This Memorandum of Agreement is entered into this 21st day of May. 2001 by and between the Democratic Republic of Sao Tome Principe (herein after referred to as "DRSTP") and Environmental Remediation Holding Corp a company organized under the laws of the State of Colorado USA (hereinafter referred to as "ERHC") DRSTP and ERHC are collectively referred to as the "Parties"

WITNESSETH:

WHEREAS, the Parties, together, at certain times, with Procura Financial Consultants, C.C. (hereinafter referred to as “Procura”) entered into various memoranda of agreement, letters and stipulations relative to the evaluation and study of oil, gas and mineral reserves within DRSTP. Those documents are

(a) Letter of Understanding between DRSTP and ERHC dated May 18, 1997.

(b) Memorandum of Agreement between DRSTP on the one hand and ERHC/Procura on the other hand dated May 27, 1997.

(c) Memorandum of Understanding between DRSTP and ERHC dated September 30  1997, and

(d) Stipulation by and between DRSTP and ERHC dated November 20, 1997 (The above referenced documents (a) through (d) inclusive shall collectively be referred hereinafter as "the Original Agreement"); and

WHEREAS , under a duty executed settlement agreement (Dated February 10, 2001 Procura and its assigns assigned to ERHC any and all rights under the May 27, 1997 Agreement (copy of settlement agreement appended herewith); and

WHEREAS , the May 27, 1997 Agreement led to the creation of Sao Tome and Principe National Pelroleuim Company S.A. a public company organized under the laws of DRSTP (hereinafter referred to as "STPetro"). of which ERHC owns forty nine percent (49%)

WHEREAS , all matters relative to STPetro were set forth in Decree Law 27/95 of July, 1998: and

WHEREAS , effective September 16, 1998. the DRSTP, STPetro and Mobil Exploration and Producing Services InC (MEPSI) entered inio an 18 month Technical Assistance Agreement (the TAA) whereby MEPSI undertook to complete a seismic program, technical evaluation and feasibility study of the oil and gas exploration potential of acreage described therein, and

WHEREAS , DRSTP and the Government of the Federal Republic of Nigeria (hereinafter referred to as "FGN") have entered into a draft Treaty on the Joint Development of Petroleum and other Resources, in respect of Areas of the Continental Shelf and Exclusive Economic Zone of the two countries which intends to establish a Joint Development Zone (hereinafter referred to as the "JDZ") and Such JDZ will require DRSTP to cede certain rights that it would have previously enjoyed in the Exclusive Economic Zone of DRSTP which had been liked with me United Nations (hereinafter referred to as the "EEZ"). and

WHEREAS , the Original Agreement is currently in Arbitration in accordance with the rules of Arbitration or the United Nations Commission on International Trade Law (hereinafter referred to as "the Current Arbitration"): and

WHEREAS . DRSTP and FGN signed a Joint Communique on May 5th 2001 which listed the points of agreement between the Parties, and

WHEREAS the Parties wish to resolve their differences by means of this Agreement and to dismiss the Current Arbitration

NOW, THEREFORE , in consideration of the mutual covenants and promises set forth below, the Parties hereby agree as follows

1.     INTERPRETATION

In this Agreement lire following acronyms, words and expressions shall, where context permits, be deemed to have the following meanings

1.1   "Agreement" means this Agreement.

1.2   "Affiliate" means, in relation to ERHC. a company. corporation or other legal entity, which controls ERHC , is controlled by ERHC or which ts. controlled by a legal entity which controls ERHC

In this definition, "control" means, either (i) the direct or indirect ownership of greater than 50% (fifty percent) of the voting Shares or stock; or (h) the legal right to make management decisions for ERHC

1.3   "Available Crude Oil" shall mean the Crude Oil won and saved from any Concession after deducting amounts used in petroleum operations

1.4   "Blocks" or "Concession" shall mean an area designated as an individual unit for the exploration and/or production of Crude Oil and Natural Gas. Within the context of award of Blocks of Working Interest, the coordinates of this area shall be the coordinates as defined by ORSTP Block designations as of 1 January 2001. subject to any changes in block coordinates that may arise upon the implementation of the JDZ.

1.5   "Contractor" or "Operator" shall mean any party that undertakes the exploration, development and/or production of Crude Oil and for Natural Gas

1.6   "Cost Oil" shall mean the quantum oil Available Crude Oil allocated to an Operator to enable it to generate the proceeds to recover costs as specified in an EPA