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                                                                  Exhibit 10(25)

THIS AGREEMENT is made on the 12th day of September 2000 between

(1)  CANARGO ENERGY CORPORATION, a Corporation incorporated under the laws of
     Delaware, USA and having an address at 32 Lookerman Square, Suite L-100,
     Dover, Delaware 19904 (the "COMPANY"); and

(2)  MURRAY CHANCELLOR, residing at Blendworth Lodge, Church Path, Horndean,
     Waterlooville, Hampshire PO8 0DG (the "EXECUTIVE")

WHEREAS the Company wishes to employ the Executive as Chief Operating Officer on
the terms and conditions of this Agreement and the Executive wishes to accept
such employment.

IT IS AGREED as follows:-

1        DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS

         In this Agreement, unless the context otherwise requires:

         "BASIC SALARY" means the monthly salary, as specified in Clause 6.1.1
         or, as appropriate, the reviewed monthly salary from time to time;

         "CONFIDENTIAL INFORMATION" means all information which is identified or
         treated by the Company or any Group Company or any of the Group's
         clients or customers as confidential or which by reason of its
         character or the circumstances or manner of its disclosure is evidently
         confidential including (without prejudice to the foregoing generality)
         any information about the personal affairs of any of the directors (or
         their families) of the Company or any Group Company, business plans,
         proposals relating to the acquisition or disposal of a company or
         business or proposed expansion or contraction of activities, maturing
         new business opportunities, research and development projects, designs,
         secret processes, trade secrets, product or services development and
         formulae, know-how, inventions, sales statistics and forecasts,
         marketing strategies and plans, costs, profit and loss and other
         financial information (save to the extent published in audited
         accounts), prices and discount structures and the names, addresses and
         contact and other details of: (a) employees and their terms of
         employment; (b) customers and potential customers, their requirements
         and their terms of business with the Group; and (c) suppliers and
         potential suppliers and their terms of business (all whether or not
         recorded in writing or in electronic or other format);

         "EMPLOYMENT" means the employment of the Executive under this Agreement
         or, as the context requires, the duration of that employment;

         "GROUP" means the Company, any holding company or undertaking of the
         Company and any subsidiaries and subsidiary undertakings of the Company
         or such holding company or undertaking;

         "GROUP COMPANY" means any company within the Group;

         "HEALTH CARE SCHEME" means the medical expenses insurance, or
         arrangement(s) provided or introduced from time to time by the Company
         for the benefit of the Executive.

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         "INTELLECTUAL PROPERTY RIGHTS" means any and all existing and future
         intellectual or industrial property rights in and to any Works,
         including all existing and future patents, copyrights, design rights
         (whether registered or unregistered), database rights, trade marks
         (whether registered or unregistered), semiconductor topography rights,
         plant varieties rights, internet rights/domain names, know-how and any
         and all applications for any of the foregoing and any and all rights to
         apply for any of the foregoing in and to any Works;

         "MINORITY HOLDER" means a person who either solely or jointly holds
         (directly or through nominees) any shares or loan capital in any
         company whose shares are listed or dealt in on a recognised investment
         exchange (as that term is defined by Section 207(1) of the Financial
         Services Act 1986) provided that such holding does not, when aggregated
         with any shares or loan capital held by the Executive's partner and/or
         his or his partner's children under the age of 18, exceed 3% of the
         shares or loan capital of the class concerned for the time being
         issued;

         "SHARE OPTIONS" means any options that the Executive may hold to
         purchase shares in the Company;

         "TERMINATION DATE" means the date of termination of the Employment; and

         "WORKS" means any documents, materials, models, designs, drawings,
         processes, inventions, formulae, computer coding, methodologies,
         know-how, Confidential Information or other work, performed made,
         created, devised, developed or discovered by the Executive in the
         course of the Employment either alone or with any other person in
         connection with or in any way affecting or relating to the business of
         the Company or any Group Company or capable of being used or adapted
         for use therein or in connection therewith.

1.2      INTERPRETATION AND CONSTRUCTION

         Save to the extent that the context or the express provisions of this
         Agreement require otherwise, in this Agreement:-

         (a)      words importing the singular shall include the plural and vice
                  versa;

         (b)      words importing any gender shall include all other genders;

         (c)      any reference to a Clause, the Schedule or part of the
                  Schedule is to the relevant Clause, Schedule or part of the
                  Schedule of or to this Agreement unless otherwise specified;

         (d)      references to this Agreement or to any other document shall be
                  construed as references to this Agreement or to that other
                  document as modified, amended, varied, supplemented, assigned,
                  novated or replaced from time to time;

         (e)      references to any statute or statutory provision (including
                  any subordinate legislation) includes any statute or statutory
                  provision which amends, extends, consolidates or replaces the
                  same, or which has been amended, extended, consolidated or
                  replaced by the same, and shall include any orders,
                  regulations, instruments or other subordinate legislation made
                  under the relevant statute or statutory provision;

         (f)      references to a "PERSON" includes any individual, firm,
                  company, corporation, body corporate, government, state or
                  agency of state, trust or foundation, or any

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                  association, partnership or unincorporated body (whether or
                  not having separate legal personality) of two or more
                  foregoing;

         (g)      any phrase introduced by the words "INCLUDING", "INCLUDE", "IN
                  PARTICULAR" or any similar expression shall be construed as
                  illustrative only and shall not be construed as limiting the
                  generality of any preceding words;

         (h)      the words "OTHER" and "OTHERWISE" shall not be construed
                  eiusdem generis with any foregoing words where a wider
                  construction is possible.

1.3      HEADINGS

         The table of contents and the headings in this Agreement are included
         for convenience only and shall be ignored in construing this Agreement.

2        THE EMPLOYMENT

2.1      APPOINTMENT

         Subject to the provisions of this Agreement, the Company employs the
         Executive and the Executive accepts employment as Chief Operating
         Officer of the Company with effect from 12 September 2000
         notwithstanding the date or dates of this Agreement.

2.2      WARRANTY

         The Executive warrants to the Company that by virtue of entering into
         this Agreement he will not be in breach of any express or implied
         obligation to any third party.

3        DURATION OF THE EMPLOYMENT

3.1      CONTINUOUS EMPLOYMENT

         The Executive's continuous period of employment with the Company
         commenced on 12th September 2000.

3.2      DURATION

         Subject to the provisions of Clauses 3 and 16.1 the Employment shall
         continue unless and until terminated at any time by:-

         (a)      the Company giving to the Executive not less than 6 months'
                  previous notice in writing to that effect; or

         (b)      the Executive giving to the Company not less than 6 months'
                  previous notice in writing to that effect.

3.3      PAYMENT IN LIEU OF NOTICE

3.3.1    The Company shall be entitled, at its sole discretion, to terminate the
         Employment immediately in writing either instead of, or at any time
         after, notice of termination being given (by either the Company or the
         Executive) and in either case to make a payment to the Executive in
         lieu of notice.

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3.4      COMPULSORY RETIREMENT

         Notwithstanding Clause 3.2, the Employment shall terminate without
         notice on the Executive's 60th birthday.

4        HOURS AND PLACE OF WORK

4.1      HOURS OF WORK

         The Executive agrees that he shall work such hours as are necessary for
         the proper performance of his duties. The Executive shall work a
         minimum of 104 hours per month based upon a 8 hour day Monday to Friday
         between the hours of 8 a.m. and 6 p.m., with a break of one hour for
         lunch each day, on days to be agreed in advance.

4.2      WORKING TIME REGULATIONS

         The Executive agrees to work hours that exceed the maximum average
         weekly working time limit of 48 hours imposed by the Working Time
         Regulations 1998. The Executive may withdraw his agreement on giving to
         the Company 3 months' prior written notice.

4.3      PLACE OF WORK

4.3.1    The Executive's place of work will initially be at the Company's UK
         branch offices at 148-150 Buckingham Palace Road, London, SW1 but the
         Company may require the Executive to work at any place within the
         United Kingdom on either a temporary or an indefinite basis. The
         Executive will be given reasonable notice of any change in his
         permanent place of work.

5        SCOPE OF THE EMPLOYMENT

5.1      DUTIES OF THE EXECUTIVE

         During the Employment the Executive shall:-

         (a)      undertake and carry out to the best of his ability such duties
                  and exercise such powers in relation to the Company's business
                  as may from time to time be assigned to or vested in him by
                  the Chief Executive Officer;

         (b)      in the discharge of those duties and the exercise of those
                  powers observe and comply with all lawful resolutions,
                  regulations and directions from time to time made by, or under
                  the authority of, the Chief Executive Officer and promptly
                  upon request, give a full account to the Chief Executive
                  Officer or a person duly authorised by the Chief Executive
                  Officer of all matters with which he is entrusted;

         (c)      unless prevented by ill-health, holidays or other unavoidable
                  cause, devote such of his working time, attention and skill to
                  the discharge of his duties hereunder as may be reasonably
                  required; and

         (d)      faithfully and diligently perform his duties and at all times
                  use his best endeavours to promote and protect the interests
                  of the Group.

5.2      RIGHT TO SUSPEND DUTIES AND POWERS

5.2.1    The Company reserves the right in its absolute discretion to suspend
         during any notice period or for the purpose of investigating any matter
         in which the Executive is implicated or

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         involved all or any of the Executive's duties and powers on terms it
         considers expedient or to require him to perform only such duties,
         specific projects or tasks as are assigned to him expressly by the
         Company (including the duties of another position) in any case for such
         period or periods and at such place or places (including, without
         limitation, the Executive's home) as the Company in its absolute
         discretion deems necessary (the "GARDEN LEAVE").

5.2.2    The Company may, at its sole discretion, require that during the Garden
         Leave the Executive shall not:

         (a)      enter or attend the premises of the Company or any Group
                  Company;

         (b)      contact or have any communication with any client or
                  prospective client or supplier of the Company or any Group
                  Company in relation to the business of the Company or any
                  Group Company;

         (c)      contact or have any communication with any employee, officer,
                  director, agent or consultant of the Company or any Group
                  Company in relation to the business of the Company or any
                  Group Company;

         (d)      remain or become involved in any aspect of the business of the
                  Company or any Group Company except as required by such
                  companies; or

         (e)      work either on his own account or on behalf of any other
                  person.

5.2.3    During Garden Leave, the Executive will continue to receive his Basic
         Salary and benefits.

5.2.4    For the avoidance of doubt, the Company may exercise its powers under
         this Clause 5.2 at any time during the Employment including after
         notice of termination has been given by either party.

6        REMUNERATION

6.1      BASIC SALARY

6.1.1    During the Employment the Company shall pay the Executive a Basic
         Salary (pound)4,000 per month. The Basic Salary shall accrue from day
         to day and be payable by credit transfer in equal monthly instalments
         on or around the 15th day of each calendar month or otherwise as
         arranged from time to time.

6.2      SALARY REVIEW

         The Basic Salary shall be reviewed annually with effect from the first
         anniversary of the commencement of employment. The Company is not
         obliged to increase the Basic Salary at any review.

6.3      SHARE OPTIONS

         The Executive will be entitled to 250,000 Special Share Options in the
         Company subject to the terms of the Special Share Options and necessary
         regulatory approval.

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7        EXPENSES

7.1      OUT-OF-POCKET EXPENSES

         The Company shall reimburse to the Executive (against receipts or other
         appropriate evidence as the Chief Executive Officer may require) the
         amount of all out-of-pocket expenses reasonably and properly incurred
         by him in the proper discharge of his duties hereunder.

7.2      COMPANY CREDIT/CHARGE CARDS

         In the event that the Company issues a Company sponsored credit or
         charge card to the Executive he shall use such card only for expenses
         reimbursable under Clause 7.1 and shall return it to the Company when
         so requested and in any event immediately on termination of the
         Employment howsoever arising.

7.3      MOBILE TELEPHONE

         The Company will provide the Executive with a mobile telephone for the
         purpose of properly performing his duties. The Company will be
         responsible for all payment of all costs in connection with the
         telephone, including line rental charges, connection fees, and all
         charges. For the avoidance of doubt, the Executive is permitted to make
         reasonable use of the mobile telephone for personal purposes. The
         telephone will however remain the property of the Company at all times
         and the Company may demand the return of the telephone at any time if,
         in the opinion of the Company the Executive is making inappropriate use
         of the telephone.

8        DEDUCTIONS

         The Executive agrees that the Company may deduct from any sums due to
         him under this Agreement any sums due by him to the Company including,
         without limitation, any debits to his Company credit or charge card not
         authorised by the Company, the Executive's pension contributions (if
         any), any overpayments, loans or advances made to him by the Company,
         the cost of repairing any damage or loss to the Company's property
         caused by him and any losses suffered by the Company as a result of any
         negligence or breach of duty by the Executive.

9        PENSION SCHEME

         The Company does not provide a Company pension scheme. The Company
         shall contribute 22.5% of the Executives Basic Salary into a personal
         pension held by the Executive provided the Company is satisfied that
         the personal pension scheme is a properly authorised scheme for tax and
         regulatory purposes.

10       OTHER INSURANCE & BENEFITS

10.1     LIFE ASSURANCE

         The Company will provide the Executive with the benefit of death in
         service life assurance which, in the event of death itself will pay a
         maximum amount of 4 times his annual salary, subject to the rules and
         conditions of the policy.

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10.2     HEALTH CARE SCHEME

         Without prejudice to the terms of Clause 16, the Executive and his
         spouse and children up to the age of 18 shall be entitled during the
         Employment, to participate at the Company's expense in a Health Care
         Scheme subject to the following terms and conditions:-

         (a)      the terms and conditions of the Health Care Scheme from time
                  to time;

         (b)      the insurer or provider of the Health Care Scheme honouring
                  the claim in respect of the Executive or his spouse or
                  children;

         (c)      the Executive's acceptance of such variations to his terms and
                  conditions of employment as may from time to time be required
                  by the Company.

10.3     PHI

         Without prejudice to the terms of Clause 16, the Executive shall be
         entitled to participate in a Permanent Health Insurance ("PHI") scheme
         at the expense of the Company, always subject to the terms and
         conditions of the PHI scheme.

10.4     PAYMENTS

10.4.1   All payments under the PHI scheme or the like will be subject to the
         deductions required by law.

10.4.2   Where payments are made under the PHI scheme all other benefits
         provided to or in respect of the Executive will cease from the start of
         those payments (if they have not done so already), unless the Company
         is fully reimbursed by the PHI scheme for the cost of providing the
         benefit.

10.5     RIGHT TO TERMINATE OR AMEND

         The Company reserves the right at its absolute discretion to terminate
         or amend at any time any Health Care Scheme or PHI scheme or the
         Executive's membership of any such scheme. The Company will provide an
         equivalent benefit unless, in the reasonable opinion of the Chief
         Executive Officer , it is unable to secure insurance at reasonable
         premiums due to the medical condition of the Executive or his spouse or
         children.

10.6     MEDICAL EXAMINATIONS AND HEALTH RECORDS

         The Executive shall submit to such medical examinations by a doctor
         selected by the Chief Executive Officer as may reasonably be required
         by the Chief Executive Officer from time to time. The Executive
         authorises the Company to make applications on his behalf for access to
         any health records relating to him for the purposes of Section 3 of the
         Access to Health Records Act 1990, provided that the Executive is given
         prior notice of any application being made. Copies of any health
         records provided to the Chief Executive Officer as a result of any
         application shall be made available to the Executive. The fees and
         expenses incurred in the provision of any medical examination and of
         obtaining access to the health records shall be borne by the Company.

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11       HOLIDAYS

11.1     THE HOLIDAY YEAR

         The Company's holiday year runs from 1st January to 31st December.
         Holidays can only be taken with the prior permission of the Chief
         Executive Officer .

11.2     ANNUAL ENTITLEMENT

11.2.1   The Executive's annual entitlement to paid holidays is to those public
         or customary holidays recognised by the Company in any holiday year and
         in addition, 5 weeks contractual days holiday.

11.2.2   Entitlement to contractual holidays is accrued pro rata throughout the
         holiday year. The Executive will be entitled to take public and
         customary holidays on the days that they are recognised by the Company
         during the holiday year.

11.2.3   The Executive is not entitled to carry any unused holiday entitlement
         forward to the next holiday year without the permission of the Company.

11.3     HOLIDAY ENTITLEMENT ON TERMINATION

         Upon notice of termination of the Employment being served by either
         party, the Company may require the Executive to take any unused
         holidays accrued at that time during any notice period. Alternatively,
         the Company may, at its discretion, on termination of the Employment,
         make a payment in lieu of accrued contractual holiday entitlement. The
         Executive will be required to make a payment to the Company in respect
         of any holidays taken in excess of his holiday entitlement accrued at
         the Termination Date. Any sums so due may be deducted from any money
         owing to the Executive by the Company.

12       ABSENCE

12.1     ABSENCE DUE TO SICKNESS OR INJURY

         If the Executive is absent from work due to sickness or injury he
         shall:

         (a)      immediately inform the Company of his sickness or injury;

         (b)      in respect of a consecutive period of absence lasting less
                  than 8 days (including weekends), send to the Company a
                  self-certification form in a format stipulated by the Company;
                  and

         (c)      in respect of any absence exceeding 7 consecutive days
                  (including weekends), send to the Company a medical
                  certificate signed by a doctor covering the further
                  consecutive period of absence.

12.2     PAYMENT OF SALARY DURING ABSENCE

12.2.1   Subject to the Executive complying with the terms of Clause 12.1, the
         Company shall continue to pay Basic Salary and other benefits during
         any period of absence due to sickness or injury for up to a maximum
         period of 10 weeks in any period of 12 consecutive months unless the
         Employment is terminated in terms of Clauses 3 or 16. Thereafter the
         Company shall pay half basic salary and benefits for a further period
         of 10 weeks in that period of 12 consecutive months unless the
         employment is terminated in terms of Clauses 3 or 16.

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12.2.2   Payment of the Basic Salary in terms of Clause 12.2.1 shall be made
         less:

         (a)      an amount equivalent to any Statutory Sick Pay payable to the
                  Executive;

         (b)      any sums which may be received by the Executive under any
                  insurance policy effected by the Company; and

         (c)      any other benefits or sums which the Executive receives in
                  terms of the Employment or under any relevant legislation.

13       OTHER INTERESTS

13.1     RESTRICTIONS ON OTHER ACTIVITIES AND INTERESTS OF THE EXECUTIVE

13.1.1   During the Employment the Executive shall not at any time, without the
         prior written consent of the Chief Executive Officer , either alone or
         jointly with any other person, carry on or be directly or indirectly
         employed, engaged, concerned or interested in any business, prospective
         business or undertaking other than a Group Company. Nothing contained
         in this Clause shall preclude the Executive from being a Minority
         Holder unless the holding is in a company that is a direct business
         competitor of the Company or any Group Company in which case, the
         Executive shall obtain the prior consent of the Chief Executive Officer
         to the acquisition or variation of such holding.

13.1.2   If the Executive, with the consent of the Chief Executive Officer ,
         accepts any other appointment he must keep the Company accurately
         informed of the amount of time he spends working under that
         appointment.

13.2     TRANSACTIONS WITH THE COMPANY

         Subject to any regulations issued by the Company, the Executive shall
         not be entitled to receive or obtain directly or indirectly any
         discount, rebate or commission as a result of any sale or purchase of
         goods or services effected or other business transacted (whether or not
         by him) by or on behalf of the Company or any Group Company and if he
         (or any person in which he is interested) obtains any discount, rebate
         or commission he shall account to the Company for the amount received
         by him (or a due proportion of the amount received by the person having
         regard to the extent of his interest therein).

14       CONFIDENTIALITY AND COMPANY DOCUMENTS

14.1     RESTRICTIONS ON DISCLOSURE/USE OF CONFIDENTIAL INFORMATION

         The Executive must not either during the Employment (except in the
         proper performance of his duties) or at any time (without limit) after
         the Termination Date:

         (a)      divulge or communicate to any person;

         (b)      use for his own purposes or for any purposes other than those
                  of the Company or any Group Company; or

         (c)      through any failure to exercise due care and diligence, cause
                  any unauthorised disclosure of;

         any Confidential Information. The Executive must at all times use his
         best endeavours to prevent publication or disclosure of any
         Confidential Information. These restrictions shall

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         cease to apply to any information which shall become available to the
         public generally otherwise than through the default of the Executive.

14.2     PROTECTION OF COMPANY DOCUMENTS AND MATERIALS

         All notes, records, lists of customers, suppliers and employees,
         correspondence, computer and other discs or tapes, data listings,
         codes, keys and passwords, designs, drawings and other documents or
         material whatsoever (whether made or created by the Executive or
         otherwise and in whatever medium or format) relating to the business of
         the Company or any Group Company or any of its or their clients (and
         any copies of the same):

         (a)      shall be and remain the property of the Company or the
                  relevant Group Company or client; and

         (b)      shall be handed over by the Executive to the Company or the
                  relevant Group Company or client on demand by the Company and
                  in any event on the termination of the Employment.

15       INVENTIONS AND OTHER WORKS

15.1     EXECUTIVE TO FURTHER INTERESTS OF THE COMPANY

         The Company and the Executive agree that the Executive may make or
         create Works during the Employment and agree that in this respect the
         Executive is obliged to further the interests of the Company and any
         Group Company.

15.2     DISCLOSURE AND OWNERSHIP OF WORKS

         The Executive must immediately disclose to the Company all Works and
         all Intellectual Property Rights. Both the Works and all Intellectual
         Property Rights will (subject to sections 39 to 43 of the Patents Act
         1977) belong to and be the absolute property of the Company or any
         other person the Company may nominate.

15.3     PROTECTION, REGISTRATION AND VESTING OF WORKS

         The Executive shall immediately on request by the Company (whether
         during or after the Termination Date) and at the expense of the
         Company:

         (a)      apply or join with the Company or any Group Company in
                  applying for any Intellectual Property Rights or other
                  protection or registration ("PROTECTION") in the United
                  Kingdom and in any other part of the world for, or in relation
                  to, any Works;

         (b)      execute all instruments and do all things necessary for
                  vesting all Intellectual Property Rights or Protection when
                  obtained and all right, title and interest to and in the same
                  absolutely and as sole beneficial owner in the Company or such
                  Group Company or other person as the Company may nominate; and

         (c)      sign and execute any documents and do any acts reasonably
                  required by the Company in connection with any proceedings in
                  respect of any applications and any publication or application
                  for revocation of any Intellectual Property Rights or
                  Protection.

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15.4     WAIVER OF RIGHTS BY THE EXECUTIVE

         The Executive hereby irrevocably and unconditionally waives all rights
         under Chapter IV Copyright, Designs and Patents Act 1988 and any other
         moral rights which he may have in the Works, in whatever part of the
         world such rights may be enforceable including:

         (a)      the right conferred by section 77 of that Act to be identified
                  as the author of any such Works; and

         (b)      the right conferred by section 80 of that Act not to have any
                  such Works subjected to derogatory treatment.

15.5     POWER OF ATTORNEY

         The Executive hereby irrevocably appoints the Company to be his
         attorney and in his name and on his behalf to execute any such act and
         to sign all deeds and documents and generally to use his name for the
         purpose of giving to the Company the full benefit of this Clause. The
         Executive agrees that, with respect to any third parties, a certificate
         signed by any duly authorised officer of the Company that any act or
         deed or document falls within the authority hereby conferred shall be
         conclusive evidence that this is the case.

15.6     STATUTORY RIGHTS

         Nothing in this Clause 15 shall be construed as restricting the rights
         of the Executive or the Company under sections 39 to 43 of the Patents
         Act 1977.

16       TERMINATION

16.1     TERMINATION EVENTS

         Notwithstanding the provisions of Clauses 3 and 12, the Company shall
         be entitled, but not bound, to terminate the Employment:

         (a)      with immediate effect by giving to the Executive notice in
                  writing at any time after the occurrence of any one or more of
                  the following events:-

                  (i)      if the Executive is guilty of any gross misconduct or
                           behaviour which tends to bring himself or the Company
                           or any Group Company into disrepute; or

                  (ii)     if the Executive commits any material or persistent
                           breach of this Agreement, or fails to comply with any
                           reasonable order or direction of the Chief Executive
                           Officer , or fails to perform his duties to the
                           standard required by the Chief Executive Officer ; or

                  (iii)    if he becomes insolvent or bankrupt or compounds with
                           or grants a trust deed for the benefit of his
                           creditors; or

                  (iv)     if his behaviour (whether or not in breach of this
                           Agreement) can reasonably be regarded as materially
                           prejudicial to the interests of the Company or any
                           Group Company, including if he is found guilty of any
                           criminal offence punishable by imprisonment (whether
                           or not such sentence is actually imposed); or

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                  (v)      has an order made against him disqualifying him from
                           acting as a company director; or

                  (vi)     if he becomes of unsound mind; or

         (b)      by giving not less than 6 months' notice in writing if the
                  Executive has been prevented by reason of ill health, injury
                  or some other reason beyond his control, from performing his
                  duties under this Agreement for a period or periods
                  aggregating at least ninety days in the preceding period of
                  twenty four consecutive months provided that if at any time
                  during the period of such notice and before the termination of
                  the Employment the Executive shall provide a medical
                  certificate satisfactory to the Chief Executive Officer to the
                  effect that he has fully recovered his physical and/or mental
                  health and that no recurrence of illness or incapacity can
                  reasonably be anticipated, the Company shall withdraw the
                  notice.

16.2     NO DAMAGES OR PAYMENT IN LIEU OF NOTICE

         In the event of the Employment being terminated in accordance with
         Clause 16.1, the Executive shall not be entitled to receive any payment
         in lieu of notice nor make any claim against the Company or any Group
         Company for damages for loss of office or termination of the
         Employment. Regardless of this, the termination shall be without
         prejudice to the continuing obligations of the Executive under this
         Agreement.

17       EVENTS UPON TERMINATION

17.1     OBLIGATIONS UPON TERMINATION

         Immediately upon the termination of the Employment howsoever arising or
         immediately at the request of the Chief Executive Officer at any time
         after either the Company or the Executive has served notice of
         termination of the Employment, the Executive shall deliver to the
         Company all Works, materials within the scope of Clause 15.2 and all
         other materials and property including credit or charge cards, mobile
         telephone, computer equipment, disks and software, passwords,
         encryption keys or the like, keys, security pass, letters, stationery,
         documents, files, films, records, reports, plans and papers (in
         whatever format including electronic) and all copies thereof used in or
         relating to the business of the Company or the Group which are in the
         possession of or under the control of the Executive.

17.2     LOSS OF SHARE OPTIONS

         On the termination of the Employment (whether occurring lawfully or
         otherwise), the Executive shall not be entitled to any compensation or
         payment for the loss of the Share Options or any benefit which could
         have been derived from them, whether the compensation or payment is
         claimed by way of a payment in lieu of notice, damages for wrongful
         dismissal, breach of contract or loss of office, or compensation for
         unfair dismissal, or on any other basis.

18       RESTRICTIONS AFTER TERMINATION

18.1     DEFINITIONS

         Since the Executive is likely to obtain Confidential Information in the
         course of the Employment and personal knowledge of and influence over
         suppliers, customers, clients and employees of the Company and Group
         Companies, the Executive hereby agrees with the Company that in
         addition to the other terms of this Agreement and without prejudice to
         the other restrictions imposed upon him by law, he will be bound by the
         covenants and

                                       12

<PAGE>   13

         undertakings contained in Clauses 18.2 to 18.5. In this Clause 18,
         unless the context otherwise requires:

         "CRITICAL EMPLOYEE" means any person who was a director, employee or
         consultant of the Company at any time within the Relevant Period who by
         reason of that position and in particular his seniority and expertise
         or knowledge of Confidential Information or knowledge of or influence
         over the clients, customers or contacts of the Company is likely to
         cause damage to the Company if he were to leave the employment of the
         Company and become employed by a competitor of the Company;

         "RELEVANT PERIOD" means the period of twelve months immediately
         preceding the Termination Date;

         "RESTRICTED AREA" means any country in the world where the Company or
         any Group Company has a valid licence for the exploration and/or
         production of oil and/or gas;

         "RESTRICTED PERIOD" means the period of 12 months commencing on the
         Termination Date;

18.2     RESTRICTIVE COVENANTS

         The Executive confirms that, neither during the Employment nor during
         the Restricted Period, without the prior written consent of the Company
         (such consent not to be unreasonably withheld), whether by himself,
         through his employees or agents or otherwise and whether on his own
         behalf or on behalf of any person, directly or indirectly, he will not:

         (a)      so as to compete with the Company in the Restricted Area; be
                  employed or engaged or at all interested in (except as a
                  Minority Holder) a business or person which is involved in the
                  business of exploration or production of oil and/or gas, if
                  the business is or seeks to be in competition with the
                  Company;

         (b)      solicit or induce or endeavour to solicit or induce any person
                  who, on the Termination Date, was a Critical Employee (and
                  with whom the Executive had dealings during the Relevant
                  Period) to cease working for or providing services to the
                  Company, whether or not any such person would thereby commit a
                  breach of contract;

         (c)      employ or otherwise engage any Critical Employee in the
                  business of exploration or production of oil and/or gas if
                  that business is, or seeks to be, in competition with the
                  Company; or

         (d)      solicit or induce or endeavour to solicit or induce any
                  Government body or agency or any other third party in the
                  Restricted Area to cease to deal with the Company and shall
                  not interfere in any way with any relationship between any
                  such Government body or agency or other third party and the
                  Company.

18.3     APPLICATION OF RESTRICTIVE COVENANTS TO OTHER GROUP COMPANIES

         Clause 18.2 shall also apply as though references to the "COMPANY"
         include references to each Group Company in relation to which the
         Executive has in the course of the Employment or by reason of rendering
         services to or holding office in such Group Company:

         (a)      acquired knowledge of its trade secrets or Confidential
                  Information; or

         (b)      had personal dealings with its Customers or Prospective
                  Customers; or

                                       13

<PAGE>   14

         (c)      supervised directly or indirectly employees having personal
                  dealings with its Customers or Prospective Customers;

         but so that references in Clause 18.1 to the "Company" shall for this
         purpose be deemed to be references to the relevant Group Company. The
         obligations undertaken by the Executive pursuant to this Clause 18.3
         shall, with respect to each Group Company, constitute a separate and
         distinct covenant and the invalidity or unenforceability of any such
         covenant shall not affect the validity or enforceability of the
         covenants in favour of any other Group Company.

18.4     EFFECT OF SUSPENSION ON RESTRICTED PERIOD

         If the Company exercises its right to suspend the Executive's duties
         and powers under Clause 5.3 after notice of termination of the
         Employment has been given, the aggregate of the period of the
         suspension and the period after the Termination Date for which the
         covenants in Clause 18 shall apply shall not exceed 12 months and if
         the aggregate of the two periods would exceed 12 months, the period
         after the Termination Date for which the covenants in Clause 18 shall
         apply shall be reduced accordingly.

18.5     SEVERANCE

         The restrictions in this Clause 18 (on which the Executive has had the
         opportunity to take independent advice, as the Executive hereby
         acknowledges) are separate and severable restrictions and are
         considered by the parties to be reasonable in all the circumstances. It
         is agreed that if any such restrictions, by themselves, or taken
         together, shall be adjudged to go beyond what is reasonable in all the
         circumstances for the protection of the legitimate interests of the
         Company or a Group Company but would be adjudged reasonable if some
         part of it were deleted, the relevant restriction or restrictions shall
         apply with such deletion(s) as may be necessary to make it or them
         valid and enforceable.

19       DISCIPLINARY AND GRIEVANCE PROCEDURE

19.1     DISCIPLINARY PROCEDURES

         Any disciplinary action taken in connection with the Employment will
         usually be taken in accordance with the Company's normal disciplinary
         procedures (which are workplace rules and not contractually binding) a
         copy of which is available from the Secretary of the Company.

19.2     GRIEVANCE PROCEDURE

         If the Executive wishes to obtain redress of any grievance relating to
         the Employment or is dissatisfied with any reprimand, suspension or
         other disciplinary step taken by the Company, he shall apply in writing
         to the Managing Director, setting out the nature and details of any
         such grievance or dissatisfaction.

20       GENERAL

20.1     PROVISIONS WHICH SURVIVE TERMINATION

         Any provision of this Agreement which is expressed or intended to have
         effect on, or to continue in force after, the termination of this
         Agreement shall have such effect, or, as the case may be, continue in
         force, after such termination.

                                       14

<PAGE>   15

20.2     NO COLLECTIVE AGREEMENTS

         There are no collective agreements that directly affect the terms and
         conditions of the Employment.

21       DATA PROTECTION

         The Executive acknowledges and agrees that the Company is permitted to
         hold personal information about the Executive as part of its personnel
         and other business records and may use such information in the course
         of the Company's or the Group's business. The Executive agrees that the
         Company may disclose such information to third parties in the event
         that such disclosure is in the Company's view required for the proper
         conduct of the Company's business or that of any Group Company. This
         Clause applies to information held, used or disclosed in any medium.

22       ENTIRE AGREEMENT

         This Agreement band the documents referred to in it, constitute the
         entire agreement and understanding of the parties and supersede any
         previous agreement between the parties relating to the subject matter
         of this Agreement.

23       INDEMNITY & INSURANCE

23.1     INDEMNITY

         The Company shall indemnify the Executive in respect of any costs,
         claims or liabilities incurred by the Executive in the proper
         performance of his duties hereunder.

23.2     INSURANCE

         The Executive shall be responsible for ensuring that the company takes
         out and maintains directors and officer's liability insurance in
         respect of all current directors and officers and to cover all
         directors and officers for a period of 3 years after termination of
         their contracts.

24       GOVERNING LAW AND JURISDICTION

24.1     GOVERNING LAW

         This Agreement shall be governed and construed in accordance with the
         law of England & Wales.

                                       15

<PAGE>   16

24.2     JURISDICTION

         Each party hereby submits to the exclusive jurisdiction of the English
         courts as regards any claim, dispute or matter arising out of or in
         connection with this Agreement and its implementation and effect.

IN WITNESS WHEREOF this Agreement has been duly signed, sealed and delivered as
a Deed the day and year before written.

SUBSCRIBED for and on behalf of CanArgo Energy Corporation

at Guernsey on September 22, 2000

by   /s/ David Robson                  Chief Executive Officer
   ____________________________________
         David Robson

SIGNED by the said Murray Chancellor    /s/ Murray Chancellor
                                      _______________________________________
                                            Murray Chancellor

at Guernsey on September 22, 2000

in the presence of:-

Witness   /s/ E. Landles __________________________________________
Full Name__________________________________________________________
Address____________________________________________________________
Occupation ________________________________________________________

                                       16
<PAGE>   17

THIS AGREEMENT is made on the 22nd day of September 2000
between

(1)  CANARGO LIMITED , a Company incorporated under the laws of Guernsey with
     Registered Number 32825 and having its Registered Office there at PO Box
     291, Commerce House, Les Banques, St Peter Port, Guernsey, GY1 3RR (the
     "COMPANY"); and

(2)  MURRAY CHANCELLOR, residing at Blendworth Lodge, Church Path, Horndean,
     Waterlooville, Hampshire PO8 0DG (the "EXECUTIVE")

WHEREAS the Company wishes to employ the Executive as Technical Manager on the
terms and conditions of this Agreement and the Executive wishes to accept such
employment.

IT IS AGREED as follows:-

1         DEFINITIONS AND INTERPRETATION

1.1       DEFINITIONS

          In this Agreement, unless the context otherwise requires:

          "BASIC SALARY" means the monthly salary, as specified in Clause 6.1.1
          or, as appropriate, the reviewed monthly salary from time to time;

          "CONFIDENTIAL INFORMATION" means all information which is identified
          or treated by the Company or any Group Company or any of the Group's
          clients or customers as confidential or which by reason of its
          character or the circumstances or manner of its disclosure is
          evidently confidential including (without prejudice to the foregoing
          generality) any information about the personal affairs of any of the
          directors (or their families) of the Company or any Group Company,
          business plans, proposals relating to the acquisition or disposal of
          a company or business or proposed expansion or contraction of
          activities, maturing new business opportunities, research and
          development projects, designs, secret processes, trade secrets,
          product or services development and formulae, know-how, inventions,
          sales statistics and forecasts, marketing strategies and plans,
          costs, profit and loss and other financial information (save to the
          extent published in audited accounts), prices and discount structures
          and the names, addresses and contact and other details of: (a)
          employees and their terms of employment; (b) customers and potential
          customers, their requirements and their terms of business with the
          Group; and (c) suppliers and potential suppliers and their terms of
          business (all whether or not recorded in writing or in electronic or
          other format);

          "EMPLOYMENT" means the employment of the Executive under this
          Agreement or, as the context requires, the duration of that
          employment;

          "GROUP" means the Company, any holding company or undertaking of the
          Company and any subsidiaries and subsidiary undertakings of the
          Company or such holding company or undertaking;

          "GROUP COMPANY" means any company within the Group;

          "INTELLECTUAL PROPERTY RIGHTS" means any and all existing and future
          intellectual or industrial property rights in and to any Works,
          including all existing and future patents, copyrights, design rights
          (whether registered or unregistered), database rights, trade marks

                                       1

<PAGE>   18

          (whether registered or unregistered), semiconductor topography
          rights, plant varieties rights, internet rights/domain names,
          know-how and any and all applications for any of the foregoing and
          any and all rights to apply for any of the foregoing in and to any
          Works;

          "MINORITY HOLDER" means a person who either solely or jointly holds
          (directly or through nominees) any shares or loan capital in any
          company whose shares are listed or dealt in on a recognised
          investment exchange (as that term is defined by Section 207(1) of the
          Financial Services Act 1986) provided that such holding does not,
          when aggregated with any shares or loan capital held by the
          Executive's partner and/or his or his partner's children under the
          age of 18, exceed 3% of the shares or loan capital of the class
          concerned for the time being issued;

          "PHI SCHEME" means the permanent health insurance scheme provide by
          the Company to the Executive.

          "TERMINATION DATE" means the date of termination of the Employment;
          and

          "WORKS" means any documents, materials, models, designs, drawings,
          processes, inventions, formulae, computer coding, methodologies,
          know-how, Confidential Information or other work, performed made,
          created, devised, developed or discovered by the Executive in the
          course of the Employment either alone or with any other person in
          connection with or in any way affecting or relating to the business of
          the Company or any Group Company or capable of being used or adapted
          for use therein or in connection therewith.

1.2       INTERPRETATION AND CONSTRUCTION

          Save to the extent that the context or the express provisions of this
          Agreement require otherwise, in this Agreement:-

          (a)  words importing the singular shall include the plural and vice
               versa;

          (b)  words importing any gender shall include all other genders;

          (c)  any reference to a Clause, the Schedule or part of the Schedule
               is to the relevant Clause, Schedule or part of the Schedule of or
               to this Agreement unless otherwise specified;

          (d)  references to this Agreement or to any other document shall be
               construed as references to this Agreement or to that other
               document as modified, amended, varied, supplemented, assigned,
               novated or replaced from time to time;

          (e)  references to any statute or statutory provision (including any
               subordinate legislation) includes any statute or statutory
               provision which amends, extends, consolidates or replaces the
               same, or which has been amended, extended, consolidated or
               replaced by the same, and shall include any orders, regulations,
               instruments or other subordinate legislation made under the
               relevant statute or statutory provision;

          (f)  references to a "PERSON" includes any individual, firm, company,
               corporation, body corporate, government, state or agency of
               state, trust or foundation, or any association, partnership or
               unincorporated body (whether or not having separate legal
               personality) of two or more foregoing;

                                       2

<PAGE>   19

          (g)  any phrase introduced by the words "INCLUDING", "INCLUDE", "IN
               PARTICULAR" or any similar expression shall be construed as
               illustrative only and shall not be construed as limiting the
               generality of any preceding words;

          (h)  the words "OTHER" and "OTHERWISE" shall not be construed eiusdem
               generis with any foregoing words where a wider construction is
               possible.

1.3       HEADINGS

          The table of contents and the headings in this Agreement are included
          for convenience only and shall be ignored in construing this
          Agreement.

2         THE EMPLOYMENT

2.1       APPOINTMENT

          Subject to the provisions of this Agreement, the Company employs the
          Executive and the Executive accepts employment as Technical Manager of
          the Company with effect from 12th September 2000 notwithstanding the
          date or dates of this Agreement.

2.2       WARRANTY

          The Executive warrants to the Company that by virtue of entering into
          this Agreement he will not be in breach of any express or implied
          obligation to any third party.

3         DURATION OF THE EMPLOYMENT

3.1       CONTINUOUS EMPLOYMENT

          The Executive's continuous period of employment with the Company
          commenced on 12th September 2000.

3.2       DURATION

          Subject to the provisions of Clauses 3 and 15.1 the Employment shall
          continue unless and until terminated at any time by:-

          (a)  the Company giving to the Executive not less than 6 months'
               previous notice in writing to that effect; or

          (b)  the Executive giving to the Company not less than 6 months'
               previous notice in writing to that effect.

3.3       PAYMENT IN LIEU OF NOTICE

          The Company shall be entitled, at its sole discretion, to terminate
          the Employment immediately in writing either instead of, or at any
          time after, notice of termination being given (by either the Company
          or the Executive) and in either case to make a payment to the
          Executive in lieu of notice.

3.4       COMPULSORY RETIREMENT

          Notwithstanding Clause 3.2, the Employment shall terminate without
          notice on the Executive's 60th birthday.

                                       3

<PAGE>   20

4         HOURS AND PLACE OF WORK

4.1       HOURS OF WORK

          The Executive agrees that he shall work such hours as are necessary
          for the proper performance of his duties. The Executive shall work a
          minimum of 120 hours per month on days to be agreed in advance.

4.2       PLACE OF WORK

          The Executive's place of work will initially be at the Company's
          premises at 1/5 Arakishvili Street, Tbilisi, Georgia or at the
          Company's premises at St Peter Port, Guernsey but the Company may
          require the Executive to work at any place within Eastern Europe or
          the Middle East on either a temporary or an indefinite basis. The
          Executive will be given reasonable notice of any change in his
          permanent place of work.

5         SCOPE OF THE EMPLOYMENT

5.1       DUTIES OF THE EXECUTIVE

          During the Employment the Executive shall:-

          (a)  undertake and carry out to the best of his ability such duties
               and exercise such powers in relation to the Company's business as
               may from time to time be assigned to or vested in him by the
               Managing Director;

          (b)  in the discharge of those duties and the exercise of those powers
               observe and comply with all lawful resolutions, regulations and
               directions from time to time made by, or under the authority of,
               the Managing Director and promptly upon request, give a full
               account to the Managing Director or a person duly authorised by
               the Managing Director of all matters with which he is entrusted;

          (c)  unless prevented by ill-health, holidays or other unavoidable
               cause, devote such of his working time, attention and skill to
               the discharge of his duties hereunder as may be reasonably
               required; and

          (d)  faithfully and diligently perform his duties and at all times use
               his best endeavours to promote and protect the interests of the
               Group.

5.2       RIGHT TO SUSPEND DUTIES AND POWERS

5.2.1     The Company reserves the right in its absolute discretion to suspend
          during any notice period or for the purpose of investigating any
          matter in which the Executive is implicated or involved all or any of
          the Executive's duties and powers on terms it considers expedient or
          to require him to perform only such duties, specific projects or tasks
          as are assigned to him expressly by the Company (including the duties
          of another position) in any case for such period or periods and at
          such place or places (including, without limitation, the Executive's
          home) as the Company in its absolute discretion deems necessary (the
          "GARDEN LEAVE").

5.2.2     The Company may, at its sole discretion, require that during the
          Garden Leave the Executive shall not:

          (a)  enter or attend the premises of the Company or any Group Company;

                                       4

<PAGE>   21

          (b)  contact or have any communication with any client or prospective
               client or supplier of the Company or any Group Company in
               relation to the business of the Company or any Group Company;

          (c)  contact or have any communication with any employee, officer,
               director, agent or consultant of the Company or any Group Company
               in relation to the business of the Company or any Group Company;

          (d)  remain or become involved in any aspect of the business of the
               Company or any Group Company except as required by such
               companies; or

          (e)  work either on his own account or on behalf of any other person.

5.2.3     During Garden Leave, the Executive will continue to receive his Basic
          Salary and benefits.

5.2.4     For the avoidance of doubt, the Company may exercise its powers under
          this Clause 5.2 at any time during the Employment including after
          notice of termination has been given by either party.

6         REMUNERATION

6.1       BASIC SALARY

          During the Employment the Company shall pay the Executive a Basic
          Salary of (pound)6,000 per month. The Basic Salary shall accrue from
          day to day and be payable by credit transfer in equal monthly
          instalments on or around the 15th day of each calendar month or
          otherwise as arranged from time to time.

6.2       SALARY REVIEW

          The Basic Salary shall be reviewed annually with effect from the first
          anniversary of the commencement of employment. The Company is not
          obliged to increase the Basic Salary at any review.

6.3       BONUS

          The Executive shall be entitled to a bonus based upon the performance
          criteria agreed between the Executive and the Managing Director.

7         EXPENSES

7.1       OUT-OF-POCKET EXPENSES

          The Company shall reimburse to the Executive (against receipts or
          other appropriate evidence as the Managing Director may require) the
          amount of all out-of-pocket expenses reasonably and properly incurred
          by him in the proper discharge of his duties hereunder.

7.2       COMPANY CREDIT/CHARGE CARDS

          In the event that the Company issues a Company sponsored credit or
          charge card to the Executive he shall use such card only for expenses
          reimbursable under Clause 7.1 and shall return it to the Company when
          so requested and in any event immediately on termination of the
          Employment howsoever arising.

                                       5

<PAGE>   22

7.3       MOBILE TELEPHONE

          The Company will provide the Executive with a mobile telephone for the
          purpose of properly performing his duties. The Company will be
          responsible for all payment of all costs in connection with the
          telephone, including line rental charges, connection fees, and all
          charges. For the avoidance of doubt, the Executive is permitted to
          make reasonable use of the mobile telephone for personal purposes. The
          telephone will however remain the property of the Company at all times
          and the Company may demand the return of the telephone at any time if,
          in the opinion of the Company the Executive is making inappropriate
          use of the telephone.

8         DEDUCTIONS

          The Executive agrees that the Company may deduct from any sums due to
          him under this Agreement any sums due by him to the Company including,
          without limitation, any debits to his Company credit or charge card
          not authorised by the Company, the Executive's pension contributions
          (if any), any overpayments, loans or advances made to him by the
          Company, the cost of repairing any damage or loss to the Company's
          property caused by him and any losses suffered by the Company as a
          result of any negligence or breach of duty by the Executive.

9         PENSION SCHEME

          The Company does not provide a Company pension scheme.

10        OTHER INSURANCE & BENEFITS

10.1      LIFE ASSURANCE

          The Company will provide the Executive with the benefit of death in
          service life assurance which, in the event of death itself will pay a
          maximum amount of 4 times his annual salary, subject to the rules and
          conditions of the policy.

10.2      PHI

          Without prejudice to the terms of clause 16, the Executive shall be
          entitled to participate in the PHI scheme at the expense of the
          Company, always subject to the terms and conditions of the PHI scheme.

10.3      PAYMENTS

10.3.1    All payments under the PHI scheme or the like will be subject to the
          deductions required by law.

10.3.2    Where payments are made under the PHI scheme all other benefits
          provided to or in respect of the Executive will cease from the start
          of those payments (if they have not done so already), unless the
          Company is fully reimbursed by the PHI scheme for the cost of
          providing the benefit.

10.4      RIGHT TO TERMINATE OR AMEND

          The Company reserves the right at its absolute discretion to terminate
          or amend at any time the PHI scheme or the Executive's membership of
          any scheme. The Company will provide an equivalent benefit unless, in
          the reasonable opinion of the Managing Director, it is unable to
          secure insurance at reasonable premiums due to the medical condition
          of the Executive.

                                       6

<PAGE>   23

10.5      MEDICAL EXAMINATIONS AND HEALTH RECORDS

          The Executive shall submit to such medical examinations by a doctor
          selected by the Managing Director as may reasonably be required by the
          Managing Director from time to time. The Executive authorises the
          Company to make applications on his behalf for access to any health
          records relating to him for the purposes of Section 3 of the Access to
          Health Records Act 1990, provided that the Executive is given prior
          notice of any application being made. Copies of any health records
          provided to the Managing Director as a result of any application shall
          be made available to the Executive. The fees and expenses incurred in
          the provision of any medical examination and of obtaining access to
          the health records shall be borne by the Company.

11        ABSENCE

11.1      ABSENCE DUE TO SICKNESS OR INJURY

          If the Executive is absent from work due to sickness or injury he
          shall:

          (a)  immediately inform the Company of his sickness or injury;

          (b)  in respect of a consecutive period of absence lasting less than 8
               days (including weekends), send to the Company a
               self-certification form in a format stipulated by the Company;
               and

          (c)  in respect of any absence exceeding 7 consecutive days (including
               weekends), send to the Company a medical certificate signed by a
               doctor covering the further consecutive period of absence.

11.2      PAYMENT OF SALARY DURING ABSENCE

11.2.1    Subject to the Executive complying with the terms of Clause 11.1, the
          Company shall continue to pay Basic Salary and other benefits during
          any period of absence due to sickness or injury for up to a maximum
          period of 10 weeks in any period of 12 consecutive months unless the
          Employment is terminated in terms of Clauses 3 or 15. Thereafter the
          Company shall pay half basic salary and benefits for a further period
          of 10 weeks in that period of 12 consecutive months unless the
          employment is terminated in terms of Clauses 3 or 15.

11.2.2    Payment of the Basic Salary in terms of Clause 11.2.1 shall be made
          less:

          (a)  an amount equivalent to any Statutory Sick Pay payable to the
               Executive;

          (b)  any sums which may be received by the Executive under any
               insurance policy effected by the Company; and

          (c)  any other benefits or sums which the Executive receives in terms
               of the Employment or under any relevant legislation.

12        OTHER INTERESTS

12.1      RESTRICTIONS ON OTHER ACTIVITIES AND INTERESTS OF THE EXECUTIVE

12.1.1    During the Employment the Executive shall not at any time, without
          the prior written consent of the Managing Director, either alone or
          jointly with any other person, carry on or be directly or indirectly
          employed, engaged, concerned or interested in any business,
          prospective business or undertaking other than a Group Company.
          Nothing contained in this

                                       7

<PAGE>   24

          Clause shall preclude the Executive from being a Minority Holder
          unless the holding is in a company that is a direct business
          competitor of the Company or any Group Company in which case, the
          Executive shall obtain the prior consent of the Managing Director to
          the acquisition or variation of such holding.

12.1.2    If the Executive, with the consent of the Managing Director, accepts
          any other appointment he must keep the Company accurately informed of
          the amount of time he spends working under that appointment.

12.2      TRANSACTIONS WITH THE COMPANY

          Subject to any regulations issued by the Company, the Executive shall
          not be entitled to receive or obtain directly or indirectly any
          discount, rebate or commission as a result of any sale or purchase of
          goods or services effected or other business transacted (whether or
          not by him) by or on behalf of the Company or any Group Company and if
          he (or any person in which he is interested) obtains any discount,
          rebate or commission he shall account to the Company for the amount
          received by him (or a due proportion of the amount received by the
          person having regard to the extent of his interest therein).

13        CONFIDENTIALITY AND COMPANY DOCUMENTS

13.1      RESTRICTIONS ON DISCLOSURE/USE OF CONFIDENTIAL INFORMATION

          The Executive must not either during the Employment (except in the
          proper performance of his duties) or at any time (without limit) after
          the Termination Date:

          (a)  divulge or communicate to any person;

          (b)  use for his own purposes or for any purposes other than those of
               the Company or any Group Company; or

          (c)  through any failure to exercise due care and diligence, cause any
               unauthorised disclosure of;

          any Confidential Information. The Executive must at all times use his
          best endeavours to prevent publication or disclosure of any
          Confidential Information. These restrictions shall cease to apply to
          any information which shall become available to the public generally
          otherwise than through the default of the Executive.

13.2      PROTECTION OF COMPANY DOCUMENTS AND MATERIALS

          All notes, records, lists of customers, suppliers and employees,
          correspondence, computer and other discs or tapes, data listings,
          codes, keys and passwords, designs, drawings and other documents or
          material whatsoever (whether made or created by the Executive or
          otherwise and in whatever medium or format) relating to the business
          of the Company or any Group Company or any of its or their clients
          (and any copies of the same):

          (a)  shall be and remain the property of the Company or the relevant
               Group Company or client; and

          (b)  shall be handed over by the Executive to the Company or the
               relevant Group Company or client on demand by the Company and in
               any event on the termination of the Employment.

                                       8

<PAGE>   25

14        INVENTIONS AND OTHER WORKS

14.1      EXECUTIVE TO FURTHER INTERESTS OF THE COMPANY

          The Company and the Executive agree that the Executive may make or
          create Works during the Employment and agree that in this respect the
          Executive is obliged to further the interests of the Company and any
          Group Company.

14.2      DISCLOSURE AND OWNERSHIP OF WORKS

          The Executive must immediately disclose to the Company all Works and
          all Intellectual Property Rights. Both the Works and all Intellectual
          Property Rights will (subject to sections 39 to 43 of the Patents Act
          1977) belong to and be the absolute property of the Company or any
          other person the Company may nominate.

14.3      PROTECTION, REGISTRATION AND VESTING OF WORKS

          The Executive shall immediately on request by the Company (whether
          during or after the Termination Date) and at the expense of the
          Company:

          (a)  apply or join with the Company or any Group Company in applying
               for any Intellectual Property Rights or other protection or
               registration ("PROTECTION") in the United Kingdom and in any
               other part of the world for, or in relation to, any Works;

          (b)  execute all instruments and do all things necessary for vesting
               all Intellectual Property Rights or Protection when obtained and
               all right, title and interest to and in the same absolutely and
               as sole beneficial owner in the Company or such Group Company or
               other person as the Company may nominate; and

          (c)  sign and execute any documents and do any acts reasonably
               required by the Company in connection with any proceedings in
               respect of any applications and any publication or application
               for revocation of any Intellectual Property Rights or Protection.

14.4      WAIVER OF RIGHTS BY THE EXECUTIVE

          The Executive hereby irrevocably and unconditionally waives all rights
          under Chapter IV Copyright, Designs and Patents Act 1988 and any other
          moral rights which he may have in the Works, in whatever part of the
          world such rights may be enforceable including:

          (a)  the right conferred by section 77 of that Act to be identified as
               the author of any such Works; and

          (b)  the right conferred by section 80 of that Act not to have any
               such Works subjected to derogatory treatment.

14.5      POWER OF ATTORNEY

          The Executive hereby irrevocably appoints the Company to be his
          attorney and in his name and on his behalf to execute any such act and
          to sign all deeds and documents and generally to use his name for the
          purpose of giving to the Company the full benefit of this Clause. The
          Executive agrees that, with respect to any third parties, a
          certificate signed by any duly authorised officer of the Company that
          any act or deed or document falls within the authority hereby
          conferred shall be conclusive evidence that this is the case.

                                       9

<PAGE>   26

14.6      STATUTORY RIGHTS

          Nothing in this Clause 14 shall be construed as restricting the rights
          of the Executive or the Company under sections 39 to 43 of the Patents
          Act 1977.

15        TERMINATION

15.1      TERMINATION EVENTS

          Notwithstanding the provisions of Clauses 3 and 11, the Company shall
          be entitled, but not bound, to terminate the Employment:

          (a)  with immediate effect by giving to the Executive notice in
               writing at any time after the occurrence of any one or more of
               the following events:-

               (i)   if the Executive is guilty of any gross misconduct or
                     behaviour which tends to bring himself or the Company or
                     any Group Company into disrepute; or

               (ii)  if the Executive commits any material or persistent breach
                     of this Agreement, or fails to comply with any reasonable
                     order or direction of the Managing Director, or fails to
                     perform his duties to the standard required by the Managing
                     Director; or

               (iii) if he becomes insolvent or bankrupt or compounds with or
                     grants a trust deed for the benefit of his creditors; or

               (iv)  if his behaviour (whether or not in breach of this
                     Agreement) can reasonably be regarded as materially
                     prejudicial to the interests of the Company or any Group
                     Company, including if he is found guilty of any criminal
                     offence punishable by imprisonment (whether or not such
                     sentence is actually imposed); or

               (v)   has an order made against him disqualifying him from acting
                     as a company director; or

               (vi)  if he becomes of unsound mind; or

          (b)  by giving not less than 6 months' notice in writing if the
               Executive has been prevented by reason of ill health, injury or
               some other reason beyond his control, from performing his duties
               under this Agreement for a period or periods aggregating at least
               ninety days in the preceding period of twenty four consecutive
               months provided that if at any time during the period of such
               notice and before the termination of the Employment the Executive
               shall provide a medical certificate satisfactory to the Managing
               Director to the effect that he has fully recovered his physical
               and/or mental health and that no recurrence of illness or
               incapacity can reasonably be anticipated, the Company shall
               withdraw the notice.

15.2      NO DAMAGES OR PAYMENT IN LIEU OF NOTICE

          In the event of the Employment being terminated in accordance with
          Clause 15.1, the Executive shall not be entitled to receive any
          payment in lieu of notice nor make any claim against the Company or
          any Group Company for damages for loss of office or termination of the
          Employment. Regardless of this, the termination shall be without
          prejudice to the continuing obligations of the Executive under this
          Agreement.

                                       10

<PAGE>   27

16        EVENTS UPON TERMINATION

16.1      OBLIGATIONS UPON TERMINATION

          Immediately upon the termination of the Employment howsoever arising
          or immediately at the request of the Managing Director at any time
          after either the Company or the Executive has served notice of
          termination of the Employment, the Executive shall deliver to the
          Company all Works, materials within the scope of Clause 14.2 and all
          other materials and property including credit or charge cards, mobile
          telephone, computer equipment, disks and software, passwords,
          encryption keys or the like, keys, security pass, letters, stationery,
          documents, files, films, records, reports, plans and papers (in
          whatever format including electronic) and all copies thereof used in
          or relating to the business of the Company or the Group which are in
          the possession of or under the control of the Executive.

16.2      LOSS OF SHARE OPTIONS

          On the termination of the Employment (whether occurring lawfully or
          otherwise), the Executive shall not be entitled to any compensation or
          payment for the loss of the Share Options or any benefit which could
          have been derived from them, whether the compensation or payment is
          claimed by way of a payment in lieu of notice, damages for wrongful
          dismissal, breach of contract or loss of office, or compensation for
          unfair dismissal, or on any other basis.

17        RESTRICTIONS AFTER TERMINATION

17.1      DEFINITIONS

          Since the Executive is likely to obtain Confidential Information in
          the course of the Employment and personal knowledge of and influence
          over suppliers, customers, clients and employees of the Company and
          Group Companies, the Executive hereby agrees with the Company that in
          addition to the other terms of this Agreement and without prejudice to
          the other restrictions imposed upon him by law, he will be bound by
          the covenants and undertakings contained in Clauses 17.2 to 17.5. In
          this Clause 17, unless the context otherwise requires:

          "CRITICAL EMPLOYEE" means any person who was a director, employee or
          consultant of the Company at any time within the Relevant Period who
          by reason of that position and in particular his seniority and
          expertise or knowledge of Confidential Information or knowledge of or
          influence over the clients, customers or contacts of the Company is
          likely to cause damage to the Company if he were to leave the
          employment of the Company and become employed by a competitor of the
          Company;

          "RELEVANT PERIOD" means the period of twelve months immediately
          preceding the Termination Date;

          "RESTRICTED AREA" means any country in the world where the Company or
          any Group Company has a valid licence for the exploration and/or
          production of oil and/or gas;

          "RESTRICTED PERIOD" means the period of 12 months commencing on the
          Termination Date.

17.2      RESTRICTIVE COVENANTS

          The Executive confirms that, neither during the Employment nor during
          the Restricted Period, without the prior written consent of the
          Company (such consent not to be

                                       11

<PAGE>   28

          unreasonably withheld), whether by himself, through his employees or
          agents or otherwise and whether on his own behalf or on behalf of any
          person, directly or indirectly, he will not:

          (a)  so as to compete with the Company in the Restricted Area; be
               employed or engaged or at all interested in (except as a Minority
               Holder) a business or person which is involved in the business of
               exploration or production of oil and/or gas, if the business is
               or seeks to be in competition with the Company;

          (b)  solicit or induce or endeavour to solicit or induce any person
               who, on the Termination Date, was a Critical Employee (and with
               whom the Executive had dealings during the Relevant Period) to
               cease working for or providing services to the Company, whether
               or not any such person would thereby commit a breach of contract;

          (c)  employ or otherwise engage any Critical Employee in the business
               of exploration or production of oil and/or gas if that business
               is, or seeks to be, in competition with the Company; or

          (d)  solicit or induce or endeavour to solicit or induce any
               Government body or agency or any other third party in the
               Restricted Area to cease to deal with the Company and shall not
               interfere in any way with any relationship between any such
               Government body or agency or other third party and the Company.

17.3      APPLICATION OF RESTRICTIVE COVENANTS TO OTHER GROUP COMPANIES

          Clause 17.2 shall also apply as though references to the "COMPANY"
          include references to each Group Company in relation to which the
          Executive has in the course of the Employment or by reason of
          rendering services to or holding office in such Group Company:

          (a)  acquired knowledge of its trade secrets or Confidential
               Information; or

          (b)  had personal dealings with its Customers or Prospective
               Customers; or

          (c)  supervised directly or indirectly employees having personal
               dealings with its Customers or Prospective Customers;

          but so that references in Clause 17.1 to the "Company" shall for this
          purpose be deemed to be references to the relevant Group Company. The
          obligations undertaken by the Executive pursuant to this Clause 17.3
          shall, with respect to each Group Company, constitute a separate and
          distinct covenant and the invalidity or unenforceability of any such
          covenant shall not affect the validity or enforceability of the
          covenants in favour of any other Group Company.

17.4      EFFECT OF SUSPENSION ON RESTRICTED PERIOD

          If the Company exercises its right to suspend the Executive's duties
          and powers under Clause 5.3 after notice of termination of the
          Employment has been given, the aggregate of the period of the
          suspension and the period after the Termination Date for which the
          covenants in Clause 17 shall apply shall not exceed 12 months and if
          the aggregate of the two periods would exceed 12 months, the period
          after the Termination Date for which the covenants in Clause 17 shall
          apply shall be reduced accordingly.

                                       12

<PAGE>   29

17.5      SEVERANCE

          The restrictions in this Clause 17 (on which the Executive has had the
          opportunity to take independent advice, as the Executive hereby
          acknowledges) are separate and severable restrictions and are
          considered by the parties to be reasonable in all the circumstances.
          It is agreed that if any such restrictions, by themselves, or taken
          together, shall be adjudged to go beyond what is reasonable in all the
          circumstances for the protection of the legitimate interests of the
          Company or a Group Company but would be adjudged reasonable if some
          part of it were deleted, the relevant restriction or restrictions
          shall apply with such deletion(s) as may be necessary to make it or
          them valid and enforceable.

18        DISCIPLINARY AND GRIEVANCE PROCEDURE

18.1      DISCIPLINARY PROCEDURES

          Any disciplinary action taken in connection with the Employment will
          usually be taken in accordance with the Company's normal disciplinary
          procedures (which are workplace rules and not contractually binding) a
          copy of which is available from the Secretary of the Company.

18.2      GRIEVANCE PROCEDURE

          If the Executive wishes to obtain redress of any grievance relating to
          the Employment or is dissatisfied with any reprimand, suspension or
          other disciplinary step taken by the Company, he shall apply in
          writing to the Managing Director, setting out the nature and details
          of any such grievance or dissatisfaction.

19        GENERAL

19.1      PROVISIONS WHICH SURVIVE TERMINATION

          Any provision of this Agreement which is expressed or intended to have
          effect on, or to continue in force after, the termination of this
          Agreement shall have such effect, or, as the case may be, continue in
          force, after such termination.

19.2      NO COLLECTIVE AGREEMENTS

          There are no collective agreements that directly affect the terms and
          conditions of the Employment.

20        DATA PROTECTION

          The Executive acknowledges and agrees that the Company is permitted to
          hold personal information about the Executive as part of its personnel
          and other business records and may use such information in the course
          of the Company's or the Group's business. The Executive agrees that
          the Company may disclose such information to third parties in the
          event that such disclosure is in the Company's view required for the
          proper conduct of the Company's business or that of any Group Company.
          This Clause applies to information held, used or disclosed in any
          medium.

21        ENTIRE AGREEMENT

          This Agreement band the documents referred to in it, constitute the
          entire agreement and understanding of the parties and supersede any
          previous agreement between the parties relating to the subject matter
          of this Agreement.

                                       13

<PAGE>   30

22        TAX

          The Executive shall be responsible for the payment of all tax whether
          of a local or national basis which may be due in respect of the Basic
          Salary and benefits provided hereunder. It is the Executive's
          responsibility to ascertain, and if necessary meet, his liability to
          tax in Georgia, Guernsey or in any other country in which he carries
          out duties under this Agreement.

23        INDEMNITY & INSURANCE

23.1      INDEMNITY

          The Company shall indemnify the Executive in respect of any costs,
          claims or liabilities incurred by the Executive in the proper
          performance of his duties hereunder.

23.2      INSURANCE

          The Executive shall be responsible for ensuring that the company takes
          out and maintains directors and officer's liability insurance in
          respect of all current directors and officers and to cover all
          directors and officers for a period of 3 years after termination of
          their contracts.

24        JURISDICTION

          Each party hereby submits to the non-exclusive jurisdiction of the
          Guernsey courts as regards any claim, dispute or matter arising out of
          or in connection with this Agreement and its implementation and
          effect.

IN WITNESS WHEREOF this Agreement has been duly signed, sealed and delivered as
a Deed the day and year before written.

SUBSCRIBED for and on behalf of CanArgo Limited.

at Guernsey on September 22 2000

    David Robson
by .................................................. Managing Director
   /s/ David Robson

                                                  /s/ Murray Chancellor
SIGNED by the said Murray Chancellor  ..........................................
                                                      Murray Chancellor
at Guernsey on September 22 2000

in the presence of:--

          /s/ E. Landles
Witness   .......................................................

Full Name  ......................................................

Address .........................................................

 .................................................................

Occupation ......................................................

                                       14<PAGE>   1

                                                                  Exhibit 10(26)

THIS AGREEMENT is made on the 1st day of October 2000
between

(1)       CANARGO ENERGY CORPORATION, a Corporation incorporated under the laws
          of Delaware, USA and having an address at 2711 Centerville Rd., Suite
          400, Wilmington Delaware 19808 (the "COMPANY"); and

(2)       ANTHONY POTTER, residing at 53 Coresbrook Way, Knaphill, Surrey GU21
          2TR (the "EXECUTIVE")

WHEREAS the Company wishes to employ the Executive as Chief Financial Officer
and Corporate Secretary on the terms and conditions of this Agreement and the
Executive wishes to accept such employment. The employing entity will be CanArgo
Services (UK) Limited, the Company's UK subsidiary (the "Employing Entity") with
its registered address at 148-150 Buckingham Palace Road, London SW1W 9TR.

IT IS AGREED as follows:-

1          DEFINITIONS AND INTERPRETATION

1.1        DEFINITIONS

           In this Agreement, unless the context otherwise requires:

           "BASIC SALARY" means the monthly salary, as specified in Clause 6.1.1
           or, as appropriate, the reviewed monthly salary from time to time;

           "CONFIDENTIAL INFORMATION" means all information which is identified
           or treated by the Company or any Group Company or any of the Group's
           clients or customers as confidential or which by reason of its
           character or the circumstances or manner of its disclosure is
           evidently confidential including (without prejudice to the foregoing
           generality) any information about the personal affairs of any of the
           directors (or their families) of the Company or any Group Company,
           business plans, proposals relating to the acquisition or disposal of
           a company or business or proposed expansion or contraction of
           activities, maturing new business opportunities, research and
           development projects, designs, secret processes, trade secrets,
           product or services development and formulae, know-how, inventions,
           sales statistics and forecasts, marketing strategies and plans,
           costs, profit and loss and other financial information (save to the
           extent published in audited accounts), prices and discount structures
           and the names, addresses and contact and other details of: (a)
           employees and their terms of employment; (b) customers and potential
           customers, their requirements and their terms of business with the
           Group; and (c) suppliers and potential suppliers and their terms of
           business (all whether or not recorded in writing or in electronic or
           other format);

           "EMPLOYMENT" means the employment of the Executive under this
           Agreement or, as the context requires, the duration of that
           employment;

           "GROUP" means the Company, any holding company or undertaking of the
           Company and any subsidiaries and subsidiary undertakings of the
           Company or such holding company or undertaking;

<PAGE>   2

           "GROUP COMPANY" means any company within the Group;

           "HEALTH CARE SCHEME" means the medical expenses insurance, or
           arrangement(s) provided or introduced from time to time by the
           Company for the benefit of the Executive.

           "INTELLECTUAL PROPERTY RIGHTS" means any and all existing and future
           intellectual or industrial property rights in and to any Works,
           including all existing and future patents, copyrights, design rights
           (whether registered or unregistered), database rights, trade marks
           (whether registered or unregistered), semiconductor topography
           rights, plant varieties rights, internet rights/domain names,
           know-how and any and all applications for any of the foregoing and
           any and all rights to apply for any of the foregoing in and to any
           Works;

           "MINORITY HOLDER" means a person who either solely or jointly holds
           (directly or through nominees) any shares or loan capital in any
           company whose shares are listed or dealt in on a recognised
           investment exchange (as that term is defined by Section 207(1) of the
           Financial Services Act 1986) provided that such holding does not,
           when aggregated with any shares or loan capital held by the
           Executive's partner and/or his or his partner's children under the
           age of 18, exceed 3% of the shares or loan capital of the class
           concerned for the time being issued;

           "SHARE OPTIONS" means any options that the Executive may hold to
           purchase shares in the Company;

           "REMUNERATION COMMITTEE" means the remuneration committee appointed
           by the Board;

           "TERMINATION DATE" means the date of termination of the Employment;
           and

           "WORKS" means any documents, materials, models, designs, drawings,
           processes, inventions, formulae, computer coding, methodologies,
           know-how, Confidential Information or other work, performed made,
           created, devised, developed or discovered by the Executive in the
           course of the Employment either alone or with any other person in
           connection with or in any way affecting or relating to the business
           of the Company or any Group Company or capable of being used or
           adapted for use therein or in connection therewith.

1.2        INTERPRETATION AND CONSTRUCTION

           Save to the extent that the context or the express provisions of this
           Agreement require otherwise, in this Agreement:-

           (a)     words importing the singular shall include the plural and
                   vice versa;

           (b)     words importing any gender shall include all other genders;

           (c)     any reference to a Clause, the Schedule or part of the
                   Schedule is to the relevant Clause, Schedule or part of the
                   Schedule of or to this Agreement unless otherwise specified;

           (d)     references to this Agreement or to any other document shall
                   be construed as references to this Agreement or to that other
                   document as modified, amended, varied, supplemented,
                   assigned, novated or replaced from time to time;

<PAGE>   3

           (e)     references to any statute or statutory provision (including
                   any subordinate legislation) includes any statute or
                   statutory provision which amends, extends, consolidates or
                   replaces the same, or which has been amended, extended,
                   consolidated or replaced by the same, and shall include any
                   orders, regulations, instruments or other subordinate
                   legislation made under the relevant statute or statutory
                   provision;

           (f)     references to a "PERSON" includes any individual, firm,
                   company, corporation, body corporate, government, state or
                   agency of state, trust or foundation, or any association,
                   partnership or unincorporated body (whether or not having
                   separate legal personality) of two or more foregoing;

           (g)     any phrase introduced by the words "INCLUDING", "INCLUDE",
                   "IN PARTICULAR" or any similar expression shall be construed
                   as illustrative only and shall not be construed as limiting
                   the generality of any preceding words;

           (h)     the words "OTHER" and "OTHERWISE" shall not be construed
                   eiusdem generis with any foregoing words where a wider
                   construction is possible.

1.3        HEADINGS

           The table of contents and the headings in this Agreement are included
           for convenience only and shall be ignored in construing this
           Agreement.

2          THE EMPLOYMENT

2.1        APPOINTMENT

           Subject to the provisions of this Agreement, the Company employs the
           Executive and the Executive accepts employment as Chief Financial
           Officer and Corporate Secretary of the Company with effect from 1st
           October 2000 notwithstanding the date or dates of this Agreement.

2.2        WARRANTY

           The Executive warrants to the Company that by virtue of entering into
           this Agreement he will not be in breach of any express or implied
           obligation to any third party.

3          DURATION OF THE EMPLOYMENT

3.1        CONTINUOUS EMPLOYMENT

           The Executive's continuous period of employment with the Company
           commenced on 1st May 1998.

3.2        DURATION

           Subject to the provisions of Clauses 3 and 15.1 the Employment shall
           be for a period of two years only but may be extended by agreement
           for a further period of 6 months. It shall automatically terminate on
           the expiry of the two years of two years six months, whichever is
           appropriate. Notwithstanding the foregoing the Employment may be
           terminated at any time during its duration by:-

<PAGE>   4

           (a)     the Company giving to the Executive not less than 3 months'
                   previous notice in writing to that effect; or

           (b)     the Executive giving to the Company not less than 3 months'
                   previous notice in writing to that effect.

3.3        PAYMENT IN LIEU OF NOTICE

3.3.1      The Company shall be entitled, at its sole discretion, to terminate
           the Employment immediately in writing either instead of, or at any
           time after, notice of termination being given (by either the Company
           or the Executive) and in either case to make a payment to the
           Executive in lieu of notice.

4          HOURS AND PLACE OF WORK

4.1        HOURS OF WORK

           The Executive agrees that he shall work such hours as are necessary
           for the proper performance of his duties. The Executive shall work a
           minimum of 120 hours per month Monday to Friday between the hours of
           8 a.m. and 5 p.m., with a break of one hour for lunch each day, on
           days to be agreed in advance.

4.2        WORKING TIME REGULATIONS

           The Executive agrees to work hours that exceed the maximum average
           weekly working time limit of 48 hours imposed by the Working Time
           Regulations 1998. The Executive may withdraw his agreement on giving
           to the Company 3 months' prior written notice.

4.3        PLACE OF WORK

4.3.1      The Executive's place of work will initially be at the Employing
           Entity's offices at 148-150 Buckingham Palace Road, London, SW1 but
           the Company may require the Executive to work at any place within the
           United Kingdom on either a temporary or an indefinite basis. The
           Executive will be given reasonable notice of any change in his
           permanent place of work.

5          SCOPE OF THE EMPLOYMENT

5.1        DUTIES OF THE EXECUTIVE

           During the Employment the Executive shall:-

           (a)     undertake and carry out to the best of his ability such
                   duties and exercise such powers in relation to the Company's
                   business as may from time to time be assigned to or vested in
                   him by the Chief Executive Officer;

           (b)     in the discharge of those duties and the exercise of those
                   powers observe and comply with all lawful resolutions,
                   regulations and directions from time to time made by, or
                   under the authority of, the Chief Executive Officer and
                   promptly upon request, give a full account to the Chief
                   Executive Officer or a person duly authorised by the Chief
                   Executive Officer of all matters with which he is entrusted;

<PAGE>   5

           (c)     unless prevented by ill-health, holidays or other unavoidable
                   cause, devote such of his working time, attention and skill
                   to the discharge of his duties hereunder as may be reasonably
                   required; and

           (d)     faithfully and diligently perform his duties and at all times
                   use his best endeavours to promote and protect the interests
                   of the Group.

5.2        RIGHT TO SUSPEND DUTIES AND POWERS

5.2.1      The Company reserves the right in its absolute discretion to suspend
           during any notice period or for the purpose of investigating any
           matter in which the Executive is implicated or involved all or any of
           the Executive's duties and powers on terms it considers expedient or
           to require him to perform only such duties, specific projects or
           tasks as are assigned to him expressly by the Company (including the
           duties of another position) in any case for such period or periods
           and at such place or places (including, without limitation, the
           Executive's home) as the Company in its absolute discretion deems
           necessary (the "GARDEN LEAVE").

5.2.2      The Company may, at its sole discretion, require that during the
           Garden Leave the Executive shall not:

           (a)     enter or attend the premises of the Company or any Group
                   Company;

           (b)     contact or have any communication with any client or
                   prospective client or supplier of the Company or any Group
                   Company in relation to the business of the Company or any
                   Group Company;

           (c)     contact or have any communication with any employee, officer,
                   director, agent or consultant of the Company or any Group
                   Company in relation to the business of the Company or any
                   Group Company;

           (d)     remain or become involved in any aspect of the business of
                   the Company or any Group Company except as required by such
                   companies; or

           (e)     work either on his own account or on behalf of any other
                   person.

5.2.3      During Garden Leave, the Executive will continue to receive his Basic
           Salary and benefits.

5.2.4      For the avoidance of doubt, the Company may exercise its powers under
           this Clause 5.2 at any time during the Employment including after
           notice of termination has been given by either party.

6          REMUNERATION

6.1        BASIC SALARY

6.1.1      During the Employment the Company shall pay the Executive a Basic
           Salary of not less than (pound)8,333 per month less tax and national
           insurance. The Basic Salary shall accrue from day to day and be
           payable by credit transfer in equal monthly instalments on or around
           the 15th day of each calendar month or otherwise as arranged from
           time to time.

<PAGE>   6

6.2        SALARY REVIEW

           The Basic Salary shall be reviewed annually with effect from the
           first anniversary of the commencement of employment. The Company is
           not obliged to increase the Basic Salary at any review.

6.3        DISCRETIONARY BONUSES

           The Company may, at its sole discretion, pay the Executive a bonus of
           an amount determined by the Chief Executive Officer in respect of
           each complete financial year of the Company during which the
           Employment subsists.

6.4        SHARE OPTIONS

           The Executive will be entitled to 105,000 Special Share Options in
           the Company subject to the terms of the Special Share Options and
           necessary regulatory approval.

7          EXPENSES

7.1        OUT-OF-POCKET EXPENSES

           The Company shall reimburse to the Executive (against receipts or
           other appropriate evidence as the Chief Executive Officer may
           require) the amount of all out-of-pocket expenses reasonably and
           properly incurred by him in the proper discharge of his duties
           hereunder.

7.2        COMPANY CREDIT/CHARGE CARDS

           In the event that the Company issues a Company sponsored credit or
           charge card to the Executive he shall use such card only for expenses
           reimbursable under Clause 7.1 and shall return it to the Company when
           so requested and in any event immediately on termination of the
           Employment howsoever arising.

7.3        MOBILE TELEPHONE

           The Company will provide the Executive with a mobile telephone for
           the purpose of properly performing his duties. The Company will be
           responsible for all payment of all costs in connection with the
           telephone, including line rental charges, connection fees, and all
           charges. For the avoidance of doubt, the Executive is permitted to
           make reasonable use of the mobile telephone for personal purposes.
           The telephone will however remain the property of the Company at all
           times and the Company may demand the return of the telephone at any
           time if, in the opinion of the Company the Executive is making
           inappropriate use of the telephone.

7.4        MOVING ALLOWANCE

           The Company shall meet all reasonable moving costs incurred by the
           Executive in moving from Canada to England to include packaging and
           shipping by air of personal effects, quarantine and kennel costs,
           commission, interest and legal fees payable on the sale of the
           Executive's home (up to a maximum of US$7,250 house sale costs). At
           the termination of the contract, (except where the contract is
           terminated under Clause 15.1 or by the Executive failing to give the
           appropriate notice under Clause 3.2) the Company shall meet all
           reasonable relocation costs incurred by the Executive in returning to
           Canada or to another

<PAGE>   7

           location (provided that the reasonable costs incurred in returning to
           that other location are broadly equivalent or less expensive than the
           costs of returning to Canada), provided such return takes place
           within 6 months of the termination of the contract. The Executive
           will submit quotations to the Company for their approval prior to
           incurring any such costs.

7.5        RELOCATION COSTS

           The Company shall pay to the Executive a relocation allowance of
           (pound)5,000 to cover the cost of purchasing furnishings and
           appliances. A further sum of (pound)2,500 will be paid to the
           Executive by the Company if the Company is satisfied that such
           payment is necessary to meet the cost of professional tax or other
           accounting services necessitated by the relocation.

7.6        TRANSPORTATION

           The Company shall, at their cost, provide airline tickets for the
           Executive and his immediate family to travel to England from Canada
           at the start of the contract and to return to Calgary, Canada, or to
           some other location (provided the cost of travel to that other
           location is equivalent to the cost of the return to Calgary, Canada)
           at its conclusion, (except where the contract is terminated under
           Clause 15.1 or by the Executive failing to give the appropriate
           notice under Clause 3.2). The Company shall in addition provide, at
           their cost, airline tickets for the Executive and his family to
           return to Calgary, Canada, or to some other location (provided the
           cost of travel is equivalent) once a year during the performance of
           the contract.

8          DEDUCTIONS

           The Executive agrees that the Company may deduct from any sums due to
           him under this Agreement any sums due by him to the Company
           including, without limitation, any debits to his Company credit or
           charge card not authorised by the Company, the Executive's pension
           contributions (if any), any overpayments, loans or advances made to
           him by the Company, the cost of repairing any damage or loss to the
           Company's property caused by him and any losses suffered by the
           Company as a result of any negligence or breach of duty by the
           Executive.

9          OTHER INSURANCE & BENEFITS

9.1        LIFE ASSURANCE

           The Company will provide the Executive with the benefit of death in
           service life assurance which, in the event of death itself will pay a
           maximum amount of 4 times his annual salary, subject to the rules and
           conditions of the policy.

9.2        HEALTH CARE SCHEME

           Without prejudice to the terms of Clause 16, the Executive and his
           spouse and children up to the age of 18 shall be entitled during the
           Employment, to participate at the Company's expense in a Health Care
           Scheme subject to the following terms and conditions:-

           (a)     the terms and conditions of the Health Care Scheme from time
                   to time;

<PAGE>   8

           (b)     the insurer or provider of the Health Care Scheme honouring
                   the claim in respect of the Executive or his spouse or
                   children;

           (c)     the Executive's acceptance of such variations to his terms
                   and conditions of employment as may from time to time be
                   required by the Company.

9.3        PHI

           Without prejudice to the terms of Clause 16, the Executive shall be
           entitled to participate in a Permanent Health Insurance ("PHI")
           scheme at the expense of the Company, always subject to the terms and
           conditions of the PHI scheme.

9.4        PAYMENTS

9.4.1      All payments under the PHI scheme or the like will be subject to
           the deductions required by law.

9.4.2      Where payments are made under the PHI scheme all other benefits
           provided to or in respect of the Executive will cease from the start
           of those payments (if they have not done so already), unless the
           Company is fully reimbursed by the PHI scheme for the cost of
           providing the benefit.

9.5        RIGHT TO TERMINATE OR AMEND

           The Company reserves the right at its absolute discretion to
           terminate or amend at any time any Health Care Scheme or PHI scheme
           or the Executive's membership of any such scheme. The Company will
           provide an equivalent benefit unless, in the reasonable opinion of
           the Chief Executive Officer, it is unable to secure insurance at
           reasonable premiums due to the medical condition of the Executive or
           his spouse or children.

9.6        MEDICAL EXAMINATIONS AND HEALTH RECORDS

           The Executive shall submit to such medical examinations by a doctor
           selected by the Chief Executive Officer as may reasonably be required
           by the Chief Executive Officer from time to time. The Executive
           authorises the Company to make applications on his behalf for access
           to any health records relating to him for the purposes of Section 3
           of the Access to Health Records Act 1990, provided that the Executive
           is given prior notice of any application being made. Copies of any
           health records provided to the Chief Executive Officer as a result of
           any application shall be made available to the Executive. The fees
           and expenses incurred in the provision of any medical examination and
           of obtaining access to the health records shall be borne by the
           Company.

10         HOLIDAYS

10.1       THE HOLIDAY YEAR

           The Company's holiday year runs from 1st January to 31st December.
           Holidays can only be taken with the prior permission of the Chief
           Executive Officer .

<PAGE>   9

10.2       ANNUAL ENTITLEMENT

10.2.1     The Executive's annual entitlement to paid holidays is to those
           public or customary holidays recognised by the Company in any holiday
           year and in addition, 5 weeks' contractual holiday.

10.2.2     Entitlement to contractual holidays is accrued pro rata throughout
           the holiday year. The Executive will be entitled to take public and
           customary holidays on the days that they are recognised by the
           Company during the holiday year.

10.2.3     The Executive is not entitled to carry any unused holiday entitlement
           forward to the next holiday year without the permission of the
           Company.

10.3       HOLIDAY ENTITLEMENT ON TERMINATION

           Upon notice of termination of the Employment being served by either
           party, the Company may require the Executive to take any unused
           holidays accrued at that time during any notice period.
           Alternatively, the Company may, at its discretion, on termination of
           the Employment, make a payment in lieu of accrued contractual holiday
           entitlement. The Executive will be required to make a payment to the
           Company in respect of any holidays taken in excess of his holiday
           entitlement accrued at the Termination Date. Any sums so due may be
           deducted from any money owing to the Executive by the Company.

10.4       PRE EXISTING VACATION ENTITLEMENT

           The Company agrees to carry forward into this Agreement six weeks'
           vacation earned by the Executive on other service for the Group. This
           entitlement shall be carried forward throughout the duration of this
           Agreement and any balance outstanding at the Termination Date shall
           be paid to the Executive in lieu.

11         ABSENCE

11.1       ABSENCE DUE TO SICKNESS OR INJURY

           If the Executive is absent from work due to sickness or injury he
           shall:

           (a)     immediately inform the Company of his sickness or injury;

           (b)     in respect of a consecutive period of absence lasting less
                   than 8 days (including weekends), send to the Company a
                   self-certification form in a format stipulated by the
                   Company; and

           (c)     in respect of any absence exceeding 7 consecutive days
                   (including weekends), send to the Company a medical
                   certificate signed by a doctor covering the further
                   consecutive period of absence.

11.2       PAYMENT OF SALARY DURING ABSENCE

11.2.1     Subject to the Executive complying with the terms of Clause 11.1, the
           Company shall continue to pay Basic Salary and other benefits during
           any period of absence due to sickness or injury for up to a maximum
           period of 10 weeks in any period of 12 consecutive months unless the
           Employment is terminated in terms of Clauses 3 or 16. Thereafter the
           Company

<PAGE>   10

           shall pay half basic salary and benefits for a further period of 10
           weeks in that period of 12 consecutive months unless the employment
           is terminated in terms of Clauses 3 or 16.

11.2.2     Payment of the Basic Salary in terms of Clause 11.2.1 shall be made
           less:

           (a)     an amount equivalent to any Statutory Sick Pay payable to the
                   Executive;

           (b)     any sums which may be received by the Executive under any
                   insurance policy effected by the Company; and

           (c)     any other benefits or sums which the Executive receives in
                   terms of the Employment or under any relevant legislation.

12         OTHER INTERESTS

12.1       RESTRICTIONS ON OTHER ACTIVITIES AND INTERESTS OF THE EXECUTIVE

12.1.1     During the Employment the Executive shall not at any time, without
           the prior written consent of the Chief Executive Officer, either
           alone or jointly with any other person, carry on or be directly or
           indirectly employed, engaged, concerned or interested in any
           business, prospective business or undertaking other than a Group
           Company. Nothing contained in this Clause shall preclude the
           Executive from being a Minority Holder unless the holding is in a
           company that is a direct business competitor of the Company or any
           Group Company in which case, the Executive shall obtain the prior
           consent of the Chief Executive Officer to the acquisition or
           variation of such holding.

12.1.2     If the Executive, with the consent of the Chief Executive Officer ,
           accepts any other appointment he must keep the Company accurately
           informed of the amount of time he spends working under that
           appointment.

12.2       TRANSACTIONS WITH THE COMPANY

           Subject to any regulations issued by the Company, the Executive shall
           not be entitled to receive or obtain directly or indirectly any
           discount, rebate or commission as a result of any sale or purchase of
           goods or services effected or other business transacted (whether or
           not by him) by or on behalf of the Company or any Group Company and
           if he (or any person in which he is interested) obtains any discount,
           rebate or commission he shall account to the Company for the amount
           received by him (or a due proportion of the amount received by the
           person having regard to the extent of his interest therein).

13         CONFIDENTIALITY AND COMPANY DOCUMENTS

13.1       RESTRICTIONS ON DISCLOSURE/USE OF CONFIDENTIAL INFORMATION

           The Executive must not either during the Employment (except in the
           proper performance of his duties) or at any time (without limit)
           after the Termination Date:

           (a)     divulge or communicate to any person;

           (b)     use for his own purposes or for any purposes other than those
                   of the Company or any Group Company; or

<PAGE>   11

           (c)     through any failure to exercise due care and diligence, cause
                   any unauthorised disclosure of;

           any Confidential Information. The Executive must at all times use his
           best endeavours to prevent publication or disclosure of any
           Confidential Information. These restrictions shall cease to apply to
           any information which shall become available to the public generally
           otherwise than through the default of the Executive.

13.2       PROTECTION OF COMPANY DOCUMENTS AND MATERIALS

           All notes, records, lists of customers, suppliers and employees,
           correspondence, computer and other discs or tapes, data listings,
           codes, keys and passwords, designs, drawings and other documents or
           material whatsoever (whether made or created by the Executive or
           otherwise and in whatever medium or format) relating to the business
           of the Company or any Group Company or any of its or their clients
           (and any copies of the same):

           (a)     shall be and remain the property of the Company or the
                   relevant Group Company or client; and

           (b)     shall be handed over by the Executive to the Company or the
                   relevant Group Company or client on demand by the Company and
                   in any event on the termination of the Employment.

14         INVENTIONS AND OTHER WORKS

14.1       EXECUTIVE TO FURTHER INTERESTS OF THE COMPANY

           The Company and the Executive agree that the Executive may make or
           create Works during the Employment and agree that in this respect the
           Executive is obliged to further the interests of the Company and any
           Group Company.

14.2       DISCLOSURE AND OWNERSHIP OF WORKS

           The Executive must immediately disclose to the Company all Works and
           all Intellectual Property Rights. Both the Works and all Intellectual
           Property Rights will (subject to sections 39 to 43 of the Patents Act
           1977) belong to and be the absolute property of the Company or any
           other person the Company may nominate.

14.3       PROTECTION, REGISTRATION AND VESTING OF WORKS

           The Executive shall immediately on request by the Company (whether
           during or after the Termination Date) and at the expense of the
           Company:

           (a)     apply or join with the Company or any Group Company in
                   applying for any Intellectual Property Rights or other
                   protection or registration ("PROTECTION") in the United
                   Kingdom and in any other part of the world for, or in
                   relation to, any Works;

           (b)     execute all instruments and do all things necessary for
                   vesting all Intellectual Property Rights or Protection when
                   obtained and all right, title and interest to and in the same
                   absolutely and as sole beneficial owner in the Company or
                   such Group Company or other person as the Company may
                   nominate; and

<PAGE>   12

           (c)     sign and execute any documents and do any acts reasonably
                   required by the Company in connection with any proceedings in
                   respect of any applications and any publication or
                   application for revocation of any Intellectual Property
                   Rights or Protection.

14.4       WAIVER OF RIGHTS BY THE EXECUTIVE

           The Executive hereby irrevocably and unconditionally waives all
           rights under Chapter IV Copyright, Designs and Patents Act 1988 and
           any other moral rights which he may have in the Works, in whatever
           part of the world such rights may be enforceable including:

           (a)     the right conferred by section 77 of that Act to be
                   identified as the author of any such Works; and

           (b)     the right conferred by section 80 of that Act not to have any
                   such Works subjected to derogatory treatment.

14.5       POWER OF ATTORNEY

           The Executive hereby irrevocably appoints the Company to be his
           attorney and in his name and on his behalf to execute any such act
           and to sign all deeds and documents and generally to use his name for
           the purpose of giving to the Company the full benefit of this Clause.
           The Executive agrees that, with respect to any third parties, a
           certificate signed by any duly authorised officer of the Company that
           any act or deed or document falls within the authority hereby
           conferred shall be conclusive evidence that this is the case.

14.6       STATUTORY RIGHTS

           Nothing in this Clause 15 shall be construed as restricting the
           rights of the Executive or the Company under sections 39 to 43 of the
           Patents Act 1977.

15         TERMINATION

15.1       TERMINATION EVENTS

           Notwithstanding the provisions of Clauses 3 and 12, the Company shall
           be entitled, but not bound, to terminate the Employment:

           (a)     with immediate effect by giving to the Executive notice in
                   writing at any time after the occurrence of any one or more
                   of the following events:-

                   (i)     if the Executive is guilty of any gross misconduct or
                           behaviour which tends to bring himself or the Company
                           or any Group Company into disrepute; or

                   (ii)    if the Executive commits any material or persistent
                           breach of this Agreement, or fails to comply with any
                           reasonable order or direction of the Chief Executive
                           Officer , or fails to perform his duties to the
                           standard required by the Chief Executive Officer ; or

                   (iii)   if he becomes insolvent or bankrupt or compounds with
                           or grants a trust deed for the benefit of his
                           creditors; or

<PAGE>   13

                   (iv)    if his behaviour (whether or not in breach of this
                           Agreement) can reasonably be regarded as materially
                           prejudicial to the interests of the Company or any
                           Group Company, including if he is found guilty of any
                           criminal offence punishable by imprisonment (whether
                           or not such sentence is actually imposed); or

                   (v)     has an order made against him disqualifying him from
                           acting as a company director; or

                   (vi)    if he becomes of unsound mind; or

           (b)     by giving not less than 3 months' notice in writing if the
                   Executive has been prevented by reason of ill health, injury
                   or some other reason beyond his control, from performing his
                   duties under this Agreement for a period or periods
                   aggregating at least ninety days in the preceding period of
                   twelve consecutive months provided that if at any time during
                   the period of such notice and before the termination of the
                   Employment the Executive shall provide a medical certificate
                   satisfactory to the Chief Executive Officer to the effect
                   that he has fully recovered his physical and/or mental health
                   and that no recurrence of illness or incapacity can
                   reasonably be anticipated, the Company shall withdraw the
                   notice.

15.2       NO PAYMENT IN LIEU OF NOTICE

           In the event of the Employment being terminated in accordance with
           Clause 16.1, the Executive shall not be entitled to receive any
           payment in lieu of notice. Regardless of this, the termination shall
           be without prejudice to the continuing obligations of the Executive
           under this Agreement.

16         EVENTS UPON TERMINATION

16.1       OBLIGATIONS UPON TERMINATION

           Immediately upon the termination of the Employment howsoever arising
           or immediately at the request of the Chief Executive Officer at any
           time after either the Company or the Executive has served notice of
           termination of the Employment, the Executive shall deliver to the
           Company all Works, materials within the scope of Clause 15.2 and all
           other materials and property including credit or charge cards, mobile
           telephone, computer equipment, disks and software, passwords,
           encryption keys or the like, keys, security pass, letters,
           stationery, documents, files, films, records, reports, plans and
           papers (in whatever format including electronic) and all copies
           thereof used in or relating to the business of the Company or the
           Group which are in the possession of or under the control of the
           Executive.

16.2       LOSS OF SHARE OPTIONS

           On the termination of the Employment (whether occurring lawfully or
           otherwise), the Executive shall not be entitled to any compensation
           or payment for the loss of the Share Options or any benefit which
           could have been derived from them, whether the compensation or
           payment is claimed by way of a payment in lieu of notice, damages for
           wrongful dismissal, breach of contract or loss of office, or
           compensation for unfair dismissal, or on any other basis.

<PAGE>   14

17         RESTRICTIONS AFTER TERMINATION

17.1       DEFINITIONS

           Since the Executive is likely to obtain Confidential Information in
           the course of the Employment and personal knowledge of and influence
           over suppliers, customers, clients and employees of the Company and
           Group Companies, the Executive hereby agrees with the Company that in
           addition to the other terms of this Agreement and without prejudice
           to the other restrictions imposed upon him by law, he will be bound
           by the covenants and undertakings contained in Clauses 18.2 to 18.5.
           In this Clause 18, unless the context otherwise requires:

           "CRITICAL EMPLOYEE" means any person who was a director, employee or
           consultant of the Company at any time within the Relevant Period who
           by reason of that position and in particular his seniority and
           expertise or knowledge of Confidential Information or knowledge of or
           influence over the clients, customers or contacts of the Company is
           likely to cause damage to the Company if he were to leave the
           employment of the Company and become employed by a competitor of the
           Company;

           "RELEVANT PERIOD" means the period of twelve months immediately
           preceding the Termination Date;

           "RESTRICTED AREA" means any country in the world where the Company or
           any Group Company has a valid licence for the exploration and/or
           production of oil and/or gas;

           "RESTRICTED PERIOD" means the period of 12 months commencing on the
           Termination Date;

17.2       RESTRICTIVE COVENANTS

           The Executive confirms that, neither during the Employment nor during
           the Restricted Period, without the prior written consent of the
           Company (such consent not to be unreasonably withheld), whether by
           himself, through his employees or agents or otherwise and whether on
           his own behalf or on behalf of any person, directly or indirectly, he
           will not:

           (a)     so as to compete with the Company in the Restricted Area; be
                   employed or engaged or at all interested in (except as a
                   Minority Holder) a business or person which is involved in
                   the business of exploration or production of oil and/or gas,
                   if the business is or seeks to be in competition with the
                   Company;

           (b)     solicit or induce or endeavour to solicit or induce any
                   person who, on the Termination Date, was a Critical Employee
                   (and with whom the Executive had dealings during the Relevant
                   Period) to cease working for or providing services to the
                   Company, whether or not any such person would thereby commit
                   a breach of contract;

           (c)     employ or otherwise engage any Critical Employee in the
                   business of exploration or production of oil and/or gas if
                   that business is, or seeks to be, in competition with the
                   Company; or

           (d)     solicit or induce or endeavour to solicit or induce any
                   Government body or agency or any other third party in the
                   Restricted Area to cease to deal with the Company and shall
                   not interfere in any way with any relationship between any
                   such Government body or agency or other third party and the
                   Company.

<PAGE>   15

17.3       APPLICATION OF RESTRICTIVE COVENANTS TO OTHER GROUP COMPANIES

           Clause 18.2 shall also apply as though references to the "COMPANY"
           include references to each Group Company in relation to which the
           Executive has in the course of the Employment or by reason of
           rendering services to or holding office in such Group Company:

           (a)     acquired knowledge of its trade secrets or Confidential
                   Information; or

           (b)     had personal dealings with its Customers or Prospective
                   Customers; or

           (c)     supervised directly or indirectly employees having personal
                   dealings with its Customers or Prospective Customers;

           but so that references in Clause 18.1 to the "Company" shall for this
           purpose be deemed to be references to the relevant Group Company. The
           obligations undertaken by the Executive pursuant to this Clause 18.3
           shall, with respect to each Group Company, constitute a separate and
           distinct covenant and the invalidity or unenforceability of any such
           covenant shall not affect the validity or enforceability of the
           covenants in favour of any other Group Company.

17.4       EFFECT OF SUSPENSION ON RESTRICTED PERIOD

           If the Company exercises its right to suspend the Executive's duties
           and powers under Clause 5.3 after notice of termination of the
           Employment has been given, the aggregate of the period of the
           suspension and the period after the Termination Date for which the
           covenants in Clause 18 shall apply shall not exceed 12 months and if
           the aggregate of the two periods would exceed 12 months, the period
           after the Termination Date for which the covenants in Clause 18 shall
           apply shall be reduced accordingly.

17.5       SEVERANCE

           The restrictions in this Clause 18 (on which the Executive has had
           the opportunity to take independent advice, as the Executive hereby
           acknowledges) are separate and severable restrictions and are
           considered by the parties to be reasonable in all the circumstances.
           It is agreed that if any such restrictions, by themselves, or taken
           together, shall be adjudged to go beyond what is reasonable in all
           the circumstances for the protection of the legitimate interests of
           the Company or a Group Company but would be adjudged reasonable if
           some part of it were deleted, the relevant restriction or
           restrictions shall apply with such deletion(s) as may be necessary to
           make it or them valid and enforceable.

18         DISCIPLINARY AND GRIEVANCE PROCEDURE

18.1       DISCIPLINARY PROCEDURES

           Any disciplinary action taken in connection with the Employment will
           usually be taken in accordance with the Company's normal disciplinary
           procedures (which are workplace rules and not contractually binding)
           a copy of which is available from the Secretary of the Company.

<PAGE>   16

18.2       GRIEVANCE PROCEDURE

           If the Executive wishes to obtain redress of any grievance relating
           to the Employment or is dissatisfied with any reprimand, suspension
           or other disciplinary step taken by the Company, he shall apply in
           writing to the Managing Director, setting out the nature and details
           of any such grievance or dissatisfaction.

19         GENERAL

19.1       PROVISIONS WHICH SURVIVE TERMINATION

           Any provision of this Agreement which is expressed or intended to
           have effect on, or to continue in force after, the termination of
           this Agreement shall have such effect, or, as the case may be,
           continue in force, after such termination.

19.2       NO COLLECTIVE AGREEMENTS

           There are no collective agreements that directly affect the terms and
           conditions of the Employment.

20         DATA PROTECTION

           The Executive acknowledges and agrees that the Company is permitted
           to hold personal information about the Executive as part of its
           personnel and other business records and may use such information in
           the course of the Company's or the Group's business. The Executive
           agrees that the Company may disclose such information to third
           parties in the event that such disclosure is in the Company's view
           required for the proper conduct of the Company's business or that of
           any Group Company. This Clause applies to information held, used or
           disclosed in any medium.

21         ENTIRE AGREEMENT

           This Agreement and the documents referred to in it, constitute the
           entire agreement and understanding of the parties and supersede any
           previous agreement between the parties relating to the subject matter
           of this Agreement.

22         INDEMNITY & INSURANCE

22.1       INDEMNITY

           The Company shall indemnify the Executive in respect of any costs,
           claims or liabilities incurred by the Executive in the proper
           performance of his duties hereunder.

22.2       INSURANCE

           The Company shall be responsible for ensuring that the Company takes
           out and maintains directors and officer's liability insurance in
           respect of all current directors and officers and to cover all
           directors and officers for a period of 3 years after termination of
           their contracts.

<PAGE>   17

23         GOVERNING LAW AND JURISDICTION

23.1       GOVERNING LAW

           This Agreement shall be governed and construed in accordance with the
           law of England & Wales.

23.2       JURISDICTION

           Each party hereby submits to the exclusive jurisdiction of the
           English courts as regards any claim, dispute or matter arising out of
           or in connection with this Agreement and its implementation and
           effect.

IN WITNESS WHEREOF this Agreement has been duly signed, sealed and delivered as
a Deed the day and year before written.

SUBSCRIBED for and on behalf of CanArgo Energy Corporation

at London on 22 March 2001

by    /s/  DAVID ROBSON
      -----------------     Chief Executive Officer
         David Robson

                                      /s/  ANTHONY POTTER
SIGNED by the said Anthony Potter     -------------------
                                        Anthony Potter

at London on 22 March 2001

in the presence of:-

Witness    /s/  MURRAY CHANCELLOR
           ----------------------
Full Name     Murray Chancellor

Address ..........................................................

 ..................................................................

Occupation .......................................................

<PAGE>   18

THIS AGREEMENT is made on the 1st day of October 2000
between

(1)        CANARGO LIMITED, a Company incorporated under the laws of Guernsey
           with Registered Number 32825 and having its Registered Office there
           at PO Box 291, Commerce House, Les Banques, St Peter Port, Guernsey,
           GY1 3RR (the "COMPANY"); and

(2)        ANTHONY POTTER, residing at 53 Coresbrook Way, Knaphill, Surrey GU21
           2TR (the "EXECUTIVE")

WHEREAS the Company wishes to employ the Executive as Financial Controller on
the terms and conditions of this Agreement and the Executive wishes to accept
such employment.

IT IS AGREED as follows:-

1          DEFINITIONS AND INTERPRETATION

1.1        DEFINITIONS

           In this Agreement, unless the context otherwise requires:

           "BASIC SALARY" means the monthly salary, as specified in Clause 6.1.1
           or, as appropriate, the reviewed monthly salary from time to time;

           "CONFIDENTIAL INFORMATION" means all information which is identified
           or treated by the Company or any Group Company or any of the Group's
           clients or customers as confidential or which by reason of its
           character or the circumstances or manner of its disclosure is
           evidently confidential including (without prejudice to the foregoing
           generality) any information about the personal affairs of any of the
           directors (or their families) of the Company or any Group Company,
           business plans, proposals relating to the acquisition or disposal of
           a company or business or proposed expansion or contraction of
           activities, maturing new business opportunities, research and
           development projects, designs, secret processes, trade secrets,
           product or services development and formulae, know-how, inventions,
           sales statistics and forecasts, marketing strategies and plans,
           costs, profit and loss and other financial information (save to the
           extent published in audited accounts), prices and discount structures
           and the names, addresses and contact and other details of: (a)
           employees and their terms of employment; (b) customers and potential
           customers, their requirements and their terms of business with the
           Group; and (c) suppliers and potential suppliers and their terms of
           business (all whether or not recorded in writing or in electronic or
           other format);

           "EMPLOYMENT" means the employment of the Executive under this
           Agreement or, as the context requires, the duration of that
           employment;

           "GROUP" means the Company, any holding company or undertaking of the
           Company and any subsidiaries and subsidiary undertakings of the
           Company or such holding company or undertaking;

           "GROUP COMPANY" means any company within the Group;

           "INTELLECTUAL PROPERTY RIGHTS" means any and all existing and future
           intellectual or industrial property rights in and to any Works,
           including all existing and future patents, copyrights, design rights
           (whether registered or unregistered), database rights, trade marks

                                       1
<PAGE>   19

           (whether registered or unregistered), semiconductor topography
           rights, plant varieties rights, internet rights/domain names,
           know-how and any and all applications for any of the foregoing and
           any and all rights to apply for any of the foregoing in and to any
           Works;

           "MINORITY HOLDER" means a person who either solely or jointly holds
           (directly or through nominees) any shares or loan capital in any
           company whose shares are listed or dealt in on a recognised
           investment exchange (as that term is defined by Section 207(1) of the
           Financial Services Act 1986) provided that such holding does not,
           when aggregated with any shares or loan capital held by the
           Executive's partner and/or his or his partner's children under the
           age of 18, exceed 3% of the shares or loan capital of the class
           concerned for the time being issued;

           "TERMINATION DATE" means the date of termination of the Employment;
           and

           "WORKS" means any documents, materials, models, designs, drawings,
           processes, inventions, formulae, computer coding, methodologies,
           know-how, Confidential Information or other work, performed made,
           created, devised, developed or discovered by the Executive in the
           course of the Employment either alone or with any other person in
           connection with or in any way affecting or relating to the business
           of the Company or any Group Company or capable of being used or
           adapted for use therein or in connection therewith.

1.2        INTERPRETATION AND CONSTRUCTION

           Save to the extent that the context or the express provisions of this
           Agreement require otherwise, in this Agreement:-

           (a)        words importing the singular shall include the plural and
                      vice versa;

           (b)        words importing any gender shall include all other
                      genders;

           (c)        any reference to a Clause, the Schedule or part of the
                      Schedule is to the relevant Clause, Schedule or part of
                      the Schedule of or to this Agreement unless otherwise
                      specified;

           (d)        references to this Agreement or to any other document
                      shall be construed as references to this Agreement or to
                      that other document as modified, amended, varied,
                      supplemented, assigned, novated or replaced from time to
                      time;

           (e)        references to any statute or statutory provision
                      (including any subordinate legislation) includes any
                      statute or statutory provision which amends, extends,
                      consolidates or replaces the same, or which has been
                      amended, extended, consolidated or replaced by the same,
                      and shall include any orders, regulations, instruments or
                      other subordinate legislation made under the relevant
                      statute or statutory provision;

           (f)        references to a "PERSON" includes any individual, firm,
                      company, corporation, body corporate, government, state or
                      agency of state, trust or foundation, or any association,
                      partnership or unincorporated body (whether or not having
                      separate legal personality) of two or more foregoing;

           (g)        any phrase introduced by the words "INCLUDING", "INCLUDE",
                      "IN PARTICULAR" or any similar expression shall be
                      construed as illustrative only and shall not be construed
                      as limiting the generality of any preceding words;

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           (h)        the words "OTHER" and "OTHERWISE" shall not be construed
                      eiusdem generis with any foregoing words where a wider
                      construction is possible.

1.3        HEADINGS

           The table of contents and the headings in this Agreement are included
           for convenience only and shall be ignored in construing this
           Agreement.

2          THE EMPLOYMENT

2.1        APPOINTMENT

           Subject to the provisions of this Agreement, the Company employs the
           Executive and the Executive accepts employment as Financial
           Controller of the Company with effect from 1st October 2000
           notwithstanding the date or dates of this Agreement.

2.2        WARRANTY

           The Executive warrants to the Company that by virtue of entering into
           this Agreement he will not be in breach of any express or implied
           obligation to any third party.

3          DURATION OF THE EMPLOYMENT

3.1        CONTINUOUS EMPLOYMENT

           The Executive's continuous period of employment with the Company
           commenced on 1st October 2000.

3.2        DURATION

           Subject to the provisions of Clauses 3 and 15.1 the Employment shall
           be for a period of two years only but may be extended by agreement
           for a further period of 6 months. It shall automatically terminate on
           the expiry of the two years or two years six months, whichever is
           appropriate. Notwithstanding the foregoing the Employment may be
           terminated at any time by:-

           (a)        the Company giving to the Executive not less than 3
                      months' previous notice in writing to that effect; or

           (b)        the Executive giving to the Company not less than 3
                      months' previous notice in writing to that effect.

3.3        PAYMENT IN LIEU OF NOTICE

           The Company shall be entitled, at its sole discretion, to terminate
           the Employment immediately in writing either instead of, or at any
           time after, notice of termination being given (by either the Company
           or the Executive) and in either case to make a payment to the
           Executive in lieu of notice.

3.4        COMPULSORY RETIREMENT

           Notwithstanding Clause 3.2, the Employment shall terminate without
           notice on the Executive's 60th birthday.

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4          HOURS AND PLACE OF WORK

4.1        HOURS OF WORK

           The Executive agrees that he shall work such hours as are necessary
           for the proper performance of his duties. The Executive shall work a
           minimum of 60 hours per month on days to be agreed in advance.

4.2        PLACE OF WORK

           The Executive's place of work will initially be at the Company's
           premises at 2/5 Arakishvili Street, Tbilisi, Georgia or at the
           Company's premises at St Peter Port, Guernsey but the Company may
           require the Executive to work at any place within Eastern Europe or
           the Middle East on either a temporary or an indefinite basis. The
           Executive will be given reasonable notice of any change in his
           permanent place of work.

5          SCOPE OF THE EMPLOYMENT

5.1        DUTIES OF THE EXECUTIVE

           During the Employment the Executive shall:-

           (a)        undertake and carry out to the best of his ability such
                      duties and exercise such powers in relation to the
                      Company's business as may from time to time be assigned to
                      or vested in him by the Managing Director;

           (b)        in the discharge of those duties and the exercise of those
                      powers observe and comply with all lawful resolutions,
                      regulations and directions from time to time made by, or
                      under the authority of, the Managing Director and promptly
                      upon request, give a full account to the Managing Director
                      or a person duly authorised by the Managing Director of
                      all matters with which he is entrusted;

           (c)        unless prevented by ill-health, holidays or other
                      unavoidable cause, devote such of his working time,
                      attention and skill to the discharge of his duties
                      hereunder as may be reasonably required; and

           (d)        faithfully and diligently perform his duties and at all
                      times use his best endeavours to promote and protect the
                      interests of the Group.

5.2        RIGHT TO SUSPEND DUTIES AND POWERS

5.2.1      The Company reserves the right in its absolute discretion to suspend
           during any notice period or for the purpose of investigating any
           matter in which the Executive is implicated or involved all or any of
           the Executive's duties and powers on terms it considers expedient or
           to require him to perform only such duties, specific projects or
           tasks as are assigned to him expressly by the Company (including the
           duties of another position) in any case for such period or periods
           and at such place or places (including, without limitation, the
           Executive's home) as the Company in its absolute discretion deems
           necessary (the "GARDEN LEAVE").

5.2.2      The Company may, at its sole discretion, require that during the
           Garden Leave the Executive shall not:

           (a)        enter or attend the premises of the Company or any Group
                      Company;

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           (b)        contact or have any communication with any client or
                      prospective client or supplier of the Company or any Group
                      Company in relation to the business of the Company or any
                      Group Company;

           (c)        contact or have any communication with any employee,
                      officer, director, agent or consultant of the Company or
                      any Group Company in relation to the business of the
                      Company or any Group Company;

           (d)        remain or become involved in any aspect of the business of
                      the Company or any Group Company except as required by
                      such companies; or

           (e)        work either on his own account or on behalf of any other
                      person.

5.2.3      During Garden Leave, the Executive will continue to receive his Basic
           Salary and benefits.

5.2.4      For the avoidance of doubt, the Company may exercise its powers under
           this Clause 5.2 at any time during the Employment including after
           notice of termination has been given by either party.

6          REMUNERATION

6.1        BASIC SALARY

           During the Employment the Company shall pay the Executive a Basic
           Salary of not less than $6,570 (US Dollars) per month. The Basic
           Salary shall accrue from day to day and be payable by credit transfer
           in equal monthly instalments on or around the 15th day of each
           calendar month or otherwise as arranged from time to time.

6.2        SALARY REVIEW

           The Basic Salary shall be reviewed annually with effect from the
           first anniversary of the commencement of employment. The Company is
           not obliged to increase the Basic Salary at any review.

7          EXPENSES

7.1        OUT-OF-POCKET EXPENSES

           The Company shall reimburse to the Executive (against receipts or
           other appropriate evidence as the Managing Director may require) the
           amount of all out-of-pocket expenses reasonably and properly incurred
           by him in the proper discharge of his duties hereunder.

7.2        COMPANY CREDIT/CHARGE CARDS

           In the event that the Company issues a Company sponsored credit or
           charge card to the Executive he shall use such card only for expenses
           reimbursable under Clause 7.1 and shall return it to the Company when
           so requested and in any event immediately on termination of the
           Employment howsoever arising.

8          DEDUCTIONS

           The Executive agrees that the Company may deduct from any sums due to
           him under this Agreement any sums due by him to the Company
           including, without limitation, any debits to his Company credit or
           charge card not authorised by the Company, the Executive's pension
           contributions (if any), any overpayments, loans or advances made to
           him by the Company,

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<PAGE>   23

           the cost of repairing any damage or loss to the Company's property
           caused by him and any losses suffered by the Company as a result of
           any negligence or breach of duty by the Executive.

9          OTHER INSURANCE & BENEFITS

9.1        LIFE ASSURANCE

           The Company will provide the Executive with the benefit of death in
           service life assurance which, in the event of death itself will pay a
           maximum amount of 4 times his annual salary, subject to the rules and
           conditions of the policy.

9.2        PAYMENTS

9.2.1      All payments under the PHI scheme or the like will be subject to the
           deductions required by law.

9.2.2      Where payments are made under the PHI scheme all other benefits
           provided to or in respect of the Executive will cease from the start
           of those payments (if they have not done so already), unless the
           Company is fully reimbursed by the PHI scheme for the cost of
           providing the benefit.

9.3        RIGHT TO TERMINATE OR AMEND

           The Company reserves the right at its absolute discretion to
           terminate or amend at any time the PHI scheme or the Executive's
           membership of any scheme. The Company will provide an equivalent
           benefit unless, in the reasonable opinion of the Managing Director,
           it is unable to secure insurance at reasonable premiums due to the
           medical condition of the Executive.

9.4        MEDICAL EXAMINATIONS AND HEALTH RECORDS

           The Executive shall submit to such medical examinations by a doctor
           selected by the Managing Director as may reasonably be required by
           the Managing Director from time to time. The Executive authorises the
           Company to make applications on his behalf for access to any health
           records relating to him for the purposes of Section 3 of the Access
           to Health Records Act 1990, provided that the Executive is given
           prior notice of any application being made. Copies of any health
           records provided to the Managing Director as a result of any
           application shall be made available to the Executive. The fees and
           expenses incurred in the provision of any medical examination and of
           obtaining access to the health records shall be borne by the Company.

10         ABSENCE

10.1       ABSENCE DUE TO SICKNESS OR INJURY

           If the Executive is absent from work due to sickness or injury he
           shall:

           (a)        immediately inform the Company of his sickness or injury;

           (b)        in respect of a consecutive period of absence lasting less
                      than 8 days (including weekends), send to the Company a
                      self-certification form in a format stipulated by the
                      Company; and

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<PAGE>   24

           (c)        in respect of any absence exceeding 7 consecutive days
                      (including weekends), send to the Company a medical
                      certificate signed by a doctor covering the further
                      consecutive period of absence.

10.2       PAYMENT OF SALARY DURING ABSENCE

10.2.1     Subject to the Executive complying with the terms of Clause 11.1, the
           Company shall continue to pay Basic Salary and other benefits during
           any period of absence due to sickness or injury for up to a maximum
           period of 10 weeks in any period of 12 consecutive months unless the
           Employment is terminated in terms of Clauses 3 or 15. Thereafter the
           Company shall pay half basic salary and benefits for a further period
           of 10 weeks in that period of 12 consecutive months unless the
           employment is terminated in terms of Clauses 3 or 15.

10.2.2     Payment of the Basic Salary in terms of Clause 11.2.1 shall be made
           less:

           (a)        an amount equivalent to any Statutory Sick Pay payable to
                      the Executive;

           (b)        any sums which may be received by the Executive under any
                      insurance policy effected by the Company; and

           (c)        any other benefits or sums which the Executive receives in
                      terms of the Employment or under any relevant legislation.

11         OTHER INTERESTS

11.1       RESTRICTIONS ON OTHER ACTIVITIES AND INTERESTS OF THE EXECUTIVE

11.1.1     During the Employment the Executive shall not at any time, without
           the prior written consent of the Managing Director, either alone or
           jointly with any other person, carry on or be directly or indirectly
           employed, engaged, concerned or interested in any business,
           prospective business or undertaking other than a Group Company.
           Nothing contained in this Clause shall preclude the Executive from
           being a Minority Holder unless the holding is in a company that is a
           direct business competitor of the Company or any Group Company in
           which case, the Executive shall obtain the prior consent of the
           Managing Director to the acquisition or variation of such holding.

11.1.2     If the Executive, with the consent of the Managing Director, accepts
           any other appointment he must keep the Company accurately informed of
           the amount of time he spends working under that appointment.

11.2       TRANSACTIONS WITH THE COMPANY

           Subject to any regulations issued by the Company, the Executive shall
           not be entitled to receive or obtain directly or indirectly any
           discount, rebate or commission as a result of any sale or purchase of
           goods or services effected or other business transacted (whether or
           not by him) by or on behalf of the Company or any Group Company and
           if he (or any person in which he is interested) obtains any discount,
           rebate or commission he shall account to the Company for the amount
           received by him (or a due proportion of the amount received by the
           person having regard to the extent of his interest therein).

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12         CONFIDENTIALITY AND COMPANY DOCUMENTS

12.1       RESTRICTIONS ON DISCLOSURE/USE OF CONFIDENTIAL INFORMATION

           The Executive must not either during the Employment (except in the
           proper performance of his duties) or at any time (without limit)
           after the Termination Date:

           (a)        divulge or communicate to any person;

           (b)        use for his own purposes or for any purposes other than
                      those of the Company or any Group Company; or

           (c)        through any failure to exercise due care and diligence,
                      cause any unauthorised disclosure of;

           any Confidential Information. The Executive must at all times use his
           best endeavours to prevent publication or disclosure of any
           Confidential Information. These restrictions shall cease to apply to
           any information which shall become available to the public generally
           otherwise than through the default of the Executive.

12.2       PROTECTION OF COMPANY DOCUMENTS AND MATERIALS

           All notes, records, lists of customers, suppliers and employees,
           correspondence, computer and other discs or tapes, data listings,
           codes, keys and passwords, designs, drawings and other documents or
           material whatsoever (whether made or created by the Executive or
           otherwise and in whatever medium or format) relating to the business
           of the Company or any Group Company or any of its or their clients
           (and any copies of the same):

           (a)        shall be and remain the property of the Company or the
                      relevant Group Company or client; and

           (b)        shall be handed over by the Executive to the Company or
                      the relevant Group Company or client on demand by the
                      Company and in any event on the termination of the
                      Employment.

13         INVENTIONS AND OTHER WORKS

13.1       EXECUTIVE TO FURTHER INTERESTS OF THE COMPANY

           The Company and the Executive agree that the Executive may make or
           create Works during the Employment and agree that in this respect the
           Executive is obliged to further the interests of the Company and any
           Group Company.

13.2       DISCLOSURE AND OWNERSHIP OF WORKS

           The Executive must immediately disclose to the Company all Works and
           all Intellectual Property Rights. Both the Works and all Intellectual
           Property Rights will (subject to sections 39 to 43 of the Patents Act
           1977) belong to and be the absolute property of the Company or any
           other person the Company may nominate.

13.3       PROTECTION, REGISTRATION AND VESTING OF WORKS

           The Executive shall immediately on request by the Company (whether
           during or after the Termination Date) and at the expense of the
           Company:

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<PAGE>   26

           (a)        apply or join with the Company or any Group Company in
                      applying for any Intellectual Property Rights or other
                      protection or registration ("PROTECTION") in the United
                      Kingdom and in any other part of the world for, or in
                      relation to, any Works;

           (b)        execute all instruments and do all things necessary for
                      vesting all Intellectual Property Rights or Protection
                      when obtained and all right, title and interest to and in
                      the same absolutely and as sole beneficial owner in the
                      Company or such Group Company or other person as the
                      Company may nominate; and

           (c)        sign and execute any documents and do any acts reasonably
                      required by the Company in connection with any proceedings
                      in respect of any applications and any publication or
                      application for revocation of any Intellectual Property
                      Rights or Protection.

13.4       WAIVER OF RIGHTS BY THE EXECUTIVE

           The Executive hereby irrevocably and unconditionally waives all
           rights under Chapter IV Copyright, Designs and Patents Act 1988 and
           any other moral rights which he may have in the Works, in whatever
           part of the world such rights may be enforceable including:

           (a)        the right conferred by section 77 of that Act to be
                      identified as the author of any such Works; and

           (b)        the right conferred by section 80 of that Act not to have
                      any such Works subjected to derogatory treatment.

13.5       POWER OF ATTORNEY

           The Executive hereby irrevocably appoints the Company to be his
           attorney and in his name and on his behalf to execute any such act
           and to sign all deeds and documents and generally to use his name for
           the purpose of giving to the Company the full benefit of this Clause.
           The Executive agrees that, with respect to any third parties, a
           certificate signed by any duly authorised officer of the Company that
           any act or deed or document falls within the authority hereby
           conferred shall be conclusive evidence that this is the case.

13.6       STATUTORY RIGHTS

           Nothing in this Clause 14 shall be construed as restricting the
           rights of the Executive or the Company under sections 39 to 43 of the
           Patents Act 1977.

14         TERMINATION

14.1       TERMINATION EVENTS

           Notwithstanding the provisions of Clauses 3 and 11, the Company shall
           be entitled, but not bound, to terminate the Employment:

           (a)        with immediate effect by giving to the Executive notice in
                      writing at any time after the occurrence of any one or
                      more of the following events:-

                      (i)        if the Executive is guilty of any gross
                                 misconduct or behaviour which tends to bring
                                 himself or the Company or any Group Company
                                 into disrepute; or

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<PAGE>   27

                      (ii)       if the Executive commits any material or
                                 persistent breach of this Agreement, or fails
                                 to comply with any reasonable order or
                                 direction of the Managing Director, or fails to
                                 perform his duties to the standard required by
                                 the Managing Director; or

                      (iii)      if he becomes insolvent or bankrupt or
                                 compounds with or grants a trust deed for the
                                 benefit of his creditors; or

                      (iv)       if his behaviour (whether or not in breach of
                                 this Agreement) can reasonably be regarded as
                                 materially prejudicial to the interests of the
                                 Company or any Group Company, including if he
                                 is found guilty of any criminal offence
                                 punishable by imprisonment (whether or not such
                                 sentence is actually imposed); or

                      (v)        has an order made against him disqualifying him
                                 from acting as a company director; or

                      (vi)       if he becomes of unsound mind; or

           (b)        by giving not less than 6 months' notice in writing if the
                      Executive has been prevented by reason of ill health,
                      injury or some other reason beyond his control, from
                      performing his duties under this Agreement for a period or
                      periods aggregating at least ninety days in the preceding
                      period of twenty four consecutive months provided that if
                      at any time during the period of such notice and before
                      the termination of the Employment the Executive shall
                      provide a medical certificate satisfactory to the Managing
                      Director to the effect that he has fully recovered his
                      physical and/or mental health and that no recurrence of
                      illness or incapacity can reasonably be anticipated, the
                      Company shall withdraw the notice.

14.2       NO PAYMENT IN LIEU OF NOTICE

           In the event of the Employment being terminated in accordance with
           Clause 15.1, the Executive shall not be entitled to receive any
           payment in lieu of notice. Regardless of this, the termination shall
           be without prejudice to the continuing obligations of the Executive
           under this Agreement.

15         EVENTS UPON TERMINATION

15.1       OBLIGATIONS UPON TERMINATION

           Immediately upon the termination of the Employment howsoever arising
           or immediately at the request of the Managing Director at any time
           after either the Company or the Executive has served notice of
           termination of the Employment, the Executive shall deliver to the
           Company all Works, materials within the scope of Clause 14.2 and all
           other materials and property including credit or charge cards, mobile
           telephone, computer equipment, disks and software, passwords,
           encryption keys or the like, keys, security pass, letters,
           stationery, documents, files, films, records, reports, plans and
           papers (in whatever format including electronic) and all copies
           thereof used in or relating to the business of the Company or the
           Group which are in the possession of or under the control of the
           Executive.

15.2       LOSS OF SHARE OPTIONS

           On the termination of the Employment (whether occurring lawfully or
           otherwise), the Executive shall not be entitled to any compensation
           or payment for the loss of the Share Options or any benefit which
           could have been derived from them, whether the compensation

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           or payment is claimed by way of a payment in lieu of notice, damages
           for wrongful dismissal, breach of contract or loss of office, or
           compensation for unfair dismissal, or on any other basis.

16         RESTRICTIONS AFTER TERMINATION

16.1       DEFINITIONS

           Since the Executive is likely to obtain Confidential Information in
           the course of the Employment and personal knowledge of and influence
           over suppliers, customers, clients and employees of the Company and
           Group Companies, the Executive hereby agrees with the Company that in
           addition to the other terms of this Agreement and without prejudice
           to the other restrictions imposed upon him by law, he will be bound
           by the covenants and undertakings contained in Clauses 17.2 to 17.5.
           In this Clause 17, unless the context otherwise requires:

           "CRITICAL EMPLOYEE" means any person who was a director, employee or
           consultant of the Company at any time within the Relevant Period who
           by reason of that position and in particular his seniority and
           expertise or knowledge of Confidential Information or knowledge of or
           influence over the clients, customers or contacts of the Company is
           likely to cause damage to the Company if he were to leave the
           employment of the Company and become employed by a competitor of the
           Company;

           "RELEVANT PERIOD" means the period of twelve months immediately
           preceding the Termination Date;

           "RESTRICTED AREA" means any country in the world where the Company or
           any Group Company has a valid licence for the exploration and/or
           production of oil and/or gas;

           "RESTRICTED PERIOD" means the period of 12 months commencing on the
           Termination Date.

16.2       RESTRICTIVE COVENANTS

           The Executive confirms that, neither during the Employment nor during
           the Restricted Period, without the prior written consent of the
           Company (such consent not to be unreasonably withheld), whether by
           himself, through his employees or agents or otherwise and whether on
           his own behalf or on behalf of any person, directly or indirectly, he
           will not:

           (a)        so as to compete with the Company in the Restricted Area;
                      be employed or engaged or at all interested in (except as
                      a Minority Holder) a business or person which is involved
                      in the business of exploration or production of oil and/or
                      gas, if the business is or seeks to be in competition with
                      the Company;

           (b)        solicit or induce or endeavour to solicit or induce any
                      person who, on the Termination Date, was a Critical
                      Employee (and with whom the Executive had dealings during
                      the Relevant Period) to cease working for or providing
                      services to the Company, whether or not any such person
                      would thereby commit a breach of contract;

           (c)        employ or otherwise engage any Critical Employee in the
                      business of exploration or production of oil and/or gas if
                      that business is, or seeks to be, in competition with the
                      Company; or

           (d)        solicit or induce or endeavour to solicit or induce any
                      Government body or agency or any other third party in the
                      Restricted Area to cease to deal with the Company

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           and shall not interfere in any way with any relationship between any
           such Government body or agency or other third party and the Company.

16.3       APPLICATION OF RESTRICTIVE COVENANTS TO OTHER GROUP COMPANIES

           Clause 17.2 shall also apply as though references to the "COMPANY"
           include references to each Group Company in relation to which the
           Executive has in the course of the Employment or by reason of
           rendering services to or holding office in such Group Company:

           (a)        acquired knowledge of its trade secrets or Confidential
                      Information; or

           (b)        had personal dealings with its Customers or Prospective
                      Customers; or

           (c)        supervised directly or indirectly employees having
                      personal dealings with its Customers or Prospective
                      Customers;

           but so that references in Clause 17.1 to the "Company" shall for this
           purpose be deemed to be references to the relevant Group Company. The
           obligations undertaken by the Executive pursuant to this Clause 17.3
           shall, with respect to each Group Company, constitute a separate and
           distinct covenant and the invalidity or unenforceability of any such
           covenant shall not affect the validity or enforceability of the
           covenants in favour of any other Group Company.

16.4       EFFECT OF SUSPENSION ON RESTRICTED PERIOD

           If the Company exercises its right to suspend the Executive's duties
           and powers under Clause 5.3 after notice of termination of the
           Employment has been given, the aggregate of the period of the
           suspension and the period after the Termination Date for which the
           covenants in Clause 17 shall apply shall not exceed 12 months and if
           the aggregate of the two periods would exceed 12 months, the period
           after the Termination Date for which the covenants in Clause 17 shall
           apply shall be reduced accordingly.

16.5       SEVERANCE

           The restrictions in this Clause 17 (on which the Executive has had
           the opportunity to take independent advice, as the Executive hereby
           acknowledges) are separate and severable restrictions and are
           considered by the parties to be reasonable in all the circumstances.
           It is agreed that if any such restrictions, by themselves, or taken
           together, shall be adjudged to go beyond what is reasonable in all
           the circumstances for the protection of the legitimate interests of
           the Company or a Group Company but would be adjudged reasonable if
           some part of it were deleted, the relevant restriction or
           restrictions shall apply with such deletion(s) as may be necessary to
           make it or them valid and enforceable.

17         DISCIPLINARY AND GRIEVANCE PROCEDURE

17.1       DISCIPLINARY PROCEDURES

           Any disciplinary action taken in connection with the Employment will
           usually be taken in accordance with the Company's normal disciplinary
           procedures (which are workplace rules and not contractually binding)
           a copy of which is available from the Secretary of the Company.

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17.2       GRIEVANCE PROCEDURE

           If the Executive wishes to obtain redress of any grievance relating
           to the Employment or is dissatisfied with any reprimand, suspension
           or other disciplinary step taken by the Company, he shall apply in
           writing to the Managing Director, setting out the nature and details
           of any such grievance or dissatisfaction.

18         GENERAL

18.1       PROVISIONS WHICH SURVIVE TERMINATION

           Any provision of this Agreement which is expressed or intended to
           have effect on, or to continue in force after, the termination of
           this Agreement shall have such effect, or, as the case may be,
           continue in force, after such termination.

18.2       NO COLLECTIVE AGREEMENTS

           There are no collective agreements that directly affect the terms and
           conditions of the Employment.

19         DATA PROTECTION

           The Executive acknowledges and agrees that the Company is permitted
           to hold personal information about the Executive as part of its
           personnel and other business records and may use such information in
           the course of the Company's or the Group's business. The Executive
           agrees that the Company may disclose such information to third
           parties in the event that such disclosure is in the Company's view
           required for the proper conduct of the Company's business or that of
           any Group Company. This Clause applies to information held, used or
           disclosed in any medium.

20         ENTIRE AGREEMENT

           This Agreement band the documents referred to in it, constitute the
           entire agreement and understanding of the parties and supersede any
           previous agreement between the parties relating to the subject matter
           of this Agreement.

21         TAX

           The Executive shall be responsible for the payment of all tax whether
           of a local or national basis which may be due in respect of the Basic
           Salary and benefits provided hereunder. It is the Executive's
           responsibility to ascertain, and if necessary meet, his liability to
           tax in Georgia, Guernsey or in any other country in which he carries
           out duties under this Agreement.

22         INDEMNITY & INSURANCE

22.1       INDEMNITY

           The Company shall indemnify the Executive in respect of any costs,
           claims or liabilities incurred by the Executive in the proper
           performance of his duties hereunder.

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22.2       INSURANCE

           The Company shall be responsible for ensuring that the Company takes
           out and maintains directors and officer's liability insurance in
           respect of all current directors and officers and to cover all
           directors and officers for a period of 3 years after termination of
           their contracts.

23.        JURISDICTION

           Each party hereby submits to the non-exclusive jurisdiction of the
           Guernsey courts as regards any claim, dispute or matter arising out
           of or in connection with this Agreement and its implementation and
           effect.

IN WITNESS WHEREOF this Agreement has been duly signed, sealed and delivered as
a Deed the day and year before written.

SUBSCRIBED for and on behalf of CanArgo Limited.

at London                  on 22 March            2001

by      /s/ David Robson
            .....................Managing Director
            David Robson

SIGNED by the said Anthony Potter /s/ Anthony Potter
                                      ............................
                                      Anthony Potter

at London                  on 22 March            2001

in the presence of:-

Witness   /s/ Murray Chancellor.......................

Full Name  ...........................................

Address ..............................................

 ......................................................

Occupation ...........................................

                                       14
<PAGE>   32
THIS AGREEMENT is made effective from the 1st day of October 2000 between

(1)  CANARGO ENERGY CORPORATION, a corporation incorporated under the laws of
     Delaware, USA, 2711 Centerville Rd., Suite 400, Wilmington, Delaware 19808
     (the "COMPANY"); and

(2)  ANTHONY POTTER, residing at 53 Coresbrook Way, Knaphill, Surrey GU21 2TR
     (the "EXECUTIVE")

WHEREAS the Company has entered into an employment contract with the Executive
effective from the 1st October 2000 ("Executive's UK Contract")

IT IS AGREED as follows:

1.    SEVERANCE

1.1   RECOGNITION OF PREVIOUS CONTRIBUTION

      The Executive has been in the continuous employ of the Company and or
      its affiliates since May 1, 1998. In recognition of this contribution
      six months severance is currently due and will be paid, based on the
      Executive's previous annual salary (Cdn.$125,000), one month prior to
      the expiration or termination of the Executive's UK Contract.

1.2   CURRENT CONTRIBUTION

      At the expiration or termination of the Executive's UK Contract, an
      additional two months severance will be paid based on the Executive's
      previous annual salary (Cdn. $125,000) for each additional year of
      service provided under the contract provided that, to the extent of the
      Executive's control, a suitable replacement has been sourced and
      trained at the end of the Executive's UK Contract.

1.3   TERMINATION DUE TO BUSINESS COMBINATION

      Should during the term of the Executive's UK Contract, CanArgo enter
      into a business combination (including but not limited to an
      acquisition, merger or reverse takeover) which results in the
      termination of the Executive's UK Contract, a total of 12 months
      severance at the Executive's previous annual salary (Cdn. $125,000)
      will be immediately due and payable to the Executive.

2     ENTIRE AGREEMENT

      This Agreement and the documents referred to in it, constitute the
      entire agreement and understanding of the parties and supersede any
      previous agreement between the parties relating to the subject matter
      of this Agreement.

<PAGE>   33

3     GOVERNING LAW AND JURISDICTION

3.1   GOVERNING LAW

      This Agreement shall be governed and construed in accordance with the
      law of England & Wales.

3.2   JURISDICTION

      Each party hereby submits to the non-exclusive jurisdiction of the
      English courts as regards any claim, dispute or matter arising out of
      or in connection with this Agreement and its implementation and effect.

IN WITNESS WHEREOF this Agreement has been duly signed, sealed and delivered as
a Deed the day and year before written.

SUBSCRIBED for and on behalf of CANARGO ENERGY CORPORATION

at London on 22 March 2001

by    /s/  David Robson  Director

and   /s/  Liz Landles  Asst. Corporate Secretary

SIGNED by the said ANTHONY POTTER             /s/  Anthony Potter
                                             ---------------------
at London on 22 March 2001                      Anthony Potter

in the presence of:-

Witness   /s/  Murray Chancellor

Full Name      Murray Chancellor

Address ..........................................................

 ..................................................................

Occupation .......................................................

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