THIRD AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT

Far East Energy Corporation (the " Company ") and Thomas Williams (" Optionee ") hereby agree to amend and restate the amended and restated stock option agreement previously entered into between the Company and Optionee on December 27, 2007, a copy of which is attached hereto, (the " 2007 Option Agreement ").  This amendment and restatement is made solely with respect to those Options which vested on or after January 1, 2005 and the terms of that certain Second Amended and Restated Nonqualified Stock Option Agreement entered into between the Company and the Optionee shall be in effect with respect to all Options that vested on or before December 31, 2004.

THIS THIRD AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT (this " Agreement ") is made and entered into as of this 14 ^th day of January, 2009 by and between Far East Energy Corporation, a Nevada corporation (the " Company "), and Thomas Williams (" Optionee ").

WHEREAS, the Company and Optionee previously entered into a Stock Option Agreement (the " 2004 Option Agreement ") dated as of February 24, 2004 setting forth the grant of options to purchase 400,000 shares of common stock of the Company, par value $0.001 per share (the " Common Stock ");

WHEREAS, the Company and Optionee entered into an Amended and Restated Stock Option Agreement (the " 2007 Option Agreement ") dated December 27, 2007, solely with respect to 300,000 of the Option Shares (the " Affected Options "), which vested on or after January 1, 2005, in order to bring such options into compliance with Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the " Code ");

WHEREAS, the remaining 100,000 of the Option Shares remained subject to the 2004 Option Agreement;

WHEREAS, the Company and Optionee desire to extend expiration of the Exercise Period for the Affected Options under the 2007 Option Agreement from February 24, 2009 to February 24, 2014; and

WHEREAS, by executing this Agreement, the Company and Optionee desire to amend, replace and supersede the 2007 Option Agreement.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, it is agreed as follows:

(a)            Number of Option Shares and Option Prices .  The Company granted the Affected Options to Optionee under the 2007 Option Agreement as non qualified stock options, to purchase shares of the Company's Common Stock (the " Option Shares "), with an exercise price of $2.09 per share (" Option Price ").

(b)            Exercise Period .  The Affected Options shall be exercisable, in whole or in part, subject to the vesting schedule and other terms set forth in this Agreement, until February 24, 2014 (the " Exercise Period ").

(c)            Vesting Schedule .  As of the date of this Agreement, the Affected Options are fully (100%) vested.

2.              Manner of Exercise and Terms of Payment .  The Affected Options may be exercised in whole or in part, subject to the limitations set forth in this Agreement, upon delivery to the Company of timely written notice of exercise, accompanied by full payment of the Option Price of such Affected Options for the Option Shares with respect to which such Affected Options are exercised.  The Option Price may be paid by delivering a certified check or wire transfer of immediately available funds to the order of the Company.  The person entitled to the shares so purchased shall be treated for all purposes as the holder of such shares as of the close of business on the date of exercise and certificates for the shares of stock so purchased shall be delivered to the person so entitled within a reasonable time, not exceeding thirty (30) days, after such exercise.

3.              Rights as Stockholder .  Optionee or a permitted transferee of the Affected Options shall have no rights as a stockholder of the Company with respect to any shares of Common Stock subject to such Affected Options prior to his or her exercise of such Affected Options.

4.              Adjustment of Purchase Price and Number of Shares .  The number and kind of securities purchasable upon the exercise of these Affected Options and the Option Prices for such Affected Options shall be subject to adjustment from time to time, as provided in Schedule A attached hereto.

5.              Investment Representation .  Optionee represents and warrants to the Company that Optionee is acquiring these Affected Options and the Option Shares for Optionee's own account for the purpose of investment and not with a view toward resale or other distribution thereof in violation of the Securities Act of 1933, as amended (" 1933 Act ").  Optionee acknowledges that the effect of the representations and warranties is that the economic risk of any investment in the Affected Options and Option Shares must be borne by the Optionee for an indefinite period of time.  This representation and warranty shall be deemed to be a continuing representation and warranty and shall be in full force and effect upon such exercise of the Affected Options granted hereby.

6.              Exercisability .  The Affected Options shall be exercisable only by Optionee, subject to the terms herein, during his lifetime or by his assigns, heirs, executors or administrators, as the case may be.  The Affected Options granted hereunder and the Option Shares underlying the Affected Options may only be assigned in compliance with Section 7 herein and applicable securities laws.

7.              Non-Transferability .  Optionee recognizes that the Option Shares received pursuant to this Agreement will be subject to various restrictions on sale and/or transfer, including but not limited to, the restrictions imposed by Rule 144 under the 1933 Act.  Notwithstanding any rights that Optionee may possess under the 1933 Act and any applicable state securities laws, Optionee hereby agrees that he or she shall not be entitled, and the Company shall be under no obligation, to remove the resale restriction from these Affected Options.  Optionee additionally agrees that the Company is under no obligation to remove the resale restriction from any number of Option Shares exceeding ten percent (10%) of the average weekly trading volume in the Company's securities during the ninety (90) days preceding the intended sale.

(a)            Amendment and Restatement; Termination of Other Agreements .  This Agreement constitutes an amendment, modification and restatement of the 2007 Option Agreement and sets forth the entire understanding of the parties hereto with respect to the Affected Options, and supersedes the 2007 Option Agreement and all other prior arrangements or und