Document:

Exhibit 10.1

                                OPTION AGREEMENT

THIS  AGREEMENT  is  made  on    28      April  2005.
                               -----

PARTIES

     (1)  USIBERIAN  ENERGY  GROUP  INC.,  a corporation incorporated under the
          ---------------------------
          laws  of  the State of Nevada, United States and whose principal place
          of  business  is  at 275 Madison Avenue, 6th floor, New York, NY 10016
          ("SEG");  and

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

          INTRODUCTION

          A)   SEG  is  the  sole  shareholder  of OOO Zauralneftegaz ("ZNG"), a
               Russian  limited liability company that has various interests and
               assets,  including oil and gas exploration licences in the Kurgan
               region  of  the  Russian  Federation.
          B)   The  parties  wish  to  jointly cooperate in a joint venture (the
               "JOINT VENTURE") through the establishment of a company ("JV CO")
               for  the  purposes  of  developing  the 4 oil and gas exploration
               licences currently owned by ZNG (the "EXISTING LICENCES"), and to
               bid  for  further  oil and gas exploration licences in the Kurgan
               region  of  the  Russian  Federation  and  oil and gas production
               licences  in the Khanty-Mansisk and Tyumen regions of the Russian
               Federation.
          C)   To  this  end,  the  parties entered into an Option Agreement and
               Memorandum  of  Understanding  dated  24  January  2005,  as
               subsequently  amended by a Deed of Variation dated 11 March 2005,
               (the  "ORIGINAL  OPTION")  pursuant  to  which,  inter  alia, SEG
               granted  to  BP  an  exclusive option whereby on exercise of said
               option  (i) SEG agreed to form JV CO; (ii) SEG agreed to transfer
               50% of the issued share capital of JV CO to BP on the basis JV CO
               would  be  owned  50%  by  BP and 50% by SEG; (iii) SEG agreed to
               transfer  100%  of  its  ownership interests in ZNG to JV CO; and
               (iv)  BP  agreed  to  provide  certain  funding to JV CO, each as
               provided  for  under  the  terms  of  the  Original  Option.
          D)   In  consideration  for  each  party's continued commitment to the
               other to finalise the arrangements relating to the Joint Venture,
               the  parties  are  entering into this agreement (the "AGREEMENT")
               for  the  purposes  of  amending  and  replacing the terms of the
               Original  Option  and to set out the revised terms agreed between
               the  parties  in  relation  to the Joint Venture.

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     ORIGINAL  OPTION

     1.   Except as provided in clause 2, this Agreement supersedes and replaces
          the  Original  Option,  which shall cease to have any force and effect
          and is hereby terminated and each of the parties confirms to the other
          party  that it has no claim against the other party under the Original
          Option.

     OPTION

     2.   The  exclusive  option  (the  "OPTION") granted by SEG to BP under the
          Original  Option  to  purchase from SEG 50% of the entire issued share
          capital  of JV CO (the "OPTION SHARES") shall remain in full force and
          effect  and the parties acknowledge that the Option has been exercised
          by  BP  and BP has paid to SEG the sum of US$100,000 (receipt of which
          is  hereby  confirmed by SEG) as consideration for the exercise of the
          Option.

     CONDITIONS

     3.1  Completion  of  the purchase of the Option Shares ("COMPLETION") shall
          be  conditional  on  the  following:

          (a)  BP  having  made  the payments under the Initial Loan (as defined
               below) referred to in clauses 9.1 to 9.4 in so far as they due at
               the  relevant time and subject to the terms of the Loan Agreement
               (as  defined  below);

          (b)  BP  being  satisfied with the Due Diligence (as defined below) in
               accordance  with  the  terms  of  clause  5  below;

          (c)  JV  CO  owning  100%  of  the  ownership  interests  of  ZNG;

          (d)  each  of  the parties being satisfied with the terms of the Joint
               Venture  Documentation  and  the  parties and ZNG having executed
               such  of the Joint Venture Documentation to which they are party;
               and

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          (e)  the  parties  having complied in all material respects with their
               respective  obligations  under  this  Agreement.

     3.2  If  the conditions set out in clause 3.1 have not been fully satisfied
          by  31  July  2005  or  if at any time prior to Completion any of such
          conditions  should  become  incapable of being satisfied, then (except
          where  the  condition  in clause 3.1(e) has not been satisfied and the
          party  who  is  not  in  breach of its obligations under the Agreement
          waives  such  condition)  this  Agreement  shall immediately lapse and
          cease  to  have effect and, subject to clause 3.3, neither party shall
          have  a claim against the other except in relation to any prior breach
          of  this  Agreement.

     3.3  In  the  event  the Agreement terminates in accordance with clause 3.2
          (other  than by reason of a breach by BP of its obligations hereunder)
          SEG  shall  pay  to  BP  the  following  sums:

          (a)  US$500,000  on  31  October  2005;  and

          (b)  US$500,000  on  28  February  2006.

          SEG  acknowledges  that  the above sums are fair and reasonable in all
          the  circumstances  and,  in  the  case where such sums become payable
          pursuant  to  a breach by SEG of its obligations hereunder, consist of
          liquidated  damages  that represent a genuine pre-estimate of the loss
          that  would  be suffered by BP if Completion does not occur (including
          its costs, expenses and loss of profit). SEG waives any right which it
          may have to challenge the validity at law of any obligation to pay the
          liquidated  damages.

     EXCLUSIVITY

     4.   In consideration of BP contemplating the Joint Venture and undertaking
          the  possibility of such transaction and incurring expenses therewith,
          until  31  July  2005 SEG shall not (and it shall procure that neither
          ZNG,  nor  any  of  its  or  ZNG's  respective  affiliates,  officers,
          directors,  employees,  agents  or  advisors  shall),  directly  or
          indirectly,  solicit  or  entertain offers from, negotiate with, or in
          any  manner  encourage,  discuss, accept or consider a proposal from a
          third  party  relating  to  financing  or  funding  of,  investment or
          acquisition  of  any  interest in ZNG or SEG which could undermine the
          transaction  described  in this Agreement (a "COMPETING TRANSACTION").
          If  SEG or any of its affiliates, or any of their respective officers,
          directors,  employees,  agents  or advisors receives any communication
          regarding  an  offer  or a proposal for a Competing Transaction during
          such  period,  then  it  will immediately notify BP of its receipt and
          promptly  provide  the  other  parties  with  a written summary of its
          terms.

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     5.   BP  and its representatives shall have the opportunity to carry out at
          BP's cost such legal, financial and other due diligence investigations
          as  BP  may decide relating to SEG, ZNG and JV CO and their respective
          undertakings,  businesses, interests, assets and liabilities (the "DUE
          DILIGENCE").  SEG  undertakes to afford (and to procure that ZNG shall
          afford)  BP all assistance and access to facilitate the performance of
          such  Due Diligence and to promptly provide such information (together
          with  supporting  documentation where appropriate) as may be requested
          by  BP.  In  the  event that BP determines in its sole discretion that
          there  are  material discrepancies between any matters revealed by the
          Due  Diligence  and  any  matters  contained  in or referred to in the
          circular  relating  to  ZNG dated 22 December 2004, the SEC filing for
          SEG  dated  9 September 2004 (or any updates of such filings made with
          the SEC), the consolidated financial statements of SEG for the periods
          ending  31  December  2003  and  30  September  2004 and the unaudited
          consolidated  financial  statements  of  SEG  for the period ending 31
          December  2004  (together referred to as the "DOCUMENTS") or is unable
          to  confirm to its satisfaction in the Due Diligence any material fact
          or  issue  contained  in  or referred to in any of the Documents or it
          should  discover  any material matter which may in its sole discretion
          affect  its willingness to complete the purchase of the Option Shares,
          then  upon  BP  providing  written  notice  of  the  same  to SEG, the
          conditions  in clause 3 shall be treated as having not been satisfied.

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     COMPLETION

     6.   Completion shall take place at the registered office of BP immediately
          following  the  last  of the conditions set out in clause 3 above have
          been  satisfied  or such earlier time or date as the parties may agree
          in  writing.  On  Completion:

     6.1  SEG  shall  deliver to BP duly executed share transfers for the Option
          Shares  in  favour of BP together with the relevant share certificates
          or other documents of title relating thereto and shall procure that JV
          CO  shall  register  BP  as  the  holder  of  such  shares;

     6.2  BP shall pay the sum of 50 as consideration for the Option Shares; and

     6.3  the  parties  shall  enter  into  the  Joint Venture Documentation (as
          defined  below)  and  SEG shall procure that JV CO and ZNG shall enter
          into  such  of the Joint Venture Documentation as they are required to
          enter  into  under  the  terms  thereof.

     COVENANTS

     7.   The parties shall as soon as reasonably practicable following the date
          hereof  cooperate to establish JV CO as an English private company (or
          such  entity  incorporated  in  such  jurisdiction  as BP may agree in
          writing). Following the establishment of JV CO, SEG shall procure that
          the  transfer  of  100%  of the ownership interests in ZNG to JV CO is
          completed  promptly  (and in any event by the date set out in clause 4
          above).

     8.   SEG  hereby undertakes to BP to procure that without the prior written
          consent  of  BP  in  the  period  up  to  Completion:

     8.1  JV  CO  shall  remain  a non-trading dormant company and SEG shall not
          transfer  or  otherwise  dispose  of  any  interest  in, or create any
          security  in  or  encumbrance  over,  the  shares  in  JV  CO;

     8.2  no  further  ownership interests in ZNG will be created or issued and,
          other  than  as  required  by  clause  7,  SEG  shall  not transfer or
          otherwise  dispose  of  any  interest in, or create any security in or
          encumbrance  over,  the  ownership  interests  in  ZNG;

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<PAGE>

     8.3  no  alteration  or  amendment  shall  be  made  to  the  operating,
          organisational  or  constitutional  documents  of  ZNG;

     8.4  ZNG  shall  not make any change in the nature or scope of its business
          as  carried  on  at  the  date  of  this  Agreement;

     8.5  ZNG shall not enter into any transaction, contract or arrangement that
          is  not  in  the  normal and ordinary course of its business nor enter
          into any transaction which is not on arm's length terms nor effect any
          acquisitions  or  disposals  of  any  material  assets;

     8.6  except  as  provided  for or contemplated by this Agreement, ZNG shall
          not  borrow  money  or  incur  any  material  indebtedness;

     8.7  ZNG  shall  not  appoint  or  terminate  any personnel in a managerial
          capacity;

     8.8  ZNG  shall  not encumber or grant security over any of its assets; and

     8.9  ZNG  shall  not institute or settle any legal proceedings nor take any
          steps  to  wind  itself  up  or commence any insolvency proceedings in
          relation  to  itself.

     FUNDING

     9.   On  execution  of  this Agreement, BP shall provide a loan facility to
          ZNG  in  respect  of an amount of US$1,267,860 (the "INITIAL LOAN") on
          the terms of the loan agreement in the form annexed as Annexure 1 (the
          "LOAN  AGREEMENT"), which shall provide that the Initial Loan shall be
          applied  by  ZNG  on  the  following  terms:

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

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

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<PAGE>

     9.3  US$250,000  to  be  used by ZNG to account to OOO Business Standard, a
          Russian  limited liability company ("BUSINESS STANDARD") in respect of
          its services for coordinating the gathering of data and information on
          the  various  new  exploration  licences  in  the  Kurgan region being
          considered  by  ZNG  (there are initially proposed to be 3 licences in
          number  in  respect  of  areas  which  shall be designated by BP). The
          parties  intend  that this data and information be obtained as soon as
          possible;

     9.4  a  payment on account of the salaries for each of the months of April,
          May, June and July 2005 for those employees set forth in Schedule 1 in
          the  sum  of US$42,000 per month in aggregate (such sum to include all
          applicable  tax).  These  amounts  may only be drawn at the end of the
          month  to  which  they  relate;

     9.5  a  further amount of US$250,000 shall be advanced to allow the payment
          to Business Standard of a further payment of US$250,000, but only upon
          production  to  BP  of  a  copy  of a letter addressed to ZNG from the
          relevant  license  authority(ies) of the Ministry of Natural Resources
          in  the  Russian  Federation  confirming that the licenses detailed in
          such clause above have been awarded to ZNG in a form acceptable to BP;

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

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

     9.8  US$24,680  to  be  used  as a deposit for Russian banking and currency
          regulation  requirements;  and

     9.9  US$2,015  to  allow for foreign exchange rate fluctuation and to cover
          for  applicable  bank  charges  in  respect  of  the  Initial  Loan.

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     10.  The  Initial  Loan shall be conditional, inter alia, upon ZNG entering
          into the Loan Agreement, SEG providing a guarantee in respect of ZNG's
          liability  in  respect  of  the Initial Loan in the form of Annexure 2
          (the  "GUARANTEE"),  providing  security in the form of the pledge and
          security  agreement  annexed  at Annexure 3 (the "SECURITY AGREEMENT")
          and  ZNG  entering  into the License Agreement (as defined below). SEG
          shall  procure  that  ZNG  shall  obtain  any  consents  and approvals
          required  from  banks  or authorities in relation to the making of the
          Initial  Loan or any payments to be made thereunder. For the avoidance
          of  doubt,  the  Loan Agreement, the Guarantee, the Security Agreement
          and  the  License  shall  survive  the  termination  or  lapse of this
          Agreement.

     11.  To  the  extent  ZNG  requires  further  sums  prior  to Completion in
          addition  to  the  Initial  Loan  for  auction  fees  in  respect  of
          exploration  licenses  detailed in clause 9.3 in excess of the amounts
          referred  to  in  clauses  9.3  and  9.5  above, then the parties will
          cooperate  with  each  other  to  calculate  and  minimize the amounts
          required  by  ZNG,  and,  on  request by SEG, BP will consider in good
          faith  such  request  for  further  funding, provided that any further
          funding  will  be  provided  by  BP  at  its  discretion  and on terms
          acceptable  to  it.

     12.  It  is the intention of the parties that following Completion BP shall
          be  responsible  for  funding  JV  CO  and in particular for making or
          procuring  loans  (the  "LOANS") to JV CO in the following amounts and
          for  the  following  purposes  as  and when the parties agree they are
          required:

               Amount  (US  Dollars)         Purpose
               ---------------------         -------
               Up to $75,000                 To  cover  SEG's  legal, accounting
                                             and  regulatory  costs  associated
                                             with  establishing  JV  CO  and
                                             transferring  ZNG  into  it.

               Up to $700,000                2D  Seismic  testing  by  ZNG's
                                             contractors  on  a licence block to
                                             be  agreed  between the parties and
                                             shallow core sampling in the Kurgan
                                             Area  and  the  reprocessing  of
                                             volumetric  and  magnetic  reports.

               $100,000 to $400,000 each     Preparation,  due  diligence, legal
                                             costs  and licensing fees for three
                                             new  proven  or  producing licences
                                             for  ZNG  in  Khanty  Mansyisk  and
                                             Tyumen  Regions.

              Approximately $500,000         Working  capital for JV CO and ZNG.

              $583,000                       In respect of outstanding debts and
                                             commitments of SEG and ZNG as at 31
                                             December 2004 not covered in clause
                                             9  above. To be paid on Completion.
                                             This  payment  shall  only  be made
                                             after  the  scope  of  work on West
                                             Suersky  has  been agreed by BP and
                                             the work programme contained in the
                                             four  exploration licences has been
                                             amended  to  BP's  satisfaction.

             To be agreed by the parties     The  drilling and ancillary work on
                                             West  Suersky  and Mokrousovsky and
                                             any  new  fields  as  agreed by the
                                             parties.

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     13.  The  Loans  to be made or procured by BP shall be on proper commercial
          terms as are acceptable to BP and SEG and full debentures, charges and
          other  appropriate  security  over  JV  CO's  and  ZNG's  businesses,
          undertakings  and  other  assets  shall  be  taken  by  BP as security
          therefor  upon  the  making  of the Loans. The parties shall cooperate
          with  each other in good faith to agree the most appropriate financing
          structure  for  the Loans (if any) as is necessary or desirable on the
          grounds  of tax and cost efficiency. Unless otherwise agreed by BP, on
          Completion  BP  shall  make  an  additional loan to JV CO equal to the
          amount  outstanding  under the Initial Loan to enable JV CO to make an
          inter-company  loan to ZNG to enable it to repay the Initial Loan. SEG
          shall not be required to provide a guarantee or security in respect of
          JV  CO's  obligations under the Loans (and it is acknowledged that SEG
          shall  be  released  from  its  obligations  under  the  Guarantee and
          Security  Agreement  following  Completion).

     14.  If  following  Completion BP's ordinary shares are admitted to listing
          on  the Alternative Investment Market of the London Stock Exchange (or
          any  other  recognised  investment  exchange  or  overseas  investment
          exchange  (as  such  expressions are defined in the Financial Services
          and  Markets  Act  2000))  (an  "IPO"), BP shall (to the extent it may
          lawfully  do so) procure that sufficient sums are provided as loans to
          ZNG  to  allow it to repay amounts owed to the parties below, but only
          on  condition that such persons will apply such amounts in subscribing
          for such number of ordinary shares in BP in connection with the IPO as
          would  have  a value at the price per share of any placing carried out
          in  connection  with  the  IPO (or if there is no such placing, at the
          opening  trading  price  of  such  shares):

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     14.1 US$250,000  to  Business  Standard;  and

     14.2 US$500,000  to  SEG  or  its  nominee.

     LICENCE  AGREEMENT

15.

15.1     SEG  shall procure that ZNG shall provide to BP a licence in respect of
certain  data  on  the  terms  of  licence  agreement annexed at Annexure 4 (the
"LICENCE  AGREEMENT").

15.2     BP  agrees  that  it  will  in  the  period prior to Completion provide
funding  for  the fees of Exploration Consultants Limited incurred in processing
the  data  to  be  licensed  pursuant  to  the Licence Agreement, provided that:

(a)     the  parties  shall  on  Completion procure that JV CO shall utilize the
Loans  to  reimburse  BP  for  such  costs;  and

(b)     if  Completion  does  not  occur,  SEG  shall  reimburse  such costs (as
notified  in  writing  to  SEG)  to  BP  on  31  October  2005.

EXISTING  LICENCES

16.     As  soon  as  reasonably  practicable after the date hereof, the parties
shall  cooperate  with each other in good faith to procure appropriate amendment
to  the  work  programme  set  out  in  the  Existing  Licences.

JOINT  VENTURE  ARRANGEMENTS

17.     The parties shall following the date hereof negotiate with each other in
good  faith  with  respect  to  the  arrangements  that  will apply to the Joint
Venture,  in  particular,  the contents of the documents set out below which the
parties  will  be  required  to enter into (or agree in the case of the document
referred  to  at  clause  17.3)  at  Completion in relation to the Joint Venture
(together,  the  "JOINT VENTURE DOCUMENTATION").  BP shall arrange for drafts of
the  Joint  Venture Documentation to be provided to SEG within a reasonable time
prior  to  31  July  2005.

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     17.1 a shareholders' agreement relating to each of the parties shares in JV
          CO and setting out terms governing the management of JV CO and setting
          out  procedures  to  be  followed  by  the parties with respect to the
          operation  of  JV  CO  and  its  business;

     17.2 articles  of  association  of  JV  CO;

     17.3 a  business  plan  for  JV  CO's  business;

     17.4 an  agreement confirming the sale and purchase of the Option Shares on
          Completion which shall contain customary warranties and indemnities to
          be  given  by  SEG  relating  to,  inter alia, ZNG, JV CO, SEG and the
          Option  Shares;  and

     17.5 such  loan agreements and security documentation as may be required to
          give  effect  to  the  Loans.

     18.  It  is the parties intention that the following provisions shall apply
          in  relation  to  the  Joint  Venture and shall be provided for in the
          Joint  Venture  Documentation.  The  parties will consider appropriate
          alternative  structures and jurisdictions if that becomes necessary or
          desirable  on  the  grounds  of  tax  and  cost  efficiency:

     18.1 the  business  of  the  joint  venture will be the exploration for and
          production  and  sale  of  oil  and  gas  and associated and ancillary
          activities;

     18.2 the  parties  shall draw up and approve an initial business plan to be
          attached  to  the  shareholders  agreement.  The business plan will be
          reviewed  by  the  board  of  JV  CO  at regular intervals and updated
          annually;

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     18.3 the  share  capital  of JV CO shall be held in equal shares by the two
          parties;

     18.4 overall  management  and supervision of the Joint Venture shall be the
          responsibility of the board of JV CO. The chairman of the boards of JV
          CO  and  ZNG  shall  be David Zaikin. Overall financial control of the
          boards  of  JV  CO  and  ZNG  will  rest with BP so long as any of the
          Initial  Loan  or  the  Loans  remain  outstanding  with  the  precise
          mechanism to effect this to be agreed between the SEG and BP. A quorum
          of the board of JV CO shall require at least one director appointed by
          each  party;

     18.5 the  initial  appointments  to  the  board  of  JV  CO  shall  be:

               SEG                        BP
               -------------              --------------------
               David  Zaikin              Simon  Leigh  Escott

               Timothy Grant Peara        James  Charles  Pockney

     18.6 the  Chief  Executive  of  JV  CO  shall  be  Simon  Leigh  Escott;

     18.7 BP  shall  be entitled to appoint at all times the Reservoir Engineer,
          Drilling  Supervisor,  Finance  Controller  and Logistic & Procurement
          Supervisor  for JV CO and ZNG (provided BP shall consult with SEG with
          regard to suitable candidates for the position of Finance Controller);

     18.8 certain  key  decisions  affecting the Joint Venture shall be reserved
          for  mutual  agreement  between  SEG  and  BP  as  shareholders. Final
          identification  of  these  matters  will  be  for  the  Joint  Venture
          Documentation;

     18.9 future management fees to be charged to JV CO by SEG and BP as well as
          payment  of dividends shall be agreed between SEG and BP provided that
          no  dividend shall be paid until all of the Initial Loan and the Loans
          are  repaid;

     18.10  BP  will procure the appointment of David Zaikin (or Tim Peara) as a
          director  of  BP  after Completion to the extent requested by SEG; and

     18.11  BP and SEG shall be free to pursue other business interests provided
          that they do not compete with the business of either the Joint Venture
          or  ZNG (including but not limited to the Existing Licences, the other
          licences referred at Recital B and the licences detailed in clause 9.3
          (the  area  to  which  such  licences  relate being referred to as the
          "AREA"))  and  SEG will offer to BP, or procure BP is offered, a right
          of  first  refusal  on commercial arms length terms on any oil and gas
          business  proposed  to  be  done  by  SEG  or  ZNG  in  the  Area  .

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CONFIDENTIALITY  AND  ANNOUNCEMENTS

     19.  Each  of the parties shall keep confidential and shall not disclose to
          any  other  person, nor use for any purpose except the purposes of the
          Joint  Venture,  the  existence  of  this  Agreement  and  any  matter
          contemplated  by  it and any information obtained from the other party
          as  a  result  of negotiating, entering into or implementing the Joint
          Venture, provided that this restriction shall not apply to information
          which:

          (a)  is  required  to  be  disclosed  by  operation  of law, any stock
               exchange  regulations  (including, for the avoidance of doubt, as
               may  be  required  in  connection with the marketing of an IPO of
               BP),  any  binding  judgment  or  order  or  any requirement of a
               competent  authority;

          (b)  is reasonably required to be disclosed in confidence to a party's
               professional  advisers  for  use  in  connection  with  the Joint
               Venture  and/or  matters  contemplated  herein;  or

          (c)  is  or  becomes  within the public domain (otherwise than through
               the  default  of  the  recipient  party).

     20.  No public announcement or press release in connection with the subject
          matter  of  this  Agreement shall be made or issued by or on behalf of
          either  party  without the prior written approval of the other, except
          such  as  may  be  required  by law or by any stock exchange or by any
          governmental  authority.

     GOVERNING  LAW

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

                                       13
<PAGE>

     NOTICE

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

          SEG                         David Zaikin             Fax:
          275 Madison Avenue                                   +1 (905) 771-9198
          6th floor
          New York, NY 10016
          USA

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

          COUNTERPARTS

     23.  This  Agreement  may be executed in any number of counterparts each of
          which  when  executed  by  one  or  more  of  the parties hereto shall
          constitute  an  original but all of which shall constitute one and the
          same  document.

                                       14
<PAGE>

          STATUS

     24.  This  Agreement is intended to be legally binding. The parties confirm
          that  they  have each received independent legal advice on the subject
          matter  of  this  Agreement.

          FURTHER  ASSURANCE

     25.  The  parties  shall do or procure to be done all such further acts and
          things  and  execute  or  procure  the  execution  of  all  such other
          documents  as  may be required for the purpose of giving effect to the
          provisions  of  this  Agreement.

          TIME  OF  THE  ESSENCE

     26.  Time shall be of the essence of this Agreement, both as regards times,
          dates  and  periods  specified  in  the Agreement and as to any times,
          dates  or  periods  that  may  by  Agreement  between  the  parties be
          substituted  for  any  of  them.

          THIRD  PARTIES

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

          ENTIRE  AGREEMENT

     28.  This Agreement, and the other documents referred to in it, contain the
          entire  agreement  of  the  parties with respect to the subject matter
          hereof, and all prior or contemporaneous understandings or agreements,
          whether  written  or  oral,  between  the parties with respect to such
          subject  matter  are  hereby  superseded  in  their  entireties.

          ASSIGNMENT

     29.  Neither  party  shall  without  the prior written consent of the other
          party  assign,  transfer, charge or deal in any other manner with this
          agreement  or  any of its rights under it, or purport to do any of the
          same,  nor  sub-contract  any  or  all  of  its obligations under this
          agreement.

                                       15
<PAGE>

          VARIATION

     30.  No  variation of this Agreement or of any of the documents referred to
          in  it  shall  be  valid  unless  it is in writing and signed by or on
          behalf  of  each  of  the  parties.

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

<PAGE>

     Signed for SIBERIAN ENERGY GROUP INC
                -------------------------

     by /s/ David Zaikin    (duly authorised signatory)
        David Zaikin
        ------------------

     Signed for BALTIC PETROLEUM LIMITED
                ------------------------

     by /s/ Simon L. Escott (duly authorised signatory)
        Simon L. Escott
        ------------------

                                       17
<PAGE>Exhibit 10.2

                                LICENCE AGREEMENT

THIS  AGREEMENT  is  made  on   28     April  2005.
                               ----

PARTIES

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

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

WHEREAS:

(A)  ZNG  owns  or  is  due to acquire certain 2D seismic, gravometric and other
geological  data,  which  has  been provided by or will be provided from time to
time to ZNG by Basneftegeofizika, Bazhenov Expedition and such other consultants
as  the  parties  may  agree  (the  "DATA").

(B) BP wishes to use the Data to re-process the same into amended formats or has
re-processed  the  same  into  amended formats (the "PURPOSE") and ZNG wishes to
provide  an  exclusive  licence  to  BP  to  use  the  Data for such purposes in
consideration  for  BP  providing to ZNG a non-exclusive licence to use the data
generated  by  BP pursuant to the Purpose (the "RESULTS"), each on the terms and
conditions  set  out  herein.

IT  IS  THEREFORE  AGREED  AS  FOLLOWS:

1.   LICENCE

1.1  In  consideration for the grant to ZNG of the licence referred to in clause
     1.2  below,  ZNG hereby grants to BP an exclusive, royalty-free, worldwide,
     perpetual  licence  to  use  the  Data  for  the  Purpose.

1.2  BP hereby grants to ZNG a non-exclusive, royalty-free, worldwide, perpetual
     licence  to  use  the  Results  when  they  become  available.

1.3  All right, title to, and interest in the Data shall remain with ZNG and all
     right,  title  to,  and interest in the Results shall belong to BP. Neither
     party  shall  have  any  right  to  grant sub-licences under this Agreement
     without  the  consent  in  writing  of  the  other  party.

2.   NON-DISCLOSURE

2.1  BP  undertakes  to  ZNG  that  it  will  keep  confidential all of the Data
     imparted to it under this agreement (save insofar as the same may be in, or
     come  into,  the public domain other than by the fault of BP) and will only
     disclose  them to those of its officers, employees, agents, consultants and
     sub-contractors whose duties in relation to the Purpose cannot be fulfilled
     without  such  disclosure  and  then only to the extent necessary to enable
     them  to  perform such duties. For the avoidance of doubt, this restriction
     shall  not  apply  to any of the Data that may be contained in the Results.

<PAGE>

2.2  ZNG  undertakes  to  BP  that  it will keep confidential all of the Results
     imparted to it under this agreement (save insofar as the same may be in, or
     come  into, the public domain other than by the fault of ZNG) and will only
     disclose  them to those of its officers, employees, agents, consultants and
     sub-contractors  whose  duties  cannot be fulfilled without such disclosure
     and  then  only  to  the  extent  necessary  to enable them to perform such
     duties. For the avoidance of doubt, this restriction shall not apply to the
     Data  from  which  the  Results  were derived. Further, ZNG undertakes that
     while any amount of the loans made to it by BP pursuant to a loan agreement
     dated    April 2005 (the "LOAN AGREEMENT") remain outstanding, it shall not
           --
     disclose  any  of the Data to any third party except with the prior written
     consent  of  BP.

3.   WARRANTIES

     ZNG  represents  and  warrants  to  BP  that:

     (a)  it  will,  following  payment  of the amounts due to Basneftegeofizika
          (US$588,856)  and  Bazhenov  Expedition  (US$200,000)  as  detailed in
          clauses  8.1(a)  and  8.1(b)  of the Loan Agreement, own the Data free
          from  any  claims  or encumbrances, it is entitled to grant the rights
          granted  under  this  Agreement  and  that  it  is  not subject to any
          restrictions  whatsoever  which  may affect its ability to perform its
          obligations  hereunder;

     (b)  that  it  has not entered into any form of agreement of any kind prior
          to  the  date  hereof which in any manner interferes or will interfere
          with the complete performance of its obligations under this Agreement;

     (c)  it  has all necessary power and authority to enter into this Agreement
          which will, on signature, comprise its legally binding obligation; and

     (d)  it  has  not  disclosed  the  Data  to  any  third  parties.

4.   FURTHER  ASSURANCE

     The parties shall do or procure to be done all such further acts and things
     and  execute or procure the execution of all such other documents as may be
     required  for  the  purpose  of  giving  effect  to  the provisions of this
     agreement  and,  in  particular, ZNG shall promptly following all or any of
     the Data coming into its title and possession provide to BP copies thereof.

5.   NOTICE

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

<PAGE>

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

BP                                    Attn:            Fax:
18b Charles Street                    Simon Escott     +44 20 7667 6468
London W1J 5DU
United Kingdom

6.   THIRD  PARTIES

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

7.   GOVERNING  LAW  AND  JURISDICTION

     This Agreement is governed by and shall be construed in accordance with the
     laws  of  England  and  Wales  and  any  dispute in relation to it shall be
     subject  to  the exclusive jurisdiction of the courts in England and Wales.
     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
     first  above  written.

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

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

<PAGE>

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