AMENDMENT, CONSENT AND WAIVER

     This AMENDMENT, CONSENT AND WAIVER (this “Agreement”) is made and entered into as of the 13th day of June, 2007 by and among Tethys Petroleum Limited, a company incorporated and existing in the Island of Guernsey (“TPL”) (formerly known as Tethys Petroleum Investments Limited), and the individuals and entities who or which are signatories hereto.

     WHEREAS, CanArgo Energy Corporation, a Delaware corporation (“CanArgo”), and certain persons (the “Senior Noteholders”) have entered into a Note Purchase Agreement dated July 25, 2005 as amended (the “Note Purchase Agreement”), pursuant to which CanArgo issued $25,000,000 in aggregate principal amount of senior secured promissory notes due July 25, 2009 (the “Senior Notes”); and

     WHEREAS, pursuant to the terms of the Senior Notes, interest due on the Senior Notes shall be payable on the unpaid balance thereof in cash at the per annum rates of interest set out thereon, payable semi annually on the thirtieth day of June and December in each year until the principal amount thereof shall have become due and payable; and

     WHEREAS, CanArgo and the holders of the Senior Notes (each hereby referred to as a “Senior Noteholder” and collectively as the “Senior Noteholders”) wish to amend the Note Purchase Agreement and the terms of the Senior Notes such that the interest payment due on June 30, 2007 shall not be paid in cash but shall in substitution be satisfied by the issue of further Senior Notes to the Senior Noteholders.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency or which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

     1. Definitions. Capitalized terms used herein but not otherwise defined have the meanings assigned to them in the Note Purchase Agreement.

     2. Consent and Waiver. Notwithstanding the provisions of any Loan Document to the contrary provided, in accordance with Section 18 of the Note Purchase Agreement, the Senior Noteholders hereby irrevocably and unconditionally consent to, and waive any rights they may have under the Note Purchase Agreement or any other Loan Documents in connection with, the amendment and waiver of the terms of the Senior Notes to provide that the interest payments due to each of the Senior Noteholders on June 30, 2007 shall not be paid in cash but shall in substitution be satisfied in full by way of the issue and sale to the Senior Noteholders of further Senior Notes of the same tenor as the existing Senior Notes and imprinted with the same restrictive legend with the aggregate principal amount of such further notes being equal to the proportion of the interest payment due to the particular Senior Noteholder as at such date (rounded to the nearest US$1). The consent, amendment and waiver granted in this Section 2 only applies to the matter described in this clause, and does not constitute a waiver of, or

consent to, any other amendment to or waiver of any other provisions of the Loan Documents.

     3. Effect on Loan Documents. This Agreement and the amendments set forth herein are limited to the specific purpose for which it is entered into and, except as specifically set forth above, (a) shall not be construed as a consent, waiver, amendment or other modification with respect to any other term, condition or other provision of any Loan Document and (b) each of the Loan Documents shall remain in full force and effect and are each hereby ratified and confirmed.

     4. Miscellaneous.

          (a) Successors and Assigns; Headings; Choice of Law, etc. This Agreement shall be binding on and shall inure to the benefit of CanArgo, TPL and the Senior Noteholders and their respective successors and assigns, heirs and legal representatives; provided that neither CanArgo nor TPL may assign its rights hereunder without the prior written consent of the Required Holders. The headings in this Agreement have been inserted for convenience purposes only and shall not be used in the interpretation or enforcement of this Agreement. The Agreement shall be interpreted and enforced in accordance with the laws of the State of New York, United States of America, applicable to contracts made in and to be performed in such State. There shall be no third party beneficiaries of any of the terms and provisions of this Agreement.

          (b) Entire Agreement; Amendments. This Agreement, including all documents attached hereto, incorporated by reference herein or delivered in connection herewith, constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all other prior understandings, oral or written, with respect to the subject matter hereof and may not be amended, or any provision thereof waived, except by an instrument in writing signed by the parties hereto.

          (c) Severability. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

          (d) Counterparts. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by telecopy shall be equally effective as the delivery of a manually executed counterpart of this Agreement.

     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto or by their representatives, thereunto duly authorized, as of the day and year first above written.

SENIOR NOTEHOLDERS:
INGALLS & SNYDER VALUE PARTNERS L.P.
By:
		Name:
		Title:

Nikolaos D. Monoyios
Thomas L. Gipson

Arthur Koenig
Thomas L. Gipson IRA
Evan Janovic
Arthur Ablin

FLEDGLING ASSOCIATES, LLC
BY: HARTZ TRADING, INC., MANAGER
By:
		Name:
		Title:

Adam Janovic
Neil Janovic
Anthony Corso

John Gilmer
Martin Solomon

AGREED AND ACKNOWLEDGED