Document:

EXHIBIT 10.5

                                                       PRIVILEGED & CONFIDENTIAL
                                                               PB DRAFT:  4/9/04

                              EMPLOYMENT AGREEMENT

     This  Employment  (the  "Agreement")  is entered into as of this January 1,
2003  by  and  between  Siberian  Energy  Group  Inc., a Nevada corporation (the
"Company"),  and  Vladimir V. Eret ("Employee") to be effective as of January 1,
2003 (the "Effective Date").  Employee and the Company are sometimes referred to
individually  as  a  "Party"  and  collectively  as  the  "Parties."
In  consideration  of  the  mutual  covenants,  promises  and  agreements herein
contained,  the  Company  and Employee hereby covenant, promise and agree to and
with  each  other  as  follows:

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

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

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

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

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

     3.2     Employee  shall  perform  duties  with  the  functions  of  a Chief
Operating  Officer of ZNG, subject to the direction of the Board of the Company.

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

<PAGE>

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

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

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

     6.4  Manner  of  Exercisability  and  Payment.

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

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

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

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

<PAGE>

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

<PAGE>

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

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

<PAGE>

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

     If  to  Employee:         Vladimir  V.  Eret

     To  the  address  for  Employee  set  forth  below  his  signature.

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

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

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

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

<PAGE>

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

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

                                    * * * * *

<PAGE>

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

EMPLOYEE                                     SIBERIAN  ENERGY  GROUP  INC.

/s/ Vladimir V. Eret
                                             /s/ David Zaikin
Vladimir  V.  Eret,  Individually            David Zaikin, Chairman
Address:  #63  -  73A  KRASINA  ST,          Printed  Name  and  Title
          KURGAN  CITY,  RUSSIA,  640001

<PAGE>EXHIBIT 10.6

                                    EXHIBIT A
                                    ---------

                         FORM OF STOCK OPTION AGREEMENT

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

                           SIBERIAN ENERGY GROUP INC.

                             STOCK OPTION AGREEMENT

     THIS  STOCK  OPTION  AGREEMENT  (the  "Agreement") is made and entered into
effective  as  of  the  1st  day of January, 2003 by and between Siberian Energy
Group  Inc.,  a  Nevada  corporation  (the  "Company"),  and  David  Zaikin (the
"Optionee").

                                   WITNESSETH:

     WHEREAS, the Company agreed to issue to Optionee options to purchase shares
of the $0.001 par value restricted common stock of the Company ("Common Stock"),
said  options  to be for the number of shares, at the price per share and on the
terms  set  forth  in  this  Agree-ment;  and

     WHEREAS,  the  Optionee  desires  to  receive  the options on the terms and
conditions  set  forth  in  this  Agreement.

NOW,  THEREFORE,  the  parties  agree  as  follows:

     1.  Terms.  Terms not otherwise defined herein shall have the meaning given
         -----
to  such  terms  in  the Employment Agreement by and between the Company and the
Optionee,  dated  as  of  December  1,  2002  (the  "Employment  Agreement").

     2.  Grant  of Options; Option Prices. During the term of the Agreement, the
         --------------------------------
Company  agrees  to  do  the  following:

(a)  To  grant to Optionee the option to purchase under the terms and conditions
     of  the  Company  2003 Stock Option Plan (the "Plan") all or any part of an
     aggregate of 200,000 shares of the authorized and unissued $0.001 par value
     restricted  common  stock  of the Company ("Common Stock") as of January 1,
     2003  (the  "2003  Option  Shares"),  subject  to,  and in accordance with,
     Exhibit  A  and  the  terms and conditions set forth in this Agreement (the
     "2003  Option"),  at  an  exercise  price  of  $0.07  per  share.

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

<PAGE>

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

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

(e)  To  grant to Optionee the additional option to purchase under the terms and
     conditions  of the Plan all or any part of 20,000 shares of Common Stock as
     of  January  1,  2007  and  on  January  1st  of every subsequent year (the
     "Subsequent  Option  Shares, together with the 2003 Option Shares, the 2004
     Option  Shares,  the  2005  Option  Shares  and the 2006 Option Shares, the
     "Option  Shares")  and  15,000  shares of Common Stock on the first date of
     each month of the year ended December 31, 2007 and on the first day of each
     month  of  each subsequent year ended December 31st (the "Subsequent Option
     Shares,  together  with the 2003 Option Shares, the 2004 Option Shares, the
     2005  Option  Shares and the 2006 Option Shares, the "Option Shares") up to
     an  aggregate  of  200,000  shares  per year, subject to, and in accordance
     with,  the  terms  and  conditions  set  forth  in  this  Agreement (each a
     "Subsequent  Option",  together  with the 2003 Option, the 2004 Option, the
     2005 Option, the 2006 Option and each Subsequent Option, the "Options"), at
     an  exercise  price  of  110%  of  the average closing prices for the three
     months  prior  to  each  grant  date.

     3.  Exercise  Periods.  Each  Option  shall terminate at 5:00 p.m. (Eastern
         -----------------
standard  time)  on  the  [fourth]  anniversary of December 31st of each year in
which  the  Options  were  granted.

     4.  Exercise  Of  Options.
         ---------------------

(a)  Each  Option  shall  become  vested and exercisable on the applicable grant
     date.

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

(c)  The  notice  of  exercise  described  in  Section  4(b)  hereof  shall  be
     accompanied  by  the  full  purchase  price  for  the  Option  Shares being
     exercised,  in  cash  or  by  check  or  (subject to the Company's consent)
     instructions  from  the  Optionee  to  the Company directing the Company to
     deliver  a  specified number of Option Shares directly to a designed broker
     or  dealer  pursuant  to  a  cashless  exercise  election  which is made in
     accordance  with  such requirements and procedures as are acceptable to the
     Company  in  its  sole  discretion  and  full  payment  of  all  applicable
     withholding  taxes  pursuant  to  Section  5  hereof.

<PAGE>

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

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

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

     6.  Securities  Laws  Requirements. No Option Shares shall be issued unless
         ------------------------------
and  until,  in the opinion of the Company, there has been full compliance with,
or an exemption from, any applicable registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), any applicable listing requirements of
any  securities  exchange  on which stock of the same class has been listed, and
any  other requirements of law or any regulatory bodies having jurisdiction over
such issuance and delivery, or applicable exemptions are available and have been
complied  with.  The Optionee shall acknowledge, represent, warrant and agree in
writing  to  the  Company  as  follows:

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

(b)  Optionee's  overall  commitment  to  investments  that  are  not  readily
     marketable  is  not disproportionate to Optionee's net worth and Optionee's
     investment  in the Option Shares will not cause such overall commitments to
     become  excessive;

(c)  Optionee's financial condition is such that Optionee is under no present or
     contemplated  future need to dispose of any portion of the Option Shares to
     satisfy  any  existing  or  contemplated undertaking, need or indebtedness;

(d)  Optionee  has sufficient knowledge and experience in business and financial
     matters to evaluate, and Optionee has evaluated, the merits and risks of an
     investment  in  the  Option  Shares;

<PAGE>

(e)  The address set forth on the signature page to this Agreement is Optionee's
     true  and  correct  residence,  and  Optionee  has  no present intention of
     becoming  a  resident  of  any  other  state  or  jurisdiction;

(f)  Optionee  confirms  that  all documents, records and books pertaining to an
     investment  in the Option and the Option Shares that have been requested by
     Optionee  have  been  made available or delivered to Optionee. Optionee has
     had  the  opportunity  to  discuss  the  acquisition of the Warrant and the
     Option  Shares  with  the  Company, and Optionee has obtained or been given
     access  to  all  information  concerning  the  Company  that  Optionee  has
     requested;

(g)  Optionee  has  had  the  opportunity  to  ask questions of, and receive the
     answers  from,  the  Company  concerning the terms of the investment in the
     Option Shares and to receive additional information necessary to verify the
     accuracy  of  the information delivered to Optionee, to the extent that the
     Company  possesses  such information or can acquire it without unreasonable
     effort  or  expense;

(h)  Optionee  understands  that  the  Options  have  not, and the Option Shares
     issuable  upon  exercise  of  the Options will not be, registered under the
     1933  Act  or  any  state  securities  laws in reliance on an exemption for
     private  offerings,  and no federal or state agency has made any finding or
     determination  as  to the fairness of this investment or any recommendation
     or  endorsement  of  the  sale  of  the  Option  Shares;

(i)  The  Option Shares that Optionee is acquiring will be solely for Optionee's
     own  account, for investment, and are not being purchased with a view to or
     for  the  resale,  distribution,  subdivision or fractionalization thereof.
     Optionee has no agreement or arrangement for any such resale, distribution,
     subdivision  or  fractionalization  thereof;

(j)  Optionee  acknowledges  and  is  aware  of  the  following:

     (i)     The Option Shares constitute a speculative investment and involve a
     high  degree  of risk of loss by Optionee of Optionee's total investment in
     the  Option  Shares.

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

<PAGE>

     (iii)  Each  certificate  issued  representing  the  Option Shares shall be
     imprinted  with  a legend that sets forth a description of the restrictions
     on  transferability  of  those  securities,  which  legend  will  read
     substantially  as  follows:

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

THE  SECURITIES  EVIDENCED  BY  THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET
FORTH  IN  A  STOCK OPTION AGREEMENT, DATED JANUARY 1, 2003, BETWEEN THE COMPANY
AND  DAVID ZAIKIN AND MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS
OF SUCH STOCK OPTION AGREEMENT.  THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH
SHAREHOLDER  WHO  SO  REQUESTS  A  COPY  OF  THE  STOCK  OPTION  AGREEMENT."

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

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

     (ii)  After an Initial Public Offering, and after any applicable restricted
     period related to the Initial Public Offering, Optionee may transfer shares
     of  Common  Stock  as follows: (a) Optionee may sell shares of Common Stock
     pursuant  to  an effective registration statement under the Securities Act,
     in  compliance  with any applicable state securities laws or blue sky laws;
     (b) Optionee may sell shares of Common Stock pursuant to, and in accordance
     with,  the  provisions of Rule 144; and (c) Optionee may transfer shares of
     Common  Stock in any transaction that satisfies the conditions discussed in
     Section  6(k)(i)  above.

<PAGE>

     The  restrictions  described  in  this  Section  6 or notice thereof may be
placed  on the certificates representing the Option Shares purchased pursuant to
the  Option, and the Company may refuse to issue the certificates or to transfer
the  shares  on  its  books  unless  it  is  satisfied that no violation of such
restrictions  will  occur.

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

     8.  Merger  Or  Consolidation. Upon the occur-rence of any of the following
         -------------------------
events,  the  Option shall automatically terminate and be of no further force or
effect whatever: (i) the merger or consolidation of the Company with one or more
other  corporations,  regardless  of which entity survives the transaction; (ii)
the  dissolution  or  liquidation  of  the  Company;  (iii) the appointment of a
receiver  for  all,  or  substantially all, of the Company's assets or business;
(iv)  the  appoint-ment  of  a trustee for the Company after a petition has been
filed  for  the  Company's  reorganization under applicable statutes; or (v) the
sale,  lease  or exchange of all, or substan-tially all, of the Company's assets
and  business.  However,  under these circumstances and prior to consummation of
said  event,  all  optionees  will  be  granted  either  and/or (a) the right to
exercise  all  outstanding  options,  or  (b)  will be substituted by equivalent
option in such surviving corporation (or other entity) or a parent or subsidiary
of  such  surviving  corporation  in  case  of  merger  or  acquisition.

     The  foregoing  adjustments shall be made by the Board, whose determination
in  that  respect  shall  be  final,  binding  and  conclusive.

     9.     Common  Stock  To  Be  Received Upon Exercise.  Optionee understands
            ---------------------------------------------
that (a) the Company is under no obligation to register the issuance or transfer
of  the  Option  Shares,  and  (b)  in the absence of any such registration, the
Option  Shares cannot be sold unless they are sold pursuant to an exemption from
registration  under  the 1933 Act.  Thus, the Option Shares will have to be held
indefinitely  in  the absence of registration under the Act or an exemption from
registration.

     Furthermore,  the  Optionee  fully  understands that issuance of the Option
Shares  will  not  be registered under the Act and that, because the issuance of
the  Option  Shares  will not be registered, the Option Shares will be issued in
reliance  upon  an  exemption  which is available only if Optionee acquires such
shares for investment and not with a view to distribution.  Optionee is familiar
with the phrase "acquired for investment and not with a view to distribution" as
it  relates  to  the  Act  and the special meaning given to such term in various
releases  of  the  Securities  and  Exchange  Commission.

     10.     Privilege  Of Ownership.  Optionee shall not have any of the rights
             -----------------------
of  a stockholder with respect to the shares covered by the Option except to the
extent  that  one or more certificates for such shares shall be delivered to him
upon  exercise  of  the  Option.

     11.  Relationship  To  Engagement.  Nothing contained in this Agreement (i)
          ----------------------------
shall  confer  upon  the  Optionee  any  right  with  respect  to continuance of
Optionee's  engagement by, or affiliation with, or relationship to, the Company,
or  (ii) shall interfere in any way with the right of the Company at any time to
terminate  the  Optionee's  engagement  by,  position  or  affiliation  with, or
relationship  to,  the  Company.

     12.  Notices.  All  notices,  requests,  demands,   directions   and  other
          -------
communications  ("Notices")  concerning  this  Agreement shall be in writing and
shall  be  mailed  or delivered personally or sent by telecopier or facsimile to
the  applicable  party  at  the  address  of  such party set forth below in this
Section  12.  When  mailed,  each  such  Notice  shall  be  sent by first class,
certified mail, return receipt requested, enclosed in a postage prepaid wrapper,
and  shall be effective on the fifth business day after it has been deposited in
the  mail.  When  delivered personally, each such Notice shall be effective when
delivered  to the address for the respective party set forth in this Section 12,
provided  that it is delivered on a business day and further provided that it is
delivered  prior  to  5:00  p.m.,  local time of the party to whom the notice is
being  delivered,  on  that  business  day; otherwise, each such Notice shall be
effective  on  the  first  business day occurring after the Notice is delivered.
When sent by telecopier or facsimile, each such Notice shall be effective on the
day  on  which it is sent provided that it is sent on a business day and further
provided that it is sent prior to 5:00 p.m., local time of the party to whom the
Notice is being sent, on that business day; otherwise, each such Notice shall be
effective  on  the  first  business day occurring after the Notice is sent. Each
such  Notice  shall  be  addressed  to  the party to be notified as shown below:

     (a)     if to the Company:     Siberian  Energy  Group  Inc.
                                    1270  Finch  Avenue  West,  Suite  14
                                    Toronto,  Ontario,  Canada  M3J  3J7
                                    Attn: Chairman of the Compensation Committee
                                    Facsimile:

     (b)     if to the Optionee:    David  Zaikin
                                    At the address set forth on the signature
                                    page of this Agreement

     Either party may change its respective address for purposes of this Section
12  by  giving the other party Notice of the new address in the manner set forth
above.

     13.     General  Provisions.  This  instrument  (a)  contains  the  entire
             -------------------
agreement  between  the  parties,  (b)  may  not  be  amended nor may any rights
hereunder  be  waived  except  by  an  instrument in writing signed by the party
sought  to  be  charged with such amendment or waiver, (c) shall be construed in
accordance  with, and governed by the laws of ________, and (d) shall be binding
upon and shall inure to the benefit of the parties and their respective personal
representatives  and assigns, except as above set forth.  All pronouns contained
herein  and  any  variations  thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural as the identity of the parties hereto may
require.

<PAGE>

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

                                          SIBERIAN  ENERGY  GROUP  INC.
                                          In  the  persons  of  the  Company's
                                          principal Stockholders to approve the
                                          appointment  of  the  Optionee

                                          /s/ Oleg V. Zhuravlev
                                          -------------------

                                          Oleg  V.  Zhuravlev
                                          -------------------
                                          Printed  Name(s)

                                          Corresponding  Signatures

                                          OPTIONEE

                                          /s/ David Zaikin
                                          ------------------

                                          David  Zaikin
                                          -------------

                                          71  Woodchester  Crt.
                                          ---------------------
                                          Address

                                          Thornhill,  ON,  L4J  7V6
                                          -------------------------
                                          City,  State  and  Zip  Code

<PAGE>

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