Document:

Exhibit 10.3

THIS  LOAN  AGREEMENT  is  made  on  28  April  2005.

PARTIES:

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

BALTIC PETROLEUM LIMITED, a company incorporated in England and Wales under
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company number 05303991 and whose registered office is at 18b Charles Street,
London W1J 5DU ("BP").

WHEREAS:

BP  is willing to make available to ZNG a loan facility of US$1,267,860 upon and
subject  to  the  terms  and  conditions  set  out  in  this  Agreement.

IT  IS  THEREFORE  AGREED  AS  FOLLOWS:

1.   DEFINITIONS
     For  the  purposes  of this Agreement the following definitions will apply:

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

     "AGREEMENT"  means  this  agreement;

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

     "COMMITMENT"  means  the  amount  of  US$1,267,860;

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

     "EVENT  OF  DEFAULT" has the meaning given in clause 10 (Events of Default)
     below;

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

     "OPTION AGREEMENT" means the option agreement between Siberian Energy Group
     Inc.  ("SEG")  and  BP  of  even  date  herewith;  and

     "OUTSTANDING  ADVANCES"  means  amounts  drawn  down under the Loan but not
     repaid.

2.   THE  LOAN

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

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3.   DRAWDOWN

3.1  Subject  to  clauses 4 (Term) and 10 (Conditions Precedent) below, BP shall
     make  an  Advance  to  ZNG  subject  to:

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

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

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

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

3.2  Each  Advance  shall  be paid by BP direct to the following US$ denominated
     account:

     Corresponding  bank: The  Bank  of  New  York,  New  York  SWIFT  XXXXXXX

     Receiving  bank:     Commercial  Bank  Rosbank  890-0372-508  SWIFT XXXXX

     Payee:               Moscow  Branch  of  Rosbank  XXXXXXXXXXXXX

     Account  Name:       Zauralneftegaz

     Account  Number:     XXXXXXXXXXXXXX

     ZNG  may  only  distribute  the  Advances  to  those  persons  and  (where
     applicable)  to those accounts set out in Schedule 2 to this Agreement. ZNG
     shall  give  payment instructions to the bank to act in accordance with the
     instructions  set  out  in  Schedule  2  to  this  Agreement.

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

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

4.   TERM

4.1  Subject  to  clauses  4.2 and 11, the Loan shall be available until 31 July
     2005, following which all Outstanding Advances shall, together with accrued
     interest,  be  repaid  by  31  October  2005.

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4.2  The  Loan  shall  cease to be available and all Outstanding Advances shall,
     together  with accrued interest, be repaid immediately following Completion
     (as  such  term  is  defined  in  the  Option  Agreement).

5.   DRAWDOWN  NOTICES

5.1  Each  Drawdown  Notice must be in the form  set out in  Schedule 1 to  this
Agreement  or  in such other form as may be acceptable to BP and shall relate to
only  one  of the purposes set forth in clause 8.1 for which the Advance will be
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utilized.  The Drawdown Notice shall specify the date upon which such Advance is
to  be  made (the "DRAWDOWN DATE") and the amount of the Advance (which shall be
the  amount  stated  in the relevant sub-clause of clause 8.1 which sets out the
purpose  for  which the Advance will be utilized and an amount in respect of the
matters  referred  to  in  clause  8.2).

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

5.3  The  Drawdown  Date  in respect of the amounts referred to at clause 8.1(d)
     shall  be no earlier than the fifth from last day of the month to which the
     amounts  relate.

6.   INTEREST  AND  DEFAULT  INTEREST

6.1  Interest  will  be  charged on the Outstanding Advances at a rate per annum
     equivalent  to  12%  per annum. Interest will be calculated and accrue on a
     daily basis (calculated on a year of 365 days and the actual number of days
     elapsed)  and  will  be  payable  on repayment of the Outstanding Advances.

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

7.   SECURITY

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

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8.   PURPOSE

     The  Loan  shall  be  used  by  ZNG  as  follows:

     (a)  US$375,000  towards  the  outstanding  invoices  due  by  ZNG  to
          Basneftegeofizika  in  the  total  sum  of  US$588,856;

     (b)  up  to  US$178,524  to  discharge  all  sums outstanding due by ZNG to
          Bazhenov  Expedition;

     (c)  US$250,000  to  be  used by ZNG to account to OOO Business Standard, a
          Russian  limited  liability  company,  in  respect of its services for
          coordinating  the gathering of data and information on the various new
          exploration  licences  in  the  Kurgan  region being considered by ZNG
          (there are initially proposed to be 3 licences in number in respect of
          areas  which  shall  be  designated  by  BP);

     (d)  a  payment on account of the salaries for each of the months of April,
          May,  June  and  July 2005 for those employees identified to BP in the
          sum  of  US$42,000  per  month  (to  include  all  applicable  tax);

     (e)  subject  to  clause  10.2,  a  further  amount  of US$250,000 shall be
          advanced  to  allow  the  payment  to OOO Business Standard, a Russian
          limited  liability  company,  of  an  additional  payment  equal  to
          US$250,000;

     (f)  US$15,148  to  pay  amounts  owing  to  OOO  Geo  Data  Consulting for
          supervisory  control over gravimetric and seismic surveys performed by
          Bashneftegeofizika  and  Bazhenov  Expedition;  and

     (g)  US$4,313  to discharge all sums outstanding to JSC Central Geophysical
          Expedition  for  preparation  of costs estimate and technical plan for
          seismic  works.

8.2  In  addition  to  the purposes set out in clause 8.1, the following amounts
     shall  be  available  under  the  Loan:

     (a)  US$24,860  to  be used to satisfy the Retention Requirement in respect
          of  the  Advances  to  be  made  hereunder;  and

     (b)  US$2,015  to  allow for foreign exchange rate fluctuation and to cover
          for  applicable  bank  charges  in  respect of the Advances to be made
          hereunder.

9.   REPAYMENT

     ZNG  may  repay in US$ all or any part (provided, in the case of part only,
     it is of an amount of not less than US$50,000) of the Outstanding Advances,
     together  with  accrued  interest thereon, at any time upon giving not less
     than  10  days  written  notice  to  the  BP. Any amounts repaid may not be
     reborrowed.

10.  CONDITIONS  PRECEDENT

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

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

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

     (c)  a  copy,  notarised  as  being  a true copy of the current Charter, as
          amended,  of  ZNG together with a copy, notarised as aforesaid, of the
          Certificate  of  Registration  (OGRN  Certificate)  of  ZNG;  and

     (d)  SEG  shall have entered into the guarantee and the pledge and security
          agreement  with  BP in the form annexed hereto (together the "SECURITY
          DOCUMENTS"  and  each  a  "SECURITY  DOCUMENT");

     (e)  there shall have been received by BP a copy, duly notarised as being a
          true  copy  of a resolution of the board of SEG (in terms satisfactory
          to BP) authorizing SEG to enter into and perform its obligations under
          the  Security  Documents,  and  authorizing  a  person  to execute the
          Security  Documents;

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

     (g)  if security shall have been requested under clause 7 (Security) above,
          such  security  shall have been granted to the satisfaction of BP; and

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

10.2 In addition to satisfaction of the conditions contained in clause 10.1, the
     amount  referred  to clause 8.1(e) may not be drawn down unless there shall
     have  been  received  by  BP  a  notarised copy of a letter to ZNG from the
     relevant licence authority(ies) of the Ministry of Natural Resources of the
     Russian  Federation  confirming that the licences detailed in clause 8.1(c)
     above  have  been  awarded  to  ZNG  in  a  form  acceptable  to  BP.

11.  EVENTS  OF  DEFAULT

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

11.2 The  events  referred  to  in  clause  11.1  above  are:

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

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

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

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

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

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

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

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

     (i)  ZNG  applies  any  Advance  (or  part  thereof)  other  than  for  the
          applicable  purpose  set  out  in  clause  8  or a distribution of any
          Advance  (or  part  thereof) is made otherwise than in accordance with
          Schedule  2  to  this  Agreement;

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

     (k)  if  the  Option  Agreement  terminates  (for  whatever  reason);

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

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     (m)  any  Security  Document  does  not  create  the  security  interest it
          purports  to  create, is not effective or is challenged by SEG or ZNG.

12.  REPRESENTATIONS  AND  WARRANTIES

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

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

     (b)  this  Agreement and each other document contemplated hereby (including
          any  documents  which  may be required in connection with any security
          requested  under  clause  7 above) constitutes or will, when executed,
          constitute a legally binding obligation of ZNG and is or will be, when
          executed,  enforceable  in  accordance  with  its  terms;

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

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

          (ii) the  Charter  of  ZNG,  as  amended;

     (d)  other than the matters referred to in sub-clauses 8.1(a), (b), (f) and
          (g)  in  respect  of  which  the  Loan shall be applied, ZNG is not in
          default  in  respect of any material obligation under any agreement to
          which  it  is  a  party or by which it may be bound and no litigation,
          arbitration  or  administrative  proceedings are pending or threatened
          which are material in the context of the Loan and the Advances made or
          to  be  made  hereunder;

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

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

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

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

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

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

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

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

13.  NOTIFICATION  OF  EVENTS  OF  DEFAULT

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

14.  COSTS  AND  CHARGES

14.1 ZNG  will  reimburse BP on repayment of the Loan hereunder for all costs or
     expenses  (including but not limited to legal fees and subject to a maximum
     of  $50,000)  incurred  by  BP in the preparation of this Agreement and the
     Security  Documents.

14.2 ZNG  will  also reimburse BP on demand for all costs or expenses (including
     but  not  limited  to  legal fees) incurred by BP in the enforcement (or in
     seeking  to  enforce)  of  this  Agreement and the Security Documents or in
     protecting  or preserving (or attempting to protect or preserve) any of its
     rights  hereunder.

15.  GROSS  UP

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

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16.  SET  OFF

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

17.  WAIVER

     No  failure  to  exercise nor any delay in exercising on the part of BP any
     right  or remedy under this Agreement shall operate as a waiver thereof nor
     shall  any  single or partial exercise of any right or remedy of BP prevent
     any further or other exercise thereof or the exercise of any other right or
     remedy.  The rights and remedies of BP hereunder are cumulative and are not
     exhaustive  of  any  rights  or  remedies  provided  by  law.

18.  NOTICES

     Any  notice  to  be  given pursuant to the terms of this Agreement shall be
     given  in  writing  to  the party due to receive such notice at the address
     stated  below  or such other address as may have been notified to the other
     parties  in  accordance  with  this  clause.  Notice  shall  be  delivered
     personally  or sent by first class pre-paid recorded delivery or registered
     post (air mail if overseas) or by facsimile transmission to the numbers and
     parties  detailed  below  and  shall  be  deemed to be given in the case of
     delivery  personally on delivery and in the case of posting (in the absence
     of evidence of earlier receipt) 48 hours after posting (six days if sent by
     air  mail)  and  in the case of facsimile transmission on completion of the
     transmission  provided  that  the  sender  shall  have  received  printed
     confirmation  of  transmission.

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

BP                                Attn:                   Fax:
18b Charles Street                Simon Escott            +44 20 7667 6471
London W1J 5DU
United Kingdom

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19.  ASSIGNMENT

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

20.  LAW  AND  DISPUTES

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

21.  THIRD  PARTIES

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

22.  LANGUAGE

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

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

OOO ZAURALNEFTEGAZ

Signed: /s/ Oleg Zhuravlev
        ---------------------
Name (print): Oleg Zhuravlev
              ---------------
Position: President and General Director
          ------------------------------

BALTIC PETROLEUM LIMITED

Signed: /s/ Simon L. Escott
        ---------------------
Name (print): Simon L. Escott
              ---------------
Position: Chief Executive
          -------------------

                                       10
<PAGE>Exhibit 10.4

                                    GUARANTEE

THIS  GUARANTEE  is  made  by  deed  on  the  28  day  of  April  2005

BY:

SIBERIAN  ENERGY  GROUP  INC.,  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  ("SEG");

IN  FAVOUR  OF:

BALTIC  PETROLEUM  LIMITED,  a  company  incorporated in England and Wales under
--------------------------
company  number  05303991  and  whose registered office is at 18b Charles Street
London  W1J  5DU,  United  Kingdom  (  "BP");

WHEREAS:

(A)     By  separate  loan  facility  agreement  between  Lender  and  OOO
Zauralneftegaz  ("ZNG"),  a  Russian  limited liability company and wholly owned
subsidiary  of SEG, of even date herewith, BP has agreed to provide certain loan
facilities  to  ZNG  (the  "LOAN  AGREEMENT");  and

(B)     SEG  has agreed to guarantee the obligations of ZNG to BP under the Loan
Agreement  pursuant  to  the  terms  of  this  Guarantee.

NOW  THIS  DEED  WITNESSES  and  SEG  hereby  agrees  as  follows:

1.     GUARANTEE  AND  INDEMNITY

SEG  irrevocably  and  unconditionally:

     1.1  guarantees  to  BP  punctual performance by ZNG of all its obligations
          under  the  Loan  Agreement;

     1.2  undertakes  with BP that whenever ZNG does not pay any amount when due
          under  or in connection with the Loan Agreement, SEG shall immediately
          on  demand  pay  that  amount  as if it was the principal obligor; and

     1.3  indemnifies  BP  immediately  on  demand  against  any  cost,  loss or
          liability  suffered  by  BP  if  any obligation guaranteed by it is or
          becomes  unenforceable,  invalid  or  illegal. The amount of the cost,
          loss  or  liability  shall  be  equal  to  the  amount  which BP would
          otherwise  have  been  entitled  to  recover.

2.     CONTINUING  GUARANTEE

This guarantee is a continuing guarantee and will extend to the ultimate balance
of  sums payable by ZNG under the Loan Agreement, regardless of any intermediate
payment  or  discharge  in  whole  or  in  part.

<PAGE>

3.     REINSTATEMENT

If  any  payment  by ZNG or any discharge given by BP (whether in respect of the
obligations  of  ZNG  or  any  security  for  those obligations or otherwise) is
avoided  or  reduced  as  a  result  of  insolvency  or  any  similar  event:

     (a)  the  liability  of  ZNG  shall  continue as if the payment, discharge,
          avoidance  or  reduction  had  not  occurred;  and

     (b)  BP  shall  be entitled to recover the value or amount of that security
          or  payment  from  ZNG,  as  if  the  payment, discharge, avoidance or
          reduction  had  not  occurred.

4.     WAIVER  OF  DEFENCES

The  obligations  of  SEG  under  this Guarantee will not be affected by an act,
omission,  matter  or thing which, but for this clause, would reduce, release or
prejudice  any  of  its obligations under this Guarantee (without limitation and
whether  or  not  known  to  BP)  including:

     (a)  any  time,  waiver  or consent granted to, or composition with, ZNG or
          any  other  person;

     (b)  the  release  of  ZNG  or  any  other  person  under  the terms of any
          composition  or  arrangement  with  any  of  its creditors or members;

     (c)  the taking, variation, compromise, exchange, renewal or release of, or
          refusal or neglect to perfect, take up or enforce, any rights against,
          or  security  over  assets  of,  ZNG  or  any  other  person  or  any
          non-presentation  or  non-observance  of  any  formality  or  other
          requirement in respect of any instrument or any failure to realise the
          full  value  of  any  security;

     (d)  any  incapacity or lack of power, authority or legal personality of or
          dissolution  or  change  in  the members or status of ZNG or any other
          person;

     (e)  any  amendment  (however  fundamental)  or  replacement  of  the  Loan
          Agreement  or  any  other  document  or  security;

     (f)  any  unenforceability,  illegality  or invalidity of any obligation of
          any person under the Loan Agreement or any other document or security;
          or

     (g)  any  insolvency  or  similar  proceedings.

5.     IMMEDIATE  RECOURSE

SEG  waives any right it may have of first requiring BP (or any trustee or agent
on  its  behalf)  to  proceed against or enforce any other rights or security or
claim  payment  from  any  person before claiming from SEG under this Guarantee.
This  waiver  applies  irrespective  of  any  law  or  any provision of the Loan
Agreement  to  the  contrary.

<PAGE>

6.     APPROPRIATIONS

Until  all  amounts which may be or become payable by ZNG under or in connection
with  the  Loan Agreement have been irrevocably paid in full, BP (or any trustee
or  agent  on  its  behalf)  may:

     (a)  refrain  from  applying  or  enforcing  any  other moneys, security or
          rights  held or received by BP (or any trustee or agent on its behalf)
          in  respect  of  those  amounts, or apply and enforce the same in such
          manner  and  order  as  it  sees fit (whether against those amounts or
          otherwise)  and  SEG shall be entitled to the benefit of the same; and

     (b)  hold  in an interest-bearing suspense account any moneys received from
          SEG  or  on  account  of  SEG's  liability  under  this  Guarantee.

7.     DEFERRAL  OF  GUARANTORS'  RIGHTS

Until  all  amounts which may be or become payable by ZNG under or in connection
with  the  Loan  Agreement  have  been  irrevocably  paid in full, SEG shall not
exercise  any  rights  which  it  may have by reason of performance by it of its
obligations  under  the  Guarantee:

     (a)  to  be  indemnified  by  ZNG;

     (b)  to  claim  any  contribution  from any other guarantor of any of ZNG's
          obligations  under  the  Loan  Agreement;  and/or

     (c)  to  take  the  benefit  (in  whole  or  in  part and whether by way of
          subrogation  or  otherwise)  of  any rights it may have under the Loan
          Agreement  or of any other guarantee or security taken pursuant to, or
          in  connection  with,  the  Loan  Agreement.

8.     ADDITIONAL  SECURITY

This  guarantee  is in addition to and is not in any way prejudiced by any other
guarantee  or  security  now  or  subsequently  held  by  BP.

9.     NOTICES

Any notice to be given pursuant to the terms of this Agreement shall be given in
writing  to the party due to receive such notice at the address set out below or
such  other address as may have been notified to the other parties in accordance
with  this  clause.  Notice shall be delivered personally or sent by first class
pre-paid  recorded  delivery  or  registered  post  (air mail if overseas) or by
facsimile  transmission  to  the numbers and parties detailed below and shall be
deemed  to  be  given  in the case of delivery personally on delivery and in the
case  of  posting (in the absence of evidence of earlier receipt) 48 hours after
posting (six days if sent by air mail) and in the case of facsimile transmission
on  completion  of the transmission provided that the sender shall have received
printed  confirmation  of  transmission.

<PAGE>

SEG                        Attn:            Fax:
275 Madison Avenue         David Zaikin     +1 (905) 771-9198

6th floor
New York, NY 10016
USA

BP                         Attn:            Fax:
18b Charles Street         Simon Escott     +44 20 7667 6471
London W1J 5DU
United Kingdom

10.     THIRD  PARTIES

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

11.     LAW  AND  JURISDICTION

This Guarantee shall be governed by and construed in accordance with the laws of
England.  Each  party irrevocably agrees to submit to the exclusive jurisdiction
of  the courts of England and Wales over any claim or matter arising under or in
connection  with  this  Agreement.

IN WITNESS whereof this Guarantee has been duly executed and delivered as a deed
the day and year first above written

EXECUTED AS A DEED by           )
SIBERIAN ENERGY GROUP INC.:     )                    /s/ David Zaikin
                                )                    ---------------------------
                                                     Authorised signatory

                                                     David Zaikin
                                                     ---------------------------
                                                     Name

<PAGE>

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