and is not injurious to the public. The covenant set forth
under  (ii)  above shall not apply if Employee's employment is terminated within
twelve  months of a Change in Control as defined in of this Agreement. Ownership
by Employee, for investment purposes only, of less than one percent of any class
of  securities  of  a  corporation  if  said securities are listed on a national
securities  exchange  or  registered  under  the 1934 Act shall not constitute a
breach  of  the covenant set forth under (ii) above. It is the desire and intent
of  the Parties that the provisions of this paragraph be enforced to the fullest
extent  permissible  under  the  laws  and  public  policies  applied  in  each
jurisdiction  in  which  enforcement  is  sought. Accordingly, if any particular
portion  of  paragraph shall be adjudicated to be invalid or unenforceable, this
paragraph  shall be deemed amended to apply in the broadest allowable manner and
to delete therefrom the portion adjudicated to be invalid or unenforceable, such
amendment  and deletion to apply only with respect to the operation of paragraph
in  the  particular  jurisdiction  in  which  that  adjudication  is  made.

<PAGE>

     9.     Termination.
            -----------

(a)  If  Employee's  employment  is  terminated by the Company without Cause (as
     defined  below),  or  if  Employee terminates his employment for Reasonable
     Basis  (as  defined  below),  then  the  Company  shall,  in  exchange  for
     Employee's  execution of a general release and waiver of claims against the
     Company  as  of the termination date in a form reasonably acceptable to the
     Company,  continue  to pay as severance Employee's salary for twelve months
     or  [one-half]  the  remaining term of the Agreement, whichever is greater.
     Such  payments  shall  be  made  in accordance with the Company's customary
     payroll  practices  and  shall  be  subject  to  applicable withholding and
     payroll  deductions. In the event of any such termination set forth in this
     Section  9(a), Employee will not be entitled to any additional compensation
     or  benefits  beyond what is provided in the first sentence of this Section
     9(a).

     (i)  For  purposes  of  this  Agreement, "Cause" shall mean that the Board,
          acting  in  good  faith  based  upon the information then known to the
          Company,  determines  that Employee has engaged in or committed any of
          the  following:  willful misconduct, gross negligence, theft, fraud or
          other  illegal conduct; refusal or unwillingness to perform Employee's
          duties; performance by Employee of Employee's duties determined by the
          Board to be inadequate in a material respect; breach of any applicable
          non-competition,  confidentiality  or other proprietary information or
          inventions  agreement  between Employee and the Company; inappropriate
          conflict  of  interest;  insubordination;  failure  to  follow  the
          directions  of  the  Board  or  any  committee  thereof;  or any other
          material  breach  of  this  Agreement. Indictment or conviction of any
          felony,  or  any  entry of a plea of nolo contendre, under the laws of
          the  United  States  or  any  State  shall  also be considered "Cause"
          hereunder. "Cause" shall be specified in a notice of termination to be
          delivered  by  the  Company  no  later  than  the  date  as  of  which
          termination  is  effective.

     (ii) For  purposes  of  this Agreement, "Reasonable Basis" shall mean (A) a
          material  breach  of  this  Agreement  by  the  Company, provided that
          Employee  shall have first given written notice of such default to the
          Company  and  if  within thirty days after receipt of such notice, the
          Company  has  not cured such default; or (B) termination of Employee's
          employment by the Company without Cause during the term hereof; or (C)
          a reduction in Employee's salary, except to the extent that a majority
          of  the  other  executive  officers of the Company incur reductions of
          salary  that average no less than the percentage reduction incurred by
          Employee;  or  (E)  termination  of  the  Employee's employment by the
          Employee  within 12 months after a "Change in Control," with Change in
          Control  being  defined  as  follows:

     "Change  in  Control"  shall  mean  any  of  the  following:

(1)  any  consolidation or merger of the Company in which the Company is not the
     continuing  or surviving corporation, other than a merger of the Company in
     which  the  holders  of  the  Company common stock immediately prior to the
     merger  own  a  majority  of  the  voting  common  stock  of  the surviving
     corporation  immediately  after  the  merger;

(2)  any sale, lease, exchange or other transfer (in one transaction or a series
     of  related  transactions)of  all  or  substantially  all the assets of the
     Company;

<PAGE>

(3)  any approval by the stockholders of the Company of any plan or proposal for
     the  liquidation  or  dissolution  of  the  Company;

(4)  the  acquisition  by  any  person or entity, or any group of persons and/or
     entities  of  a  majority  of the stock entitled to elect a majority of the
     directors  of  the  Company;  or

(5)  subject  to  applicable  law,  in  a  Chapter 11 bankruptcy proceeding, the
     appointment  of a trustee or the conversion of a case involving the Company
     to  a  case  under  a  Chapter  7  bankruptcy  proceeding.

(b)  In  the event that Employee's employment with the Company is terminated for
     Cause,  by  reason  of Employee's death or disability, or due to Employee's
     resignation  or  voluntary  termination  (other than for Reasonable Basis),
     then  all  compensation and benefits will cease as of the effective date of
     such  termination, and Employee shall receive no severance benefits, or any
     other compensation; provided that Employee shall be entitled to receive all
     compensation  earned  and  all  benefits and reimbursements due through the
     effective  date  of  termination.

(c)  In  the event that Employee's employment with the Company is terminated for
     any  reason, (i) Employee shall have the right to exercise any Option(s) or
     portion  thereof  for  a  period of three months from the effective date of
     such termination and (ii) Employee's right to any Option or portion thereof
     which has not been granted under this Agreement shall immediately terminate
     on  the  effective  date  of  such  termination  of  employment.

(d)  Employee  agrees  that  the  payments  contemplated by this Agreement shall
     constitute the exclusive and sole remedy for any termination of employment,
     and  Employee  covenants not to assert or pursue any other remedies, at law
     or  in  equity,  with  respect  to  any  termination  of  employment.

(e)  Any  party  terminating  this  Agreement  shall  give prompt written notice
     ("Notice  of  Termination")  to  the other party hereto advising such other
     party of the termination of this Agreement stating in reasonable detail the
     basis  for  such  termination.  The  Notice  of  Termination shall indicate
     whether  termination is being made for Cause (if the Company has terminated
     the  Agreement) or for Reasonable Basis (if the Employee has terminated the
     Agreement).

     10.     Remedies.  If  there  is  a  breach  or  threatened  breach  of any
             --------
provision  of  Section 7 or Section 8 of this Agreement, the Company will suffer
irreparable  harm  and  shall  be entitled to an injunction restraining Employee
from  such breach.  Nothing herein shall be construed as prohibiting the Company
from  pursuing  any  other  remedies  for  such  breach  or  threatened  breach.

     11.  Severability.  It  is  the  clear  intention  of  the  Parties to this
          ------------
Agreement that no term, provision or clause of this Agreement shall be deemed to
be invalid, illegal or unenforceable in any respect, unless such term, provision
or clause cannot be otherwise construed, interpreted, or modified to give effect
to  the intent of the Parties and to be valid, legal or enforceable. The Parties
specifically  charge  the  trier  of  fact  to  give effect to the intent of the
Parties,  even  if  in  doing  so,  information  of a specific provision of this
Agreement  is required consistent with the foregoing stated intent. In the event
that  such  a  term,  provision or clause cannot be so construed, interpreted or
modified,  the validity, legality and enforceability of the remaining provisions
contained  herein  and  other  application(s)  thereof  shall  not in any way be
affected  or  impaired  thereby  and  shall  remain  in  full  force and effect.

     12.  Waiver  of Breach. The waiver by the Company or Employee of the breach
          ------
of  any  provision  of this Agreement by the other Party shall not operate or be
construed  as  a  waiver  of  any  subsequent  breach  by  that  Party.

     13.  Entire  Agreement. This document contains the entire agreement between
          -----------------
the  Parties  and  supersedes  all  prior  oral  or  written agreements, if any,
concerning  the  subject  matter  hereof  or  otherwise  concerning  Employee's
employment by the Company (except for _________________). This Agreement may not
be  changed  orally,  but  only  by  agreement in writing signed by the Parties.

     14.  Governing  Law.  This  Agreement,  its  validity,  interpretation  and
          --------------
enforcement,  shall  be  governed by the laws of the State of _______, excluding
conflict  of  laws  principles.  Employee  hereby expressly consents to personal
jurisdiction  in  the state and federal courts located in ________, ________ for
any  lawsuit  filed there against him by the Company arising from or relating to
this  Agreement.

     15.  Notices.  Any notice pursuant to this Agreement shall be validly given
          -------
or  served if that notice is made in writing and delivered personally or sent by
certified  mail or registered, return receipt requested, postage prepaid, to the
following  addresses:

     If  to  Company:          Siberian  Energy  Group  Inc.
                               275  Madison  Avenue,  6th  floor
                               New  York  NY  10016
                               Attention:  Chairman  of  the  Compensation
                               Committee

     If  to  Employee:         Oleg  V.  Zhuravlev

                               To  the  address  for  Employee  set forth  below
                               his  signature.

     All  notices  so given shall be deemed effective upon personal delivery or,
if  sent  by  certified  or  registered  mail,  five business days after date of
mailing.  Either  party, by notice so given, may change the address to which his
or  its  future  notices  shall  be  sent.

     16.     Assignment  and  Binding  Effect.  This  Agreement shall be binding
             --------------------------------
upon  Employee  and the Company and shall benefit the Company and its successors
and  assigns.  This  Agreement  shall  not  be  assignable  by  Employee.

     17. Headings. The headings in this Agreement are for convenience only; they
         --------
form  no  part  of  this  Agreement  and  shall  not  affect its interpretation.

     18.  Construction.  Employee  represents  he  has  (a)  read and completely
          -------------
understands this Agreement and (b) had an opportunity to consult with such legal
and  other  advisers  as  he has desired in connection with this Agreement. This
Agreement  shall  not  be  construed  against  any  one  of  the  Parties.

<PAGE>

     19.     Insurance.  The  Company  is  to  maintain directors' and officers'
             ---------
insurance  in  an  amount  determined  reasonably  by  the  Board.

     20.  Counterparts.  This  Agreement  may  be  executed   in  one   or  more
          ------------
counterparts,  all of which taken together shall constitute a single instrument.

                                    * * * * *

<PAGE>

     IN  WITNESS  WHEREOF, the parties have caused this Agreement to be executed
the  day  and  year  first  above  written.

EMPLOYEE                                       SIBERIAN  ENERGY  GROUP  INC.

/s/ Oleg V. Zhuravlev
                                                   /s/ David Zaikin
Oleg  V.  Zhuravlev,  Individually                 David Zaikin, Chairman
Address:  #17  -  13  6TH  MICROREGION,            Printed  Name  and  Title
          KURGAN  CITY,  RUSSIA,  640023

<PAGE>EXHIBIT 10.4

                                                       PRIVILEGED & CONFIDENTIAL
                                                               PB DRAFT:  4/9/04

                              EMPLOYMENT AGREEMENT

     This  Employment  (the  "Agreement")  is entered into as of this 1st day of
January,  2003  by  and between Siberian Energy Group Inc., a Nevada corporation
(the  "Company"),  and Sergey Potapov ("Employee") to be effective as of January
1, 2003 (the "Effective Date").  Employee and the Company are sometimes referred
to  individually  as  a  "Party"  and  collectively  as  the  "Parties."

In  consideration  of  the  mutual  covenants,  promises  and  agreements herein
contained,  the  Company  and Employee hereby covenant, promise and agree to and
with  each  other  as  follows:

     1.     Employment.  The  Company  shall  employ Employee and Employee shall
            ----------
perform  services for and on behalf of the Company upon the terms and conditions
set  forth  in  this  Agreement.

     2. Positions and Duties of Employment. Employee shall be required to devote
        ----------------------------------
his  full  energy,  skill and best efforts as required to the furtherance of his
managerial duties with the Company as Vice President of the Company's subsidiary
"Zauralneftegaz"  ("Vice  President  of  ZNG")  and  Director  of  the  Company
("Director  of  SEG").  While serving in such capacity(ies), Employee shall have
the  responsibilities,  duties,  obligations,  rights,  benefits  and  requisite
authority as is customary for his position and as may be determined by the Board
of  Directors  (the  "Board")  of  the  Company.

     Employee  understands  that  his  employment  as  Vice President of ZNG and
Director  of  SEG  involves  a  high  degree of trust and confidence, that he is
employed  for  the  purpose of furthering the Company's reputation and improving
the Company's operations and profitability, and that in executing this Agreement
he  undertakes  the  obligations set forth herein to accomplish such objectives.
Employee  agrees  that he shall serve the Company fully, diligently, competently
and  to  the  best of his ability.  Employee certifies that he fully understands
his  right  to  discuss  this  Agreement  with his attorney, that he has availed
himself  of this right to the extent that he desires, that he has carefully read
and fully understands this entire Agreement, and that he is voluntarily entering
into  this  Agreement.

     3.     Duties.  Employee  shall  perform  the  following  services  for the
            ------
Company:

     3.1     Employee  shall serve as Vice President of ZNG and Director of SEG,
or in such other position as determined by the Board, and in that capacity shall
work  with  the  Company to pursue the Company's plans as directed by the Board.

     3.2     Employee  shall  perform  duties  with  the  functions  of  a  Vice
President  of  ZNG and Director of SEG, subject to the direction of the Board of
the  Company.

     3.3  During the term of this Agreement, Employee shall devote substantially
all  of  Employee's  business time to the performance of Employee's duties under
this  Agreement. Without limiting the foregoing, Employee shall perform services
on behalf of the Company for at least [40] hours per week, and Employee shall be
available  at  the request of the Company at other times, including weekends and
holidays,  to  meet  the  needs  and  requests  of  the  Company's  customers.

<PAGE>

     3.4  During  the  term  of  this Agreement, Employee will not engage in any
other  activities  or undertake any other commitments that conflict with or take
priority over Employee's responsibilities and obligations to the Company and the
Company's  customers,  including  without  limitation those responsibilities and
obligations  incurred  pursuant  to  this  Agreement.

     4.     Term.  Unless  terminated earlier as provided for in this Agreement,
            ----
the  term  of  this  Agreement  shall  commence on the Effective Date and end on
December 31, 2008 (the "Term").  If the employment relationship is terminated by
either  Party,  Employee  agrees  to  cooperate  with  the  Company and with the
Company's new management with respect to the transition of the new management in
the  operations  previously performed by Employee.  Upon Employee's termination,
Employee  agrees  to return to the Company all Company documents (and all copies
thereof),  any  other  Company property in Employee's possession or control, and
any materials of any kind that contain or embody any proprietary or confidential
material  of  the  Company.

     5.     Compensation.  Employee shall receive the following as compensation:
            ------------

     5.1     A salary at an annual rate as covered by the preexisting employment
agreement  between the Employee and "Zauralneftegaz", subject to periodic review
by  the  Board  or  the  Compensation  Committee  of  the  Board,  is payable in
accordance  with  the  Company's  customary  payroll  practices.

     5.2  At  the  discretion  of the Board or the Compensation Committee of the
Board,  a  performance-based  bonus.

     5.3  The  Company  shall  include  Employee,  if otherwise eligible, in any
profit sharing plan, executive stock option plan, pension plan, retirement plan,
medical  and/or  hospitalization  plan,  and/or any and all other benefit plans,
except  for  disability and life insurance, which may be placed in effect by the
Company  for the benefit of the Company's executives during the Term. Except for
the  fact  that  the  Company at all times shall provide Employee with all or at
least  a  portion  of Employee's medical and/or hospitalization insurance, which
shall  not be less than that afforded to the Company's other executives, nothing
in  this  Agreement  shall  limit  (i)  the  Company's  ability  to exercise the
discretion  provided  to  it  under any such benefit plan, or (ii) the Company's
discretion  to adopt, not adopt, amend or terminate any such benefit plan at any
time.

     5.4  The  Company  shall  provide  Employee  with vacation leave as per the
existing  employment  agreement with "Zauralneftegaz". The Company may modify in
its sole and absolute discretion such benefits from time to time as it considers
necessary  or  appropriate, provided that any such modification shall not affect
or modify Employee's then existing rights with respect to any previously accrued
vacation.

     5.5  Any payments which the Company shall make to Employee pursuant to this
Agreement  shall be reduced by standard withholding and other applicable payroll
deductions, including but not limited to federal, state or local income or other
taxes,  Social  Security and Medicare Taxes, State Unemployment Insurance, State
Disability  Insurance,  and  the  like.

<PAGE>

     5.6  During  the  term  of his employment, Employee shall be reimbursed for
reasonable  expenses that are authorized by the Company and that are incurred by
Employee  for  the  benefit  of  the  Company  in  accordance  with the standard
reimbursement  practices  of the Company. Any direct payment or reimbursement of
expenses  shall  be  made  only  upon  presentation  of  an  itemized accounting
conforming  in  form and content to standards prescribed by the Internal Revenue
Service  relative  to  the  substantiation  of  the  deductibility  of  business
expenses.

     6.     Stock  Options.
            --------------

     6.1     Option Grants; Exercise Prices.  During the term of this Agreement,
the  Company  agrees  to  do  the  following:

(a)  To  grant to Employee the additional option to purchase under the terms and
     conditions  of the Company 2004 Stock Option Plan (the "Plan") all or any
     part of 14,000 shares of Common Stock as of  January  1, 2004 and 14,000
     shares of the authorized and unissued $0.001 par value common stock of the
     Company ("Common Stock"),  on the first date of each  month  of  the  year
     ended  December 31, 2004, up to an aggregate of 168,000  shares (the "2004
     Option Shares"), subject to, and in accordance with,  Exhibit A and the
     terms  and  conditions  set  forth in this Agreement (the "2004 Option"),
     at  an  exercise  price  of  $0.10  per  share.

(b)  To  grant to Employee the additional option to purchase under the terms and
     conditions  of the Plan all or any part of 14,000 shares of Common Stock as
     of  January  1, 2005 and 14,000 shares of Common Stock on the first date of
     each  month  of  the  year  ended  December 31, 2005, up to an aggregate of
     168,000  shares  (the  "2005 Option Shares"), subject to, and in accordance
     with,  the  terms  and  conditions  set  forth in this Agreement (the "2005
     Option"),  at  an  exercise  price  of  $0.30  per  share.

(c)  To  grant to Employee the additional option to purchase under the terms and
     conditions  of the Plan all or any part of 14,000 shares of Common Stock as
     of  January  1, 2006 and 14,000 shares of Common Stock on the first date of
     each  month  of  the  year  ended  December 31, 2006, up to an aggregate of
     168,000  shares  (the  "2006 Option Shares"), subject to, and in accordance
     with,  the  terms  and  conditions  set  forth in this Agreement (the "2006
     Option"),  at  an  exercise  price  of  $0.30  per  share.

(d)  To  grant to Employee the additional option to purchase under the terms and
     conditions  of the Plan all or any part of 14,000 shares of Common Stock as
     of  January  1,  2007  and  on  January  1st  of every subsequent year (the
     "Subsequent  Option  Shares, together with the 2004 Option  Shares,  the
     2005  Option  Shares  and the 2006 Option Shares, the "Option  Shares")
     and  14,000  shares of Common Stock on the first date of each month of
     the year ended December 31, 2007 and on the first day of each month  of
     each subsequent year ended December 31st (the "Subsequent Option Shares,
     together  with the 2004 Option Shares, the 2005  Option  Shares and the
     2006 Option Shares, the "Option Shares") up to an  aggregate  of  168,000
     shares  per year, subject to, and in accordance with,  the  terms  and
     conditions  set  forth  in  this  Agreement (each a  "Subsequent  Option",
     together  with the 2004 Option, the 2005 Option, the 2006 Option and each
     Subsequent Option, the "Options"), at an  exercise  price  of  110%  of
     the average closing prices for the three months  prior  to  each  grant
     date.

<PAGE>

(f)  The  Options  to be granted pursuant to this Section 6.1 shall be evidenced
     by  one  or more stock option agreements in the form set forth as Exhibit A
     hereto  (the  "Stock  Option  Agreement").

     6.2     Vesting  of  Options.  Each Option shall become vested and
exercisable on the applicable grant date.

     6.3 Duration of Options. The 2004 Option, the 2005 Option,
the  2006  Option  and each Subsequent Option shall be exercisable to the extent
and  in  the  manner provided for in the applicable Stock Option Agreement for a
period  of  [four  (4)] years from the applicable grant date; provided, however,
                                                              --------  --------
that  an  Option may be terminated earlier as provided in Section 9. Any Options
or  portion  thereof  which  have  not  been  exercised  within their respective
[four]-year  periods  shall  expire  at  the  end of each respective [four]-year
period  and  the  Company  shall cancel such unexercised Options at those times.

     6.4  Manner  of  Exercisability  and  Payment.

(a)  Subject  to  the terms and conditions of this Agreement, each Option may be
     exercised  in whole at any time, or in part, from time to time, by delivery
     of  written  notice  to the Company, at its principal executive office. The
     notice shall state which Option(s) Employee is electing to exercise and the
     number  of  Option  Shares being exercised and shall be signed by Employee.

(b)  The  notice  of  exercise  described  in  Section  6.4(a)  hereof  shall be
     accompanied  by  the  full  purchase  price  for  the  Option  Shares being
     exercised,  in  cash  or  by  check  or  (subject to the Company's consent)
     instructions from Employee to the Company directing the Company to delivery
     a specified number of Option Shares directly to a designed broker or dealer
     pursuant  to  a cashless exercise election which is made in accordance with
     such  requirements  and  procedures as are acceptable to the Company in its
     sole  discretion  and  full  payment  of  all  applicable withholding taxes
     pursuant  to  Section  6.8  hereof.

(c)  Upon  receipt  of notice of exercise and full payment for the Option Shares
     being  exercised, the Company shall take such action as may be necessary to
     effect the transfer to Employee of the number of Options Shares as to which
     such  exercise  was  effective.

(d)  Employee  shall  not  be  deemed to be the holder of, or to have any of the
     rights  of  a holder with respect to any Option Shares until (i) the Option
     shall  have  been  exercised  pursuant  to  the terms of this Agreement and
     Employee  shall  have paid the full purchase price for the number of Option
     Shares  exercised,  (ii)  the  Company  shall have issued and delivered the
     Option  Shares  to  Employee,  and  (iii)  Employee's  name shall have been
     entered  as  a stockholder of record on the books of the Company, whereupon
     Employee  shall  have full ownership rights with respect to such the Option
     Shares.

<PAGE>

(e)  Each  certificate representing Option Shares initially issued upon exercise
     of  an  Option,  unless  at  the  time  of  exercise such Option Shares are
     registered  under  the  Securities  Act of 1933, as amended, shall bear the
     following  legend  on  the  face  thereof:

     THE  SECURITIES  REPRESENTED  BY  THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     WITH  THE  UNITED  STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S.
     SECURITIES  ACT  OF  1933, AS AMENDED (THE "1933 ACT"), AND ARE 'RESTRICTED
     SECURITIES'  AS  THAT  TERM  IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THE
     SECURITIES  MAY  NOT  BE  OFFERED  FOR  SALE, SOLD OR OTHERWISE TRANSFERRED
     EXCEPT  PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT,
     OR  PURSUANT  TO  AN  EXEMPTION  FROM  REGISTRATION  UNDER  THE  1933 ACT..

     THE  SECURITIES  EVIDENCED  BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
     SET  FORTH  IN A STOCK OPTION AGREEMENT, DATED JANUARY 1, 2004, BETWEEN THE
     COMPANY  AND SERGEY POTAPOV AND MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE
     WITH  THE  TERMS  OF  SUCH STOCK OPTION AGREEMENT. THE COMPANY WILL FURNISH
     WITHOUT  CHARGE  TO  EACH  SHAREHOLDER  WHO SO REQUESTS A COPY OF THE STOCK
     OPTION  AGREEMENT.

     6.5     Nontransferability.  There  are  substantial  restrictions  on  the
transferability  of the Options Shares.  The Options are not transferable except
by will or the laws of descent and distribution, and  any attempt to do so shall
void  the  Option.  The  Option  Shares  cannot  be  transferred,  pledged,
hypothecated, sold or otherwise disposed of unless they are registered under the
1933  Act or an exemption from such registration is available and established to
the  satisfaction  of  the  Company;  investors in the Company have no rights to
require that the Option Shares be registered except as set forth in Section 9 of
this  Agreement; there is no right of presentment of the Option Shares and there
is  no  obligation  by  the Company to repurchase any of the Option Shares; and,
accordingly, Optionee may have to hold the Option Shares indefinitely and it may
not  be possible for Optionee to liquidate Optionee's investment in the Company.

     6.6  Adjustment  By  Stock  Split,  Stock Dividend, Etc. If at any time the
Company  increases  or  decreases the number of its outstanding shares of Common
Stock,  or changes in any way the rights and privileges of such shares, by means
of  the  payment  of a stock dividend or the making of any other distribution on
such shares payable in its Common Stock, or through a stock split or subdivision
of  shares,  or  a  consolidation  or  combination  of  shares,  or  through  a
reclassification  or  recapitalization  involving its Common Stock, the numbers,
rights and privileges of the shares of Common Stock included in the Option shall
be  increased,  decreased  or  changed in like manner as if such shares had been
issued  and  outstanding,  fully  paid  and  nonassessable,  at the time of such
occurrence,  and  the  exercise  price  shall  be  adjusted  accordingly.

     6.7  Withholding  of  Taxes.  The  Company  may take such steps as it deems
necessary  or  appropriate for the withholding of any taxes which the Company is
required  by  any  law  or  regulation  or  any  governmental authority, whether
federal, state or local, domestic or foreign, to withhold in connection with the
Option  including,  but not limited to, the withholding of all or any portion of
any  payment  owed  by the Company to Employee or the withholding of issuance of
Option  Shares  to  be  issued  upon  the  exercise  of  the  Option.

     6.8 Certain Representations, Warranties and Covenants of Employee. Employee
hereby  represents,  warrants  and  covenants  to  the  Company  that:

(a)  Employee  is  acquiring  the Option Shares for investment purposes only and
     the  Options  Shares  that  Employee  is acquiring will be held by Optionee
     without sale, transfer or other disposition for an indefinite period unless
     the  transfer  of  those  securities  is  subsequently registered under the
     federal  securities  laws  or  unless  exemptions  from  registration  are
     available.

(b)  Employee  will  not  sell,  assign, transfer, exchange, encumber, pledge or
     otherwise  dispose  of  any  of  the Option Shares acquired pursuant to the
     Options,  or grant any option or right to purchase such shares or any legal
     or  beneficial  interest  in  such  shares,  except  in accordance with the
     requirements  set  forth  below:

     (i)  Prior to the consummation of the first public offering of Common Stock
          pursuant  to  a  registration  statement  (other  than  on Form S-8 or
          successor forms) filed with, and declared effective by, the Securities
          and  Exchange  Commission (an "Initial Public Offering"), Employee may
          transfer  shares  of Common Stock only if the following conditions are
          satisfied:  (a) the proposed transfer must be pursuant to an exemption
          from  registration  in  compliance  with  the  Securities Act, and any
          applicable  state  securities laws, and the transferring Employee must
          provide  a  written  opinion from counsel acceptable to the Company to
          the  effect that no such registration is required under the applicable
          securities  laws;  (b) the proposed transfer must be permissible under
          the  provisions  of  all other applicable laws, rules, regulations and
          licenses and the transferring Employee must satisfy all pre-conditions
          and comply with all other requirements pertaining to the transfer; and
          (c)  the  Company must consent to the proposed transfer, which consent
          will  not  be  unreasonably  withheld.

     (ii) After  an Initial Public Offering, and after any applicable restricted
          period  related  to the Initial Public Offering, Employee may transfer
          shares  of  Common  Stock  as follows: (a) Employee may sell shares of
          Common Stock pursuant to an effective registration statement under the
          Securities  Act,  in  compliance  with any applicable state securities
          laws  or  blue  sky laws; (b) Employee may sell shares of Common Stock
          pursuant  to,  and in accordance with, the provisions of Rule 144; and
          (c)  Employee  may  transfer shares of Common Stock in any transaction
          that  satisfies  the  conditions discussed in Section 6.8(b)(i) above.

<PAGE>

     7.     Confidentiality.  Employee  hereby  warrants,  covenants  and agrees
            ---------------
that,  without  the  prior  express  written  approval  of the Company or unless
required by law or court order, Employee shall hold in the strictest confidence,
and shall not disclose to any person, firm, corporation or other entity, any and
all  of  the  Company's  data,  including  but  not  limited to (a) information,
drawings,  sketches,  plans or other documents concerning the Company's business
or  development  plans,  customers  or suppliers, (b) the Company's development,
design,  construction  or  sales and marketing methods or techniques, or (c) the
Company's  trade  secrets  and  other  "know-how" or information not of a public
nature, regardless of how such information came to the custody of Employee.  For
purposes  of  this Agreement, such information shall include, but not be limited
to,  information,  including  a  formula, pattern, compilation, program, device,
method,  technique  or  process,  that  (i)  derives independent economic value,
present  or  potential, from not being generally known to, and not being readily
ascertainable  by  proper  means by, other persons who can obtain economic value
from  its  disclosure  or  use,  and  (ii)  is  the  subject of efforts that are
reasonable  under  the  circumstances  to  maintain  its secrecy.  The warranty,
covenant  and  agreement  set  forth  in  this paragraph shall not expire, shall
survive this Agreement, and shall be binding upon Employee without regard to the
passage  of  time  or  other  events.

     8. Non-Compete. Employee acknowledges and recognizes the highly competitive
        -----------
nature  of  the  Company's business and that Employee's duties hereunder justify
restricting  Employee's  further   employment   following  any   termination  of
employment.  The Employee agrees that so long as the Employee is employed by the
Company,  and  (i) for a period of [two] years following the termination of this
Agreement,  Employee, except when acting at the request of the Company on behalf
of or for the benefit of the Company, will not induce customers, agents or other
sources  of  distribution  of  the  Company's  business  under contract or doing
business with the Company to terminate, reduce, alter or divert business with or
from the Company, and (ii) for a period of one year following the termination of
this  Agreement,  Employee  shall  not,  directly  or  indirectly,  either  as a
principal,  agent, employee, employer, consultant, partner, member or manager of
a  limited  liability  company,  shareholder  of  a  company  that does not have
securities registered under the Securities Exchange Act of 1934, as amended (the
"1934  Act"),  or  shareholder  in  excess  of one percent of a company that has
securities  registered  under the 1934 Act, corporate officer or director, or in
any other individual or representative capacity, engage or otherwise participate
in  any  manner  or fashion in any business that is in competition in any manner
whatsoever  with  the business activities of the Company, in or about any market
in  which  the Company has, or has publicly announced a plan for doing business.
Employee further covenants and agrees that the restrictive covenant set forth in
this  paragraph  is  reasonable  as to duration, terms and geographical area and
that the same protects the legitimate interests of the Company, imposes no undue
hardship on Employee, and is not injurious to the public. The covenant set forth
under  (ii)  above shall not apply if Employee's employment is terminated within
twelve  months of a Change in Control as defined in of this Agreement. Ownership
by Employee, for investment purposes only, of less than one percent of any class
of  securities  of  a  corporation  if  said securities are listed on a national
securities  exchange  or  registered  under  the 1934 Act shall not constitute a
breach  of  the covenant set forth under (ii) above. It is the desire and intent
of  the Parties that the provisions of this paragraph be enforced to the fullest
extent  permissible  under  the  laws  and  public  policies  applied  in  each
jurisdiction  in  which  enforcement  is  sought. Accordingly, if any particular
portion  of  paragraph shall be adjudicated to be invalid or unenforceable, this
paragraph  shall be deemed amended to apply in the broadest allowable manner and
to delete therefrom the portion adjudicated to be invalid or unenforceable, such
amendment  and deletion to apply only with respect to the operation of paragraph
in  the  particular  jurisdiction  in  which  that  adjudication  is  made.

     9.     Termination.
            -----------

(a)  If  Employee's  employment  is  terminated by the Company without Cause (as
     defined  below),  or  if  Employee terminates his employment for Reasonable
     Basis  (as  defined  below),  then  the  Company  shall,  in  exchange  for
     Employee's  execution of a general release and waiver of claims against the
     Company  as  of the termination date in a form reasonably acceptable to the
     Company,  continue  to pay as severance Employee's salary for twelve months
     or  [one-half]  the  remaining term of the Agreement, whichever is greater.
     Such  payments  shall  be  made  in accordance with the Company's customary
     payroll  practices  and  shall  be  subject  to  applicable withholding and
     payroll  deductions. In the event of any such termination set forth in this
     Section  9(a), Employee will not be entitled to any additional compensation
     or  benefits  beyond what is provided in the first sentence of this Section
     9(a).

     (i)  For  purposes  of  this  Agreement, "Cause" shall mean that the Board,
          acting  in  good  faith  based  upon the information then known to the
          Company,  determines  that Employee has engaged in or committed any of
          the  following:  willful misconduct, gross negligence, theft, fraud or
          other  illegal conduct; refusal or unwillingness to perform Employee's
          duties; performance by Employee of Employee's duties determined by the
          Board to be inadequate in a material respect; breach of any applicable
          non-competition,  confidentiality  or other proprietary information or
          inventions  agreement  between Employee and the Company; inappropriate
          conflict  of  interest;  insubordination;  failure  to  follow  the
          directions  of  the  Board  or  any  committee  thereof;  or any other
          material  breach  of  this  Agreement. Indictment or conviction of any
          felony,  or  any  entry of a plea of nolo contendre, under the laws of
          the  United  States  or  any  State  shall  also be considered "Cause"
          hereunder. "Cause" shall be specified in a notice of termination to be
          delivered  by  the  Company  no  later  than  the  date  as  of  which
          termination  is  effective.

     (ii) For  purposes  of  this Agreement, "Reasonable Basis" shall mean (A) a
          material  breach  of  this  Agreement  by  the  Company, provided that
          Employee  shall have first given written notice of such default to the
          Company  and  if  within thirty days after receipt of such notice, the
          Company  has  not cured such default; or (B) termination of Employee's
          employment by the Company without Cause during the term hereof; or (C)
          a reduction in Employee's salary, except to the extent that a majority
          of  the  other  executive  officers of the Company incur reductions of
          salary  that average no less than the percentage reduction incurred by
          Employee;  or  (E)  termination  of  the  Employee's employment by the
          Employee  within 12 months after a "Change in Control," with Change in
          Control  being  defined  as  follows:

     "Change  in  Control"  shall  mean  any  of  the  following:

(1)  any  consolidation or merger of the Company in which the Company is not the
     continuing  or surviving corporation, other than a merger of the Company in
     which  the  holders  of  the  Company common stock immediately prior to the
     merger  own  a  majority  of  the  voting  common  stock  of  the surviving
     corporation  immediately  after  the  merger;

<PAGE>

(2)  any sale, lease, exchange or other transfer (in one transaction or a series
     of  related  transactions)of  all  or  substantially  all the assets of the
     Company;

(3)  any approval by the stockholders of the Company of any plan or proposal for
     the  liquidation  or  dissolution  of  the  Company;

(4)  the  acquisition  by  any  person or entity, or any group of persons and/or
     entities  of  a  majority  of the stock entitled to elect a majority of the
     directors  of  the  Company;  or

(5)  subject  to  applicable  law,  in  a  Chapter 11 bankruptcy proceeding, the
     appointment  of a trustee or the conversion of a case involving the Company
     to  a  case  under  a  Chapter  7  bankruptcy  proceeding.

(b)  In  the event that Employee's employment with the Company is terminated for
     Cause,  by  reason  of Employee's death or disability, or due to Employee's
     resignation  or  voluntary  termination  (other than for Reasonable Basis),
     then  all  compensation and benefits will cease as of the effective date of
     such  termination, and Employee shall receive no severance benefits, or any
     other compensation; provided that Employee shall be entitled to receive all
     compensation  earned  and  all  benefits and reimbursements due through the
     effective  date  of  termination.

(c)  In  the event that Employee's employment with the Company is terminated for
     any  reason, (i) Employee shall have the right to exercise any Option(s) or
     portion  thereof  for  a  period of three months from the effective date of
     such termination and (ii) Employee's right to any Option or portion thereof
     which has not been granted under this Agreement shall immediately terminate
     on  the  effective  date  of  such  termination  of  employment.

(d)  Employee  agrees  that  the  payments  contemplated by this Agreement shall
     constitute the exclusive and sole remedy for any termination of employment,
     and  Employee  covenants not to assert or pursue any other remedies, at law
     or  in  equity,  with  respect  to  any  termination  of  employment.

(e)  Any  party  terminating  this  Agreement  shall  give prompt written notice
     ("Notice  of  Termination")  to  the other party hereto advising such other
     party of the termination of this Agreement stating in reasonable detail the
     basis  for  such  termination.  The  Notice  of  Termination shall indicate
     whether  termination is being made for Cause (if the Company has terminated
     the  Agreement) or for Reasonable Basis (if the Employee has terminated the
     Agreement).

     10.     Remedies.  If  there  is  a  breach  or  threatened  breach  of any
             --------
provision  of  Section 7 or Section 8 of this Agreement, the Company will suffer
irreparable  harm  and  shall  be entitled to an injunction restraining Employee
from  such breach.  Nothing herein shall be construed as prohibiting the Company
from  pursuing  any  other  remedies  for  such  breach  or  threatened  breach.

<PAGE>

11.     Severability.  It  is  the  clear  intention  of  the  Parties  to  this
        ------------
Agreement that no term, provision or clause of this Agreement shall be deemed to
be invalid, illegal or unenforceable in any respect, unless such term, provision
or clause cannot be otherwise construed, interpreted, or modified to give effect
to the intent of the Parties and to be valid, legal or enforceable.  The Parties
specifically  charge  the  trier  of  fact  to  give effect to the intent of the
Parties,  even  if  in  doing  so,  information  of a specific provision of this
Agreement is required consistent with the foregoing stated intent.  In the event
that  such  a  term,  provision or clause cannot be so construed, interpreted or
modified,  the validity, legality and enforceability of the remaining provisions
contained  herein  and  other  application(s)  thereof  shall  not in any way be
affected  or  impaired  thereby  and  shall  remain  in  full  force and effect.

     12.  Waiver  of Breach. The waiver by the Company or Employee of the breach
          -----------------
of  any  provision  of this Agreement by the other Party shall not operate or be
construed  as  a  waiver  of  any  subsequent  breach  by  that  Party.

     13.  Entire  Agreement. This document contains the entire agreement between
          -----------------
the  Parties  and  supersedes  all  prior  oral  or  written agreements, if any,
concerning  the  subject  matter  hereof  or  otherwise  concerning  Employee's
employment by the Company (except for _________________). This Agreement may not
be  changed  orally,  but  only  by  agreement in writing signed by the Parties.

     14.  Governing  Law.  This  Agreement,  its  validity,  interpretation  and
          --------------
enforcement,  shall  be  governed by the laws of the State of _______, excluding
conflict  of  laws  principles.  Employee  hereby expressly consents to personal
jurisdiction  in  the state and federal courts located in ________, ________ for
any  lawsuit  filed there against him by the Company arising from or relating to
this  Agreement.

     15.  Notices.  Any notice pursuant to this Agreement shall be validly given
          -------
or  served if that notice is made in writing and delivered personally or sent by
certified  mail or registered, return receipt requested, postage prepaid, to the
following  addresses:

     If  to  Company:          Siberian  Energy  Group  Inc.
                               275  Madison  Avenue,  6th  floor
                               New  York  NY  10016
                               Attention:  Chairman  of  the  Compensation
                               Committee

     If  to  Employee:         Sergey  Potapov

     To  the  address  for  Employee  set  forth  below  his  signature.

     All  notices  so given shall be deemed effective upon personal delivery or,
if  sent  by  certified  or  registered  mail,  five business days after date of
mailing.  Either  party, by notice so given, may change the address to which his
or  its  future  notices  shall  be  sent.

     16.     Assignment  and  Binding  Effect.  This  Agreement shall be binding
             --------------------------------
upon  Employee  and the Company and shall benefit the Company and its successors
and  assigns.  This  Agreement  shall  not  be  assignable  by  Employee.

<PAGE>

     17. Headings. The headings in this Agreement are for convenience only; they
         --------
form  no  part  of  this  Agreement  and  shall  not  affect its interpretation.

     18.  Construction.  Employee  represents  he  has  (a)  read and completely
          ------------
understands this Agreement and (b) had an opportunity to consult with such legal
and  other  advisers  as  he has desired in connection with this Agreement. This
Agreement  shall  not  be  construed  against  any  one  of  the  Parties.

     19.     Insurance.  The  Company  is  to  maintain directors' and officers'
             ---------
insurance  in  an  amount  determined  reasonably  by  the  Board.

     20.  Counterparts.  This  Agreement  may  be  executed  in  one  or  more
          ------------
counterparts,  all of which taken together shall constitute a single instrument.

                                    * * * * *

<PAGE>

     IN  WITNESS  WHEREOF, the parties have caused this Agreement to be executed
the  day  and  year  first  above  written.

EMPLOYEE                                    SIBERIAN  ENERGY  GROUP  INC.

/s/ Sergey Potapov                         /s/ David Zaikin
                                           David Zaikin, Chairman
Sergey  Potapov,  Individually             -------------------------------
Address:  #46  -  34  GORKOVA  ST,          Printed  Name  and  Title
          KURGAN  CITY,  RUSSIA,  640020

<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]