APCO ARGENTINA INC/NEW
ADMINISTRATIVE SERVICES AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>d17605exv10w1.txt
<DESCRIPTION>ADMINISTRATIVE SERVICES AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

                        ADMINISTRATIVE SERVICES AGREEMENT

                                     BETWEEN

                               APCO ARGENTINA INC.

                                       AND

                          THE WILLIAMS COMPANIES, INC.

                         EFFECTIVE DATE: JANUARY 1, 2004

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
1.   DEFINITIONS.........................................................     1

2.   TERM................................................................     4

3.   PROVISION OF SERVICES...............................................     4

4.   COMPENSATION........................................................     6

5.   INVOICING AND PAYMENTS..............................................     8

6.   RIGHT TO AUDIT......................................................     8

7.   INDEPENDENT CONTRACTOR STATUS.......................................     9

8.   INDEMNIFICATION.....................................................     9

9.   INSURANCE...........................................................    10

10.  CONFIDENTIALITY.....................................................    11

11.  LIMITATION OF LIABILITY.............................................    12

12.  NOTICES.............................................................    12

13.  CERTAIN PRACTICES...................................................    14

14.  NON-WAIVER..........................................................    14

15.  ASSIGNMENT..........................................................    15

16.  NON-EXCLUSIVE AGREEMENT.............................................    15

17.  NO THIRD PARTY BENEFICIARY..........................................    15

18.  HEADINGS............................................................    15

19.  ENTIRE AGREEMENT....................................................    15

20.  SEVERABILITY........................................................    15

21.  AMENDMENTS..........................................................    16

22.  GOVERNING LAW.......................................................    16

23.  DISPUTE RESOLUTION..................................................    16

24.  MUTUAL COOPERATION..................................................    17

25.  FORCE MAJEURE.......................................................    17
</TABLE>

                                       -i-
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                        ADMINISTRATIVE SERVICES AGREEMENT

      THIS ADMINISTRATIVE SERVICES AGREEMENT ("Agreement") is made and entered
into as of this 1st day of January, 2004 ("Effective Date"), by and between APCO
Argentina Inc., a company organized under the laws of the Cayman Islands and its
Subsidiaries ("Company" or "Apco"), and The Williams Companies, Inc.
("Williams"), a company organized under the laws of the State of Delaware, USA.

      WHEREAS, Company is a public company whose stock is traded on the NASDAQ
but has few employees and is in need of personnel to perform administrative
services on behalf of the Company;

      WHEREAS, Williams owns approximately 69% of the issued and outstanding
stock of Company and has been providing administrative, legal and management
services ("Services") to Company without a formal written agreement.

      WHEREAS, Company desires to engage the services of Williams to perform
various Services, under the terms and conditions hereinafter provided; and

      WHEREAS, Williams is willing to perform the Services upon the terms and
conditions hereinafter set forth.

      NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Parties agree as follows:

1.    DEFINITIONS:

      (a)   The following terms have the meanings assigned herein.

            (i)   "Affiliate" of a Person means a Person (i) which is a
                  Subsidiary of that Person, (ii) of which that Person is a
                  Subsidiary, or (iii) which is a Subsidiary of a Person of
                  which that Person is a Subsidiary.

            (ii)  "Agreement" means this Administrative Services Agreement, as
                  amended or supplemented from time to time, and the exhibits
                  hereto, which are incorporated herein by reference.

            (iii) "Applicable Law" means, with respect to any Person or any
                  property or asset, all laws, ordinances, codes, rules,
                  regulations, orders, writs, injunctions, decrees, rulings,
                  determinations, awards or standards of any Governmental
                  Authority, all Governmental Authorizations and all agreements
                  with any Governmental Authority applicable to or binding on
                  such Person (or its properties or assets) or to such property
                  or asset from time to time or at the time specified in this
                  Agreement, as the case may be.

            (iv)  "Bankruptcy" of a Person means (a) Involuntary Bankruptcy or
                  (b) commencement by a Person of a voluntary case or proceeding

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                   under any applicable bankruptcy, insolvency, reorganization
                   or other similar law or of any other case or proceeding to be
                   adjudicated a bankrupt or insolvent, or the consent by such
                   Person to the entry of a decree or order for relief in
                   respect of such Person in an involuntary case or proceeding
                   under any applicable bankruptcy, insolvency, reorganization
                   or other similar law or to the commencement of any bankruptcy
                   or insolvency case or proceeding against such Person, or the
                   filing by such Person of a petition or answer or consent
                   seeking reorganization or relief under any Applicable Law; or
                   consent by such Person to the filing of such petition or to
                   the appointment of or taking possession by a custodian,
                   receiver, liquidator, assignee, trustee, sequestrator or
                   similar official of such Person or of any substantial part of
                   the property of such Person, or the making by such Person of
                   an assignment for the benefit of creditors, or the admission
                   by such Person in writing of its inability to pay its debts
                   generally as they become due, or the taking of corporate
                   action by such Person in furtherance of any such action.

            (v)    "Business Days" means any day other than Saturday, Sunday or
                   a legal holiday in New York, New York.

            (vi)   "Calendar Month" means any of January, February, March,
                   April, May, June, July, August, September, October, November
                   or December, as applicable.

            (vii)  "Claims" has the meaning specified in Section 8(a).

            (viii) "Company" has the meaning specified in the preamble to this
                   Agreement.

            (ix)   "Confidential Information" has the meaning specified in
                   Section 10(a)(i).

            (x)    "Effective Date" has the meaning specified in the preamble to
                   this Agreement.

            (xi)   "Governmental Authority" means any judicial, legislative,
                   administrative or other national, state, municipal or local
                   governmental authority, ministry, department, any
                   administrative agency, office, organization or authority
                   having jurisdiction over the Parties.

            (xii)  "Governmental Authorization" means any authorization,
                   consent, ruling, permit, certification, exemption,
                   exoneration or registration by or with any Governmental
                   Authority.

            (xiii) "Involuntary Bankruptcy" means entry by any competent
                   governmental authority of any jurisdiction or a court having
                   jurisdiction in the premises of (i) a decree or order for
                   relief in respect

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                    of such Person in an involuntary case or proceeding under
                    any applicable bankruptcy, insolvency, reorganization or
                    other similar law or (ii) an involuntary or contested decree
                    or order adjudging such Person a bankrupt or insolvent, or
                    approving as properly filed a petition seeking
                    reorganization, arrangement, adjustment or composition of or
                    in respect of such Person under any applicable law, or
                    appointing a custodian, receiver, liquidator, assignee,
                    trustee, sequestrator or other similar official of such
                    Person or of any substantial part of the property of such
                    Person, or ordering the winding up or liquidation of the
                    affairs of such Person.

            (xiv)   "Parties" and "Party" mean Company and Williams or either of
                    them.

            (xv)    "Person" means any individual, corporation, partnership,
                    joint venture, association, trust, unincorporated
                    organization or government or any agency or political
                    subdivision thereof.

            (xvi)   "Representatives" of a Party shall mean directors, officers,
                    employees, auditors, counsel, financial and other advisors
                    and other representatives and Affiliates of such Party, and
                    such Affiliates' directors, officers, employees, auditors,
                    counsel, financial and other advisors and other
                    representatives.

            (xvii)  "Services" shall have the meaning specified in the second
                    Whereas clause to this Agreement hereinabove.

            (xviii) "Subsidiary" of a Person means (i) a corporation more than
                    50% of the outstanding voting shares of which is owned,
                    directly or indirectly, by such Person or by one or more
                    other Subsidiaries of such Person or by such Person and one
                    or more Subsidiaries thereof or (ii) any other Person (other
                    than a corporation) in which such Person, or one or more
                    other Subsidiaries of such Person, or such Person and one or
                    more other Subsidiaries thereof, directly or indirectly, has
                    at least a majority ownership and power to direct the
                    policies, management and affairs thereof.

            (xix)   "US Foreign Corrupt Practices Act" means the United States
                    Foreign Corrupt Practices Act of 1977, as amended from time
                    to time.

            (xx)    "Williams" has the meaning specified in the preamble to this
                    Agreement.

            (xxi)   "Williams E&P" shall mean Williams' exploration and
                    production, business unit that conducts exploration and
                    production of hydrocarbons activities.

      (b)   For all purposes of this Agreement, except as otherwise expressly
provided or to the extent that the context otherwise requires:

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            (i)   the terms defined herein include the plural as well as the
                  singular and vice versa;

            (ii)  words importing gender include all genders;

            (iii) any reference to an "Article", "Section" or "Exhibit" refers
                  to an article, section or exhibit, as the case may be, of this
                  Agreement;

            (iv)  all references to "this Agreement" mean this Agreement,
                  including all exhibits hereto, and the words "herein",
                  "hereof", "hereto" and "hereunder" and other words of similar
                  import refer to this Agreement and its exhibits, as a whole
                  and not to any particular article, section, exhibit or other
                  subdivision;

            (v)   the symbol "$" or "US$" means United States dollars; and

            (vi)  whenever the words "include," "includes," or "including" are
                  used in this Agreement, they shall be deemed to be followed by
                  the words "without limitation".

2.    TERM:

      (a)   This Agreement shall be effective commencing upon the Effective
Date.

      (b)   This Agreement shall remain in effect for one year and shall
automatically renew on the anniversary of the Effective Date and each year
thereafter unless terminated by either party upon 90 days prior written notice
prior to any anniversary of the Effective Date. Either Williams or Company may
terminate any given Service provided hereunder at any time upon 60 days prior
written notice.

      (c)   Promptly after the date of any termination, Williams shall be paid
for any Services rendered by Williams through the date on which Williams ceases
to perform such Services.

      (d)   Termination of this Agreement in accordance with this Section 2
shall not affect the rights, privileges, duties, liabilities or obligations of
either Party which arose or accrued prior to the date of termination, and this
Section 2 and Sections 8, 9, 10, 11, 14, 17, 18, 19, 20, 22 and 23 shall survive
any termination of this Agreement.

3.    PROVISION OF SERVICES:

      (a)   Company hereby appoints and retains Williams to perform the Services
on the terms and conditions set forth in this Agreement. Williams hereby accepts
and agrees to perform the Services in accordance with the terms and conditions
of this Agreement.

      (b)   Subject to any limitations on availability and resources and such
other limitations as set forth in this Agreement, the Services shall be those
administrative, legal and financial services described below and such other
services as may be agreed upon from time to time by

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Company and Williams, which shall be performed or provided subject to and under
the direction and supervision of, Company:

            (i)    internal audit, corporate communications, controller,
                   security, human resources, storage, accounting, legal, tax,
                   risk management and insurance, administration, management,
                   corporate secretarial services and information services,
                   including without limitation, hardware support, systems
                   design, programming, production and distribution services but
                   only to the extent of current capacity levels and subject to
                   limitations set forth in any applicable agreements of
                   Williams;

            (ii)   right to use third party licensed software licensed to
                   Williams but only to the extent and subject to the
                   limitations set forth in such licenses;

            (iii)  providing Williams' personnel to hold certain executive
                   positions of the Company;

            (iv)   establishing and maintaining appropriate administrative,
                   business, accounting and financial systems; maintaining
                   Apco's home office accounts, perform consolidation
                   accounting, account analysis, financial reporting, assure
                   compliance with US GAAP and work with the Company's external
                   auditors in the US and Argentina;

            (v)    preparing and issuing monthly operations and financial
                   reports;

            (vi)   preparing and/or filing, on behalf of the Company, Securities
                   and Exchange Commission filings and other information
                   required to be filed as a public company in compliance with
                   Applicable Law;

            (vii)  obtaining, on behalf of Company, Governmental Authorizations,
                   including completing and executing any related applications
                   and filings;

            (viii) preparing and executing (upon proper authorization) on behalf
                   of Company agreements for professional services; and

            (ix)   preparation for and scheduling of meetings of the Board of
                   Directors and preparing agendas for same.

      (c)   In addition, amounts expended pursuant to Company's request with
respect to claims and litigation ( including settlement costs and reasonable
expenses associated therewith, and attorney's fees, expenses and court costs)
will be reimbursed by Company to Williams.

      (d)   Williams shall determine the number and identity of personnel to be
provided to perform the Services but shall ensure that sufficient personnel are
provided at all times. Company agrees that Williams may employ subcontractors to
perform the Services. Any individuals employed by Williams and performing
Services hereunder shall be and remain the employees of Williams and/or its
Affiliates (and not of Company). Company shall be free at any time to accept,
reject or, upon reasonable notice, ask for replacements for any such personnel.

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All equipment provided to such personnel by Company shall remain the property of
Company and all equipment provided to such personnel by Williams shall remain
the property of Williams.

      (e)   Williams shall not be required to qualify to do business in any
state or foreign country in order to provide Services requested by Company.
Notwithstanding anything to the contrary, Williams shall not be obligated or
required to provide any Service that it is not currently providing to its other
Affiliates.

      (f)   If Company should discontinue its use of equipment, third party
software or related items which items were leased, purchased, or licensed by
Williams or its Affiliates on Company's behalf and at Company's request, at any
time during the term of this Agreement or prior thereto, the Company shall
reimburse to Williams all charges, costs and expenses actually incurred by
Williams in connection with the cancellation or assignment of any applicable
leases, licenses or other contracts associated with such items; provided,
however, that Williams will allow a representative of Company to participate in
negotiations with regard to such charges prior to any assessment thereof. To the
extent Company shall have specifically requested Williams or its Affiliates to
purchase equipment for the benefit of Company, and such purchase was made,
Company shall purchase from Williams any of such equipment owned by Williams, at
a price equal to Williams' net book value for such equipment. Such obligations
apply whether the discontinuance of use occurs upon the termination of this
Agreement or prior thereto.

4.    COMPENSATION:

As full and complete compensation for Services, Company agrees to pay Williams
in the following manner:

i.    The Company will pay Williams a percentage (to be defined later herein) of
      the certain and specific corporate services allocated to Williams E&P by
      Williams using the Modified Massachusetts Formula (the "MMF"). The
      allocated services for which the Company will pay are those services that
      specifically benefit the Company and include but are not limited to Tulsa
      Facilities; Manager General Services (Call Center, Mail, Office, Park and
      Facilities scheduling); Tulsa Office Services; Tulsa Mail Services; Tulsa
      Forms Management & Purchasing; Williams Travel Service; Manager Food, TVI,
      Print, Records; Tulsa Print Services, Tulsa Record Management; Treasurer &
      Credit; Risk Management & Insurance; Corporate Secretary; Ethics; Audit;
      Investor Relations; Research Accounting and Sarbanes Oxley. Williams' cost
      centers will be analyzed at least annually by both Williams and Apco to
      determine whether the listing of cost centers utilized hereunder is
      complete and appropriate. The Company will pay Williams for its share of
      these allocated services based on a separate MMF allocation to be computed
      between it and Williams E&P.

      The MMF is a three-factor formula, which allocates costs to subsidiaries,
      divisions or business units giving equal weight to operating revenue less
      cost-of-sales, gross payroll and gross property, plant and equipment. For
      purposes of this calculation hereunder, revenues will be reported net of
      royalties. For purposes of the MMF calculation, gross payroll shall
      include total wages, salaries and other compensation, such as would be
      reportable on IRS form 941 or the Argentine equivalent. In the event of
      changes due to acquisitions, mergers or asset sales, this allocation will
      be adjusted quarterly.

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      Individual percentages for each factor will be determined by dividing the
      amount of each factor for the Company by the total of the factor for
      Williams E&P. The separate labor, operating revenue and property factors
      for the Company as a percentage of Williams E&P shall be added together
      and then divided by three to calculate the weighted average percent for
      the Company. The weighted percentage represents the percent that the
      Company will pay to Williams for its share of the named services allocated
      to Williams E&P by Williams.

      The payment by the Company to Williams based on the MMF allocation is
      intended to reimburse Williams for all Services described in Article 3.(b)
      above that are provided to the Company and for which it will not be
      charged directly. Direct charges such as legal services, rent, computer
      leasing, LAN charges, printing and reproduction services and other similar
      services which are directly identifiable to Apco will be directly charged
      to Apco.

            Williams currently uses MMF to allocate expenses to its business
      units and, as a result, MMF has been selected as the method by which
      expenses will be allocated by Williams E&P to the Company hereunder. In
      the event Williams adopts a different method for the allocation of
      corporate expenses to its business units in the future, Williams and the
      Company shall meet to determine whether the new allocation method will be
      used hereunder or whether the Parties shall continue the use of the MMF
      allocation method for purposes of this Agreement. Should the Parties
      determine to use a different allocation method, their agreement to do so
      shall be reflected in an Amendment to this Agreement. In the event the
      Parties determine to continue the use of the MMF allocation method, no
      Amendment to this Agreement shall be required.

ii    Williams shall provide the Company with the services of those positions
      set forth on Exhibit "A" that perform specific functions for the Company
      and spend either substantial time in the performance of services for the
      Company or consistently provide time to the Company every month. Exhibit
      "A" may be modified by the Parties from time to time as needed to add or
      remove positions which will be provided hereunder.

      The Parties agree that the positions described on Exhibit "A" have devoted
      and will continue to devote substantial and or consistent time to the
      business of the Company. Accordingly, time for services of the listed
      positions will be paid for by the Company on the basis of an allocation of
      the salary, and bonus of those individuals plus a factor determined
      annually by Williams (for 2004, this factor is 33%) for employee benefits
      and taxes (the "Salary Allocation").

      Unless a modification is agreed by the Parties through an agreed revision
      to Exhibit "A", the Salary Allocation percentages to be used for the
      positions described in Exhibit "A" are as follows:

<TABLE>
<S>                                                         <C>
Director of International Exploration and Production        75 %
Senior Accounting Analyst                                   75 %
Administrative Assistant III                                50 %
Manager of International Exploration and Production         25 %
</TABLE>

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      The percentages and positions shall be reviewed by the parties
      periodically and adjusted but not more than on an annual basis.

iii.  The Company will also pay Williams one hundred thousand dollars ($100,000)
      per year for the services of those Williams employees that hold the
      positions of Chairman and Chief Executive Officer and Chief Financial
      Officer of Apco as compensation for time devoted by those employees in the
      performance of their duties for the Company. Such amount is based upon a
      percentage of such individual's Salary Allocation determined by using an
      estimate of the time actually spent by such employees on behalf of APCO
      and will be periodically reviewed and adjusted by the Parties as
      appropriate to more accurately reflect the actual time spent.

iv.   The Company shall pay Williams separately for Services that are not
      included above and are directly identifiable to the Company on an as-used
      basis. Such Services include but are not limited to rent for the square
      footage of office space occupied by the Company on the 26th and the 37th
      floors of the Bank of Oklahoma Tower, One Williams Center, Tulsa,
      Oklahoma, computer leasing costs, local area network (LAN), telephone,
      printing and reproduction services and supplies and legal services. These
      services will be charged to the Company on the same rate as charged to
      other Williams' Affiliates or Subsidiaries. The Company shall also
      reimburse Williams for the cost of any insurance coverage provided to APCO
      by Williams .

5.    INVOICING AND PAYMENTS:

      Williams shall at a minimum submit quarterly invoices to Company for
Services rendered hereunder and will provide full supporting documentation upon
the request of Company. Company shall pay Williams the amounts of such invoices
within thirty (30) days after receipt; provided, that if Company shall have any
objection to all or any portion of an invoice, Company shall notify Williams of
the same within thirty (30) days after receipt of the invoice, give reasons for
its objection and pay only the portion of the invoice which is not in dispute.
Representatives of Williams and Company shall confer within sixty (60) days of
receipt of objection by Company regarding a particular invoice to resolve any
disputed invoices. In the event such representatives are unable to reach
agreement with regard to such a dispute, the matter shall be resolved in
accordance with Section 23.

6.    RIGHT TO AUDIT:

      Williams shall keep such books and records (which books and records shall
be maintained on a consistent basis and substantially in accordance with
generally accepted accounting principles) as shall readily disclose , as allowed
by law, the basis for any charges or credits, ordinary or extraordinary, billed
to Company under this Agreement. Company shall, as allowed by law, have the
right, upon reasonable notice from Company to Williams and during regular
business hours, to inspect, examine and audit or cause to be audited each year
the accounts and records of Williams reasonably related to the Services provided
hereunder, except where such accounts and records would otherwise be considered
proprietary or confidential, in which case such audit shall be conducted by an
independent auditor agreed to by the Parties, provided such right is exercised
in a manner that does not interfere with the provision of the

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Services hereunder by Williams. Any audit by Company hereunder shall be at
Company's sole cost and expense.

7.    INDEPENDENT CONTRACTOR STATUS:

      (a)   Williams hereby declares it is engaged in an independent business
and agrees to perform the Services as an independent contractor with, except as
otherwise provided for hereunder, full responsibility for the control and
direction of its employees and subcontractors. Williams, in its performance of
this Agreement, has and hereby retains the right to exercise full control and
supervision over the accomplishment of the objectives set forth herein;
provided, however, that Company shall be free at any time to accept, reject or
request replacement of any Williams personnel providing the Services. Williams
shall make reasonable efforts to complete the Services in a timely manner.
Williams shall not be required to provide personnel to work a specific number of
hours per day or specific days of the week. Williams shall not be an agent,
employee or servant for and may not bind Company. This Agreement is not intended
to and shall not create a partnership, joint venture or agency of any kind or
type. It is understood that Williams is free to contract for similar services to
be performed for others during the term of this Agreement.

      (b)   Williams hereby accepts full and exclusive liability for the payment
of its employees' compensation and benefits including any and all contributions
or taxes for unemployment insurance, old age retirement benefits, pensions or
annuities now or hereafter imposed by or under Applicable Law and which are
measured by the wages, salaries or other remuneration paid to the persons
employed by Williams with respect to Services performed under the terms of this
Agreement. Williams further warrants that it will comply with all other
Applicable Law to which it is subject as an employer regarding compensation,
hours of work or other conditions of employment, including those applicable to
minimum wage and overtime wages.

      (c)   Neither Williams nor its employees providing Services to Company
under this Agreement shall be entitled to participate in or receive benefits
under any programs maintained by Company for its employees, including, without
limitation, life, medical and disability benefits, pension, profit sharing or
other retirement plans or other fringe benefits. Nor shall any Williams
employees be entitled to any direct or indirect compensation or remuneration of
any kind from Company as a result of the Services performed under this
Agreement.

8.    INDEMNIFICATION:

      (a)   Williams shall be responsible for and shall defend and hold harmless
Company from and against all claims, demands, causes of action, liabilities,
fines, penalties, loss, or expense (including, without limitation, reasonable
attorneys' fees, costs and expenses) (collectively "Claims") of every kind and
character, whether they be direct or indirect, arising from or related to,
actions and/or omissions of any kind from personnel providing Services to
Company hereunder when not performing tasks or assignments for or on behalf of
Company. The above indemnity of this Section 8(a) shall not apply to, and
Company shall indemnify, protect, defend and hold harmless Williams, its owners,
Affiliates, and all of their officers, directors, employees, consultants and
agents (collectively, the "Williams Group") from, Claims for bodily injury,
illness or death of any member of Williams Group, or of any employee of

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Williams' contractors or subcontractors when arising out of Company's or its
contractors' (other than Williams) or subcontractors' gross negligence or
willful misconduct.

      (b)   Company shall be responsible for and shall defend and hold harmless
Williams Group from and against all Claims of every kind and character, whether
they be direct or indirect, arising from or related to actions and/or omissions
of any kind of the personnel providing Services to Company by Williams hereunder
when performing tasks or assignments for Company (including the Services), EVEN
IF SUCH CLAIMS, DEMANDS, CAUSES OF ACTION, LIABILITIES, LOSSES OR EXPENSES ARE
BASED UPON THE NEGLIGENCE (WHETHER JOINT, CONCURRENT, ACTIVE, OR PASSIVE) OF THE
WILLIAMS GROUP OR ACTIONS OR OMISSIONS (WHETHER OR NOT THE RESPONSIBILITY OF THE
WILLIAMS GROUP) WHICH IMPOSE STRICT LIABILITY. The above indemnity of this
Section 8(b) shall not apply to, and Williams shall indemnify, protect, defend
and hold harmless Company from, Claims for bodily injury, illness or death of
any employee of Company or any of Williams' contractors or subcontractors when
arising out of any member of the Williams Group's gross negligence or willful
misconduct.

      (c)   Except for claims against Company for failure to make any payments
due hereunder, Williams shall defend, protect, indemnify and hold harmless
Company from and against all Claims of every kind and character arising from or
related to Williams' failure to pay its employees or because of its failure to
withhold federal and state income taxes or any other such taxes or state, local,
municipal, national or federal governmental charges which Williams may be
required to pay with respect to Williams' employees during the period of such
employment or which otherwise accrue under any employee plan or benefit
arrangement, including without limitation, all obligations of Williams for
salaries, vacation, and holiday pay, severance payments, bonuses and other forms
of compensation, benefits or other payments, as well as all costs and expenses
with respect to any termination by Williams of its employees who performed
Services under this Agreement.

9.    INSURANCE:

      (a)   Williams shall carry or cause to be carried and maintained in force
throughout the entire term of this Agreement insurance coverage as described in
paragraphs (i) through (iii) below.

            (i)   Workers' Compensation insurance complying with the laws of the
                  state or states of the United States of America having
                  jurisdiction over each Williams employee and Employers'
                  Liability insurance with limits of $1,000,000 per each
                  accident, $1,000,000 disease per each employee and a
                  $1,000,000 disease policy limit.

            (ii)  Commercial General Liability insurance on an occurrence basis
                  with a combined single limit of $1,000,000 per each occurrence
                  for bodily injury and property damage.

            (iii) Automobile Liability insurance with a combined single limit of
                  $1,000,000 per each occurrence for bodily injury and property

                                       10
<PAGE>

                  damage, which insurance shall include coverage for all owned,
                  non-owned and hired vehicles.

      (b)   In each of the above-described policies, Williams agrees to waive
and shall require its insurers to waive any rights of subrogation or recovery
they may have against Company to the extent of Williams' obligations set forth
in Section 8 above.

      (c)   Under the policies described in (a)(ii) and (a)(iii) above, and to
the extent of the indemnities contained within this Agreement, Company shall be
named as additional insured as respects Williams' operations and as respects any
Services performed under this Agreement.

10.   CONFIDENTIALITY:

      (a)   Confidential Information.

            (i)   "Confidential Information" shall mean all information of a
                  Party of a proprietary or confidential nature that any Party
                  (the "Disclosing Party") furnishes to the other Party (the
                  "Receiving Party"), whether such information is written or
                  oral and in whatever form or medium it is provided.

            (ii)  Information shall not be deemed to be Confidential Information
                  and the provisions of this Section 10 shall not apply to: (A)
                  information which is or becomes generally available to the
                  public other than as a result of a disclosure in violation of
                  this Agreement; (B) information which was already known to the
                  Receiving Party or its Representatives prior to being
                  furnished pursuant to this Agreement; (C) information which
                  becomes available to the Receiving Party or its
                  Representatives on a non-confidential basis from a source
                  other than a Disclosing Party or its Representatives if such
                  Receiving Party or its Representatives had no reason to
                  believe that such source was subject to any prohibition
                  against transmitting the information to such Receiving Party
                  or its Representatives; and (D) information independently
                  developed by the Receiving Party or its Representatives.

      (b)   Confidentiality Obligations.

            (i)   Each Receiving Party shall not disclose the Confidential
                  Information to third parties or any of such Receiving Party's
                  Affiliates, or to any other Person without the consent of the
                  other Party other than to: (A) such Receiving Party's
                  Representatives, (B) a financial advisor, legal counsel,
                  consultant, contractor or subcontractor that has a legitimate
                  business need to be informed; (C) a Governmental Authority, or
                  (D) a Person to which the Disclosing Party or its Affiliate is
                  required by Applicable Laws or the applicable rules of any
                  stock exchange or similar organization to disclose the
                  Confidential Information.

                                       11
<PAGE>

            (ii)  In case of a disclosure of Confidential Information to a third
                  party permitted by paragraph (b)(i)(A) and (b)(i)(B), the
                  Receiving Party disclosing such information shall ensure that
                  such third party has signed an agreement to protect the
                  Confidential Information from further disclosure to the same
                  extent as the Parties are obligated under this Section 10.

      (c)   Notice Preceding Compelled Disclosure. If a Party or any
Representative of such Party reasonably believes it is required by Applicable
Law or the applicable rules of any stock exchange or similar organization
(whether requested by oral question, interrogatory, request for information or
documents, subpoena, civil investigative demand, similar law or legal process or
otherwise) to disclose any Confidential Information, such Party shall promptly
notify the other Party of such requirement as soon as it becomes aware of it.

      (d)   Return of Information. All written Confidential Information, except
for that portion of the Confidential Information that may be found in analyses,
compilations, studies or other documents prepared by the Disclosing Party or its
Representatives, shall be promptly returned upon written request of the
Disclosing Party or, at the election of the Receiving Party, destroyed, and no
copies shall be retained by such Receiving Party or its Representatives. That
portion of the Confidential Information that may be found in analyses,
compilations, studies or other documents and Confidential Information not so
requested or returned will be held and kept subject to the terms of this
Agreement, or destroyed.

      (e)   Specific Performance. The Parties recognize and agree that if any of
the provisions of this Section 10 are not performed in accordance with their
specific terms or are otherwise breached, immediate and irreparable harm or
injury would be caused for which money damages would not be an adequate remedy.
Accordingly, each Party agrees that, in addition to other remedies, the Parties
shall be entitled to an injunction restraining any violation or threatened
violation of the provisions of this Section 10 or to specific performance or
other equitable relief to enforce the provisions of this Section 10. In the
event that any action should be brought in equity to enforce the provisions of
this Section 10, no Party will allege, and each Party hereby waives the defense,
that there is adequate remedy at law.

11.   LIMITATION OF LIABILITY:

      NEITHER COMPANY NOR WILLIAMS SHALL BE LIABLE TO THE OTHER OR ITS EMPLOYEES
IN ANY EVENT OR FOR ANY REASON FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOSS OF PROFITS, LOSS OF DATA, LOSS OF REVENUE OR LOSS
OF GOODWILL ARISING OUT OF OR RELATED TO THIS AGREEMENT.

12.   NOTICES:

      Except as specifically provided otherwise herein, all notices required or
permitted under this Agreement shall be in writing and shall be deemed given
upon actual receipt. Such notices may be given by: (a) personal delivery; (b)
facsimile; or (c) certified or registered mail for which postage is prepaid and
a return receipt is requested. Any such notices shall be sent to the

                                       12
<PAGE>

respective addresses specified below. Any Party's address may be changed by
notice given to the other Party in accordance with this provision.

      If to Company:

            APCO Argentina Inc.
            One Williams Center
            Mail Drop 26-4
            Tulsa, Oklahoma  74172
            Attention:  Thomas  Bueno
                      President  COO and CAO
            Phone No.:  (918) 573-2164
            Facsimile No.:  (918) 573-1324

            With a copy to:

            APCO Argentina Inc.
            One Williams Center
            Suite 4100
            Tulsa, Oklahoma  74172
            Attention:  William Gault
                      Assistant Secretary
            Phone No.:  (918) 573-0454
            Facsimile No.:  (918) 573-4503

      If to Williams:

            The Williams Companies, Inc.
            One Williams Center
            Suite 2600
            Tulsa, Oklahoma 74172
            Attention:  Bryan K. Guderian
            Phone No.:  (918) 573-4680
            Facsimile No.:  (918) 573-1324

            With a copy to:

            The Williams Companies, Inc.
            One Williams Center
            Suite 4100
            Tulsa, Oklahoma  74172
            Attention:  James N. Cundiff , Senior Attorney
            Phone No.:  (918) 573-5459
            Facsimile No.:  (918) 573-4503

                                       13
<PAGE>

13.   CERTAIN PRACTICES:

      (a)   Each of the Parties represents, warrants and covenants that neither
it nor its Affiliates, officers, directors, employees or agents has made or
shall make, any payments, loans, gifts, or promises or offers of payments,
loans, gifts or anything of value, directly or indirectly to or for the use or
benefit in whole or in part of, any foreign official or employee of any
Governmental Authority or state-owned enterprise, or to or for the use of any
political party or official thereof, or candidate for political office, or to
any other Person if any such party knows, should have known or has or had reason
to suspect, that any part of such payment, loan, gift or promise or offer (i) is
for purposes of corruptly (A) influencing any act or decision of the recipient
in its official capacity or (B) inducing such recipient to (1) do or omit to do
any act in violation of its lawful duty or (2) use its influence to affect or
influence any act or decision of the government of any foreign country or
instrumentality thereof, or (3) secure any improper advantage, in each case, in
order to assist the parties in obtaining or retaining business for or with, or
directing business to, any person.

      (b)   Each Party agrees to advise all of its and its Affiliates' employees
and Representatives engaged in implementing this Agreement regarding these
practices and Applicable Law. Each Party agrees to take appropriate steps to
ensure that it and its Affiliates and their respective Representatives comply
with these practices and Applicable Laws. Each Party shall respond promptly, and
in reasonable detail, to any notice from any other Parties or their auditors
pertaining to the above stated warranty and representation and shall furnish
documentary support for such response upon request from such other Party.

      (c)   In carrying out the terms and provisions of this Agreement, each
Party agrees: (i) to ensure that all billings and reports rendered to the other
Party under the terms of this Agreement will, to the best of its knowledge and
belief, properly reflect the facts about all activities and transactions related
to this Agreement, and (ii) to promptly notify the other Party upon discovery of
any instance in which it fails to comply with this Section 13, or if it has
reason to believe that any billings or reports covered by (i) above are no
longer accurate and complete in any material respect.

      (d)   Each Party, in performing its obligations under this Agreement,
shall establish and maintain appropriate business standards, procedures and
controls, including those necessary to avoid any real or apparent impropriety or
adverse impact on the interests of the other Party. Each Party shall review with
reasonable frequency during the term of this Agreement such business standards
and procedures including those related to the activities of its employees and
agents in their relations with the other Party's employees, agents and
representatives, and other third parties.

14.   NON-WAIVER:

      (a)   No waiver by either Party hereto of any breach or default of any
provision hereunder shall be deemed a waiver of any other provision hereof or a
waiver of any subsequent breach or default.

      (b)   Except as specifically provided otherwise herein, no failure or
delay on the part of either Party to exercise any right, power, or privilege
under this Agreement and no course of

                                       14
<PAGE>

dealing between the Parties shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein expressly provided are
not exclusive of any rights or remedies which either Party would otherwise have
pursuant to law or equity unless specifically provided to the contrary herein.
No notice to or demand on one Party in any case shall entitle the other Party to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of a Party to any other or further action in
any circumstances without notice or demand.

15.   ASSIGNMENT:

      Neither Party shall assign this Agreement or any of its rights or claims
hereunder without the prior written consent of the other, except to any entity
which is an Affiliate of a Party or which succeeds to all or substantially all
of a Party's assets by merger, consolidation, reorganization or purchase.
Subject to the foregoing, this Agreement shall inure to the benefit of and bind
the successors and assigns of the Parties.

16.   NON-EXCLUSIVE AGREEMENT:

      Nothing herein contained shall be construed to prevent Company from
engaging other contractors or other persons during the term of this Agreement to
perform the Services.

17.   NO THIRD PARTY BENEFICIARY

      Nothing contained in this Agreement shall be considered or construed as
conferring any right or benefit on a Person not a Party, and neither this
Agreement nor the performance hereunder shall be deemed to have created a joint
venture or partnership between the Parties.

18.   HEADINGS:

      The headings preceding the text of the sections and subsections hereof are
inserted solely for convenience of reference and shall not constitute a part of
this Agreement, nor shall they affect its meaning, construction or effect.

19.   ENTIRE AGREEMENT:

      This Agreement is the entire agreement between the Parties with respect to
the subject matter hereof. This Agreement supersedes any and all prior
negotiations, promises, understandings, agreements, arrangements,
representations, warranties, and/or contracts of any form or nature whatsoever,
whether oral or in writing, and whether explicit or implicit, which may have
been entered into prior to the execution hereof between the Parties as to the
subject matter hereof.

20.   SEVERABILITY:

      If, for any reason, any provision of this Agreement is unenforceable, the
remaining provisions hereof shall nevertheless be carried into effect.

                                       15
<PAGE>

21.   AMENDMENTS:

      No amendment, supplement or waiver of this Agreement shall be valid unless
evidenced in writing and signed by a duly authorized representative of each
Party.

22.   GOVERNING LAW:

      THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

23.   DISPUTE RESOLUTION:

      (a)   Negotiations; Arbitration.

            (i)   Any dispute, controversy or claim arising out of or relating
                  to this Agreement, or the performance, breach, termination or
                  invalidity hereof shall be settled by arbitration in
                  accordance with the American Arbitration Rules in effect on
                  the date hereof. The arbitration shall be the sole and
                  exclusive forum for resolution of the dispute, controversy or
                  claim, and the award shall be final and binding. Judgment
                  thereon may be entered by any court having jurisdiction. The
                  number of arbitrators shall be three, each of whom shall be
                  disinterested in the dispute, controversy or claim and shall
                  have no connection with either Party. One arbitrator will be
                  selected by each Party and one by mutual agreement of the
                  first two or, if they cannot agree, by the appointing
                  authority designated in accordance with the American
                  Arbitration Rules. The Parties shall have thirty (30) days to
                  each appoint an arbitrator. If, after such 30-day period, the
                  Parties have not made such appointment, the appointing
                  authority shall select all three arbitrators. The Parties and
                  the appointing authority may appoint from among the nationals
                  of any country, whether or not a Party is a national of that
                  country. The place of arbitration shall be The City of Tulsa,
                  Oklahoma. The arbitration shall be conducted in the English
                  language and any foreign-language documents presented at such
                  arbitration shall be accompanied by an English translation
                  thereof. The arbitrators shall apply the laws of the State of
                  Oklahoma without regard to the principles of conflicts of
                  laws.

            (ii)  In the event that there is an existing arbitration pursuant to
                  paragraph (i) above, and that the same or a similar dispute,
                  controversy or claim should arise between Persons other than
                  the parties to the existing arbitration, the arbitrators shall
                  have the power to allow the other Persons to be joined in the
                  existing arbitration with their express consent, and to make a
                  single final award determining all disputes, controversies or
                  claims among them.

            (iii) Each Party hereby submits to the jurisdiction of the United
                  States District Court for the Northern District of Oklahoma in
                  any action,

                                       16
<PAGE>

                  suit or proceeding with respect to the enforcement of the
                  arbitration provisions of this Agreement and the jurisdiction
                  of such court with respect to the enforcement of any award
                  thereunder.

            (iv)  The compensation and expenses of the arbitrators shall be
                  borne equally by the Parties. Each Party shall bear its own
                  costs, expenses and attorneys' fees, provided that, if court
                  proceedings to stay litigation or compel arbitration are
                  necessary, the Party who unsuccessfully opposes such
                  proceedings shall pay all reasonable associated costs,
                  expenses, and attorneys' fees in connection with such court
                  proceedings.

      (b)   Waiver of Immunity. Each Party hereby irrevocably consents to and
waives any objection which it may now or hereafter have to the laying of venue
of any proceeding relating to enforcement of the arbitration provisions, or any
award thereunder brought in the courts specified, and further irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of any such proceeding in such courts.

      (c)   Judgment Currency. The obligation of a Party in respect of any sum
due from it to another Party expressed in United States Dollars, notwithstanding
any judgment in a currency other than United States Dollars, shall not be
discharged until the first Business Day following receipt by such other Party of
any sum adjudged to be so due in such other currency on which (and only to the
extent that) such other Party may in accordance with normal banking procedures
purchase United States Dollars with such other currency. If the Dollars so
purchased are less than the sum originally due to such other Party hereunder,
the obligated Party agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify such other Party against such Dollar shortfall. If
the United States Dollars so purchased are greater than the sum originally due
to such other Party hereunder, such other Party agrees to the fullest extent
permitted by law to pay to the obligated Party an amount equal to the excess of
the Dollars so purchased over the sum originally due to such other Party
hereunder

24.   MUTUAL COOPERATION:

      Company and Williams will provide each other with such assistance as may
reasonably be required by any of them in connection with the performance of all
obligations under this Agreement.

25.   FORCE MAJEURE:

      Neither party hereto shall be liable in any manner for failure or delay of
performance of all or part of this Agreement (other than payment obligations),
directly or indirectly, owing to any acts of God, governmental orders or
restrictions, strikes or other labor disturbances, riots, embargoes, computer
equipment failures, power failures, telecommunication line failures,
revolutions, wars (declared or undeclared), sabotage, fires, floods, or any
other causes or circumstances beyond the control of the parties. The party,
however, experiencing such delay or

                                       17
<PAGE>

failure shall use reasonable efforts to give prompt notice to the other party
and shall use reasonable efforts to remove the causes or circumstances of
nonperformance with dispatch and or a consistent basis.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

APCO ARGENTINA INC.                          THE WILLIAMS COMPANIES, INC.

/s/  Thomas Bueno                            /s/  Donald R. Chappel
-----------------------------------          ----------------------------------
By                                           By

President & Chief Operating Officer          Sr.Vice-President & CFO
Title                                        Title

                                       18


</TEXT>
</DOCUMENT>
