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                                                                    EXHIBIT 10.4

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement ("Employment Agreement"),
effective February 20, 2003 is between Harvest Natural Resources, Inc.
(hereinafter sometimes called the "Company") and Kurt A. Nelson, a resident of
Texas, ("Employee"), the terms and conditions of which are as follows:

         WHEREAS, the Company and Employee entered into an employment agreement
on November 12, 2001;

         WHEREAS, since November 12, 2001, the Company has experienced
significant changes in its operations and financial condition, including,
without limitation, the relocation of its corporate headquarters, changes in its
management and the effects of the sale of its interest in Arctic Gas Company;

         WHEREAS, the Company and Employee entered into a new employment
agreement effective August 1, 2002 (the "Original Employment Agreement") to
provide Employee with the additional benefits (including without limitation
additional severance benefits and extension of the term of his employment)
described in the Original Employment Agreement;

         WHEREAS, the Company has established (or will establish) new
"performance contract" guidelines applicable to Employee to determine the amount
of his bonuses;

         WHEREAS, the Company wishes to provide Employee with certain additional
benefits in the event of a Change of Control in addition to the benefits
described in the Original Employment Agreement;

         WHEREAS, the Company and Employee acknowledge that if Employee's
employment with the Company terminates for any reason, Employee may inevitably
disclose trade secrets of, and other proprietary and confidential information
about, the Company's business, operations and prospects;

         WHEREAS, Employee wishes to enter into this Amended and Restated
Employment Agreement to receive the benefit of the provisions contained in it;
and

         WHEREAS, the Company and Employee wish to amend the Original Employment
Agreement as hereinafter set forth and, for convenience of reference, restate
the Original Employment Agreement except as amended hereby.

         NOW THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which are acknowledged, the Company and Employee agree as follows:

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1.       TERM OF EMPLOYMENT.

Subject to the terms and conditions set forth in this Employment Agreement, the
Company agrees to employ Employee and Employee agrees to be employed by the
Company for the term which starts on July 10, 2000 and ends on May 31, 2004. On
May 31, 2004, and on each anniversary thereafter (an "Extension Date") the term
of this Employment Agreement shall automatically be extended for a one-year
period unless and until either party has given written notice to the other at
least one year before any Extension Date that it or he wishes to terminate this
Agreement as of such Extension Date.

2.       POSITION AND DUTIES.

         (a)      Position. Subject to annual election by the Company's Board of
                  Directors, Employee's position shall be Vice
                  President-Controller of Harvest Natural Resources, Inc.

         (b)      Duties and Responsibilities. Employee's duties and
                  responsibilities initially shall be those normally associated
                  with Employee's position, plus any additional duties and
                  responsibilities the Company initially may assign orally or in
                  writing to Employee. Employee shall undertake to perform all
                  Employee's duties and responsibilities for the Company and its
                  affiliates in good faith and on a full-time basis and shall at
                  all times act in the course of Employee's employment under
                  this Employment Agreement in the best interest of the Company
                  and Company's affiliates.

         (c)      The Company's Right to Change Position or Duties. Subject to
                  the terms of this Agreement, the Company shall have the right,
                  to the extent the Company from time to time reasonably deems
                  necessary or appropriate, to change Employee's position, or to
                  expand or reduce Employee's duties and responsibilities.

3.       COMPENSATION AND BENEFITS.

         (a)      Base Salary. During the term of this Employment Agreement,
                  Employee' yearly base salary shall be not less than $135,000
                  US (paid bi-weekly), which yearly base salary shall be payable
                  from the Company's Houston offices to Employee in accordance
                  with the Company's standard payroll practices and policies,
                  and shall be subject to such withholdings as required by U.S.
                  Federal law and the State of Texas, or as otherwise
                  permissible under such practices or policies. Base salary for
                  any partial period of employment shall be prorated. The
                  Company shall annually review Employee's base salary.

         (b)      Annual Bonus. Employee shall be eligible for such annual bonus
                  as may be determined by the Human Resources Committee of the
                  Company's Board of Directors and the Company's Board of
                  Directors, which bonus shall be based on Employee's
                  performance under the performance contract guidelines adopted
                  by the Company, the Company's overall performance and any
                  special circumstances the Human Resources Committee and the
                  Board deem appropriate. Any such bonus is to be determined at
                  the discretion of the Company's Human Resources

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                  Committee and the Board of Directors. Employee acknowledges
                  that the Company is not obligated to award him any bonus in
                  any year.

         (c)      Employee Benefit Plans. Employee shall be eligible to
                  participate in the employee benefit plans, programs and
                  policies maintained by the Company for similarly situated
                  employees in accordance with the terms and conditions to
                  participate in such plans, programs, and policies as in effect
                  from time to time.

         (d)      Stock Options. Previously Employee has been granted certain
                  stock options pursuant to the Company's stock option plans.
                  This Novation neither increases nor decreases the number of
                  stock options previously granted, nor does it change the terms
                  under which they were granted.

         (e)      Vacation - Employee shall be entitled to four (4) weeks annual
                  vacation.

         (f)      Expenses. The Company shall pay or reimburse Employee for all
                  reasonable expenses actually incurred or paid by the Employee
                  in the performance of his services hereunder upon the
                  presentation of expense statements or vouchers or such other
                  supporting information as the Company may reasonably require
                  of Employee.

         (g)      Office Facilities and Services. Employee shall be accorded
                  such benefits and support services, including without
                  limitation, office facilities, administrative assistant,
                  communications, and such other perquisites as would normally
                  be accorded by a corporation of the size and at the stage of
                  development in the industry in which the Company is, to its
                  Vice President-Controller.

         (h)      Indemnification. Employee shall be entitled to the benefit of
                  the indemnification provisions contained in the bylaws of the
                  Company as the same may be amended.

4.       TERMINATION OF EMPLOYMENT.

         (a)      Termination By The Company Other Than For Cause Or Disability,
                  Or By Employee For Good Reason.

                  (1)      The Company shall have the right to terminate
                           Employee's employment other than for Cause at any
                           time, and Employee shall have the right to quit or
                           resign for Good Reason at any time.

                  (2)      If (a) the Company or its successors terminate
                           Employee's employment with the Company other than (i)
                           for Cause or (ii) pursuant to a notice of termination
                           delivered in accordance with Section 1 of this
                           Employment Agreement or (b) Employee resigns for Good
                           Reason, then (x) the Company shall pay to Employee
                           within thirty (30) days after the termination or
                           resignation an amount equal to twenty-four months of
                           Employee's base salary as in effect immediately
                           before Employee's termination of employment or
                           resignation and (y) any outstanding stock option(s)
                           granted by the Company to Employee shall become fully
                           vested

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                           and shall remain exercisable for twelve (12) months
                           following Employee's termination pursuant to this
                           section 4(a)(2), or the tenth anniversary of the
                           date(s) of the grant(s) specified in the relevant
                           option agreement(s), whichever is the shorter period.

                  (3)      If the termination or resignation described in
                           Section 4(a)(2) occurs within 730 days after or 240
                           days before a Change of Control, then, in addition to
                           the benefits accruing to Employee under Section
                           4(a)(2), (x) the Company shall pay to Employee,
                           within thirty (30) days after the termination or
                           resignation, the Bonus Amount, (y) for a period of
                           twenty-four months following the termination or
                           resignation the Company shall continue to provide
                           Employee and Employee's dependents with the same
                           level of life, disability, accident, dental and
                           health insurance benefits Employee and Employee's
                           dependents were receiving immediately before
                           Employee's termination or resignation, and (z) the
                           company will pay Employee, within thirty (30) days
                           after the termination or resignation, an additional
                           amount such that the net amount retained by Employee
                           pursuant to the benefits described in Section 4(a)(2)
                           and clause (x) of this Section 4(a)(3) after any
                           federal, state, local and other taxes (including
                           without limitation any excise tax imposed under
                           Section 4999 of the Internal Revenue Code of 1986, as
                           amended from time to time) shall be equal to the
                           amount that Employee would have received pursuant to
                           those benefits before payment of any such taxes.

                  (4)      If the Company or its successors terminate Employee's
                           employment with the Company pursuant to a notice of
                           termination delivered in accordance with Section 1 of
                           this Employment Agreement within 730 days after or
                           240 days before a Change of Control, then (w) the
                           Company shall pay to Employee, within thirty (30)
                           days after the termination, an amount equal to
                           twenty-four months of Employee's base salary as in
                           effect immediately before Employee's termination of
                           employment and the Bonus Amount, (x) any outstanding
                           stock option(s) granted by the Company to Employee
                           shall become fully vested and shall remain
                           exercisable for twelve (12) months following
                           Employee's termination pursuant to this section
                           4(a)(4), or the tenth anniversary of the date(s) of
                           the grant(s) specified in the relevant option
                           agreement(s), whichever is the shorter period, (y)
                           for a period of twenty-four months following
                           Employee's termination the Company shall continue to
                           provide Employee and Employee's dependents with the
                           same level of life, disability, accident, dental and
                           health insurance benefits Employee and Employee's
                           dependents were receiving immediately before
                           Employee's termination of employment, and (z) the
                           Company shall pay to Employee, within thirty (30)
                           days after the termination, an additional amount such
                           that the net amount retained by Employee pursuant to
                           the benefits described in clauses (w) and (x) of this
                           section 4(a)(4) after any federal, state, local and
                           other taxes (including without limitation any excise
                           tax imposed under Section 4999 of the Internal
                           Revenue Code of 1986, as amended from time to time)
                           shall be

                                      -4-

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                           equal to the amount that Employee would have received
                           pursuant to such benefits before payment of any such
                           taxes.

         (b)      Termination By The Company For Cause, Or By Employee Other
                  Than For Good Reason.

                  (1)      The Company shall have the right to terminate
                           Employee's employment at any time for Cause, and
                           Employee shall have the right to quit or resign at
                           any time other than for Good Reason.

                  (2)      If the Company terminates Employee's employment for
                           Cause or pursuant to a notice of termination
                           delivered in accordance with Section 1 of this
                           Employment Agreement that is not delivered within 730
                           days after or 240 days before a Change of Control, or
                           Employee quits or resigns other than for Good Reason,
                           the Company's only obligation to Employee under this
                           Employment Agreement shall be to pay Employee's base
                           salary (including accrued vacation) actually earned
                           up to the date Employee's employment terminates.

         (c)      Termination for Disability or Death.

                  (1)      The Company shall have the right to terminate
                           Employee's employment on or after the date Employee
                           has a Disability, and Employee's employment shall
                           terminate at Employee's death.

                  (2)      If Employee's employment terminates under this
                           section 4(c), the Company shall pay Employee or, if
                           Employee dies, Employee's estate the amount provided
                           for under section 4(a)(2) and, in addition, Employee
                           or, if Employee dies, Employee's estate shall be
                           entitled to the provisions of section 4(a)(2) with
                           respect to Employee's stock options.

         (d)      Bonus Amount. The term "Bonus Amount" means twice the amount
                  of the higher of (i) the highest annual bonus earned by
                  Employee for the last three fiscal years ending prior to the
                  termination date, excluding any bonus payment related to the
                  sale of Arctic Gas, and (ii) (A) the target bonus percentage
                  as established by the Company's Board of Directors for the
                  fiscal year in which the Change of Control occurs, multiplied
                  by (B) Employee's annual base salary for that fiscal year
                  (whether or not paid or accrued for the full year at the time
                  of Employee's termination or resignation.

         (e)      Cause. The term "Cause" shall mean (1) Employee's final
                  conviction of a felony by a trial court, (2) Employee's
                  material breach of this Employment Agreement or (3) Employee's
                  material violation of any policy or code of conduct of the
                  Company, all as reasonably determined by the Company.

         (f)      Good Reason. The term "Good Reason" shall mean any of the
                  following, unless Employee shall have given his express
                  written consent thereto: (1) a material breach of the terms
                  and conditions of this Employment Agreement by the

                                      -5-

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                  Company which remains uncorrected for thirty (30) days after
                  Employee delivers written notice of such breach to the
                  Company; (2) failure to maintain or reelect Employee to the
                  position described in section 2(a); (3) a significant
                  reduction of Employee's duties, position or responsibilities
                  relative to the Employee's duties, position or
                  responsibilities in effect immediately prior to such
                  reduction, unless Employee is provided with comparable duties
                  and responsibilities; (4) a substantial reduction, without
                  good business reasons, of the facilities and perquisites
                  available to Employee immediately prior to such reduction; (5)
                  a reduction by the Company of Employee's monthly base salary
                  in effect immediately prior to such reduction; (6) the Company
                  fails to continue Employee's participation in any bonus,
                  incentive, profit sharing, performance, savings, retirement or
                  pension policy, plan, program or arrangement on substantially
                  the same or better basis, both in terms of the amount of
                  benefits provided to Employee and the level of Employee's
                  participation, relative to other participants, (7) the
                  relocation of the Employee more than fifty (50) miles from the
                  location of the Company's principal office on the date hereof;
                  or (7) the failure of the Company to obtain a satisfactory
                  agreement from a successor to assume and agree to perform this
                  Agreement as contemplated by section 6(d).

         (g)      Disability. Employee shall have a "disability" under this
                  Employment Agreement on the date the Company receives written
                  notice from a physician selected by the Company that Employee
                  no longer can perform one or more of the essential functions
                  of Employee's job even with reasonable accommodation.

         (h)      Change of Control. A "Change of Control" means the occurrence
                  of any of the following:

                  (1)      the acquisition by any individual, entity or group
                           (within the meaning of Section 13(d)(3) or 14(d)(2)
                           of the Securities Exchange Act of 1934) (a "Covered
                           Person") of beneficial ownership (within the meaning
                           of rule 13d-3 promulgated under the Securities
                           Exchange Act of 1934) of 50 percent or more of the
                           combined voting power of the then outstanding voting
                           securities of the Company entitled to vote generally
                           in the election of directors (the "Voting
                           Securities"); provided, however, that for purposes of
                           this subsection (1) of this Section 4(g) the
                           following acquisitions shall not constitute a Change
                           of Control: (i) any acquisition by the Company, (ii)
                           any acquisition by any employee benefit plan (or
                           related trust) sponsored or maintained by the Company
                           or any entity controlled by the Company, or (iii) any
                           acquisition by any entity pursuant to a transaction
                           which complied with clauses (i), (ii) and (iii) of
                           subsection (3) of this Section 4(g); or

                  (2)      individuals who, as of the date of this Employment
                           Agreement, constitute the board of directors of the
                           Company (the "Incumbent Board") cease for any reason
                           to constitute at least a majority of the board of
                           directors of the Company; provided, however, that any
                           individual becoming a director after the date of this
                           Employment Agreement whose election, or

                                      -6-

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                           nomination for election by the Company's
                           stockholders, was approved by a vote of at least a
                           majority of the directors then comprising the
                           Incumbent Board shall be considered as though such
                           individual were a member of the Incumbent Board, but
                           excluding, for this purpose, any such individual
                           whose initial assumption of office occurs as a result
                           of an actual or threatened election contest with
                           respect to the election or removal of directors; or

                  (3)      the consummation of a reorganization, merger or
                           consolidation or sale of the Company, or a
                           disposition of at least 50 percent of the assets of
                           the Company including goodwill (a "Business
                           Combination"), provided, however, that for purposes
                           of this subsection (3), a Business Combination will
                           not constitute a change of control if the following
                           three requirements are satisfied:

                           following such Business Combination, (i) all or
                           substantially all of the individuals and entities who
                           were the beneficial owners, respectively, of the
                           Company's voting securities immediately prior to such
                           Business Combination beneficially own, directly or
                           indirectly, more than 50 percent of the ownership
                           interests of the entity resulting from such Business
                           Combination (including, without limitation, an entity
                           which as a result of such transaction owns the
                           Company or all or substantially all of the Company's
                           assets either directly or through one or more
                           subsidiaries or other affiliated entities) in
                           substantially the same proportions as their ownership
                           immediately prior to such Business Combination, (ii)
                           no Covered Person (excluding any employee benefit
                           plan (or related trust) of the Company or such entity
                           resulting from such Business Combination)
                           beneficially owns, directly or indirectly, 50 percent
                           or more of, respectively, the ownership interests in
                           the entity resulting from such Business Combination,
                           except to the extent that such ownership existed
                           prior to the Business Combination, and (iii) at least
                           a majority of the members of the board of directors
                           of the entity resulting from such Business
                           Combination were members of the Incumbent Board at
                           the time of the execution of the initial agreement,
                           or of the action of the board of directors of the
                           Company, providing for such Business Combination. For
                           this purpose any individual who becomes a director
                           after the date of this Employment Agreement, and
                           whose election or nomination for election by the
                           Company's stockholders, was approved by a vote of at
                           least a majority of the directors then comprising the
                           Incumbent Board shall be considered as though such
                           individual were a member of the Incumbent Board, but
                           excluding, for this purpose, any such individual
                           whose initial assumption of office occurs as a result
                           of an actual or threatened election contest with
                           respect to the election or removal of directors.

         (i)      Benefits. Employee shall have the right to receive any
                  benefits payable under the Company's employee benefits plans,
                  programs and policies (other than the Company's change of
                  Control Severance Plan (the "Change of Control Plan"))

                                      -7-

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                  which Employee otherwise has a non-forfeitable right to
                  receive under the terms of such plans, programs and policies
                  (other than severance benefits) independent of Employee's
                  rights under this Employment Agreement upon a termination of
                  employment in addition to any other benefits under this
                  section 4 without regard to the reason for such termination of
                  employment. Employee acknowledges and agrees that until the
                  termination of this Agreement, he shall not be entitled o
                  participate in the Change of Control Plan.

         (j)      Notice of Termination. Any termination by the Company or by
                  Employee for any reason shall be communicated by a notice of
                  termination to the other party hereto and shall be given in
                  accordance with section 6(a). Such notice shall state the
                  specific termination provision in this Agreement relied upon,
                  and shall set forth in reasonable detail the facts and
                  circumstances claimed to provide a basis for termination under
                  the provision so indicated.

         (k)      No Mitigation. Employee shall not be required to mitigate the
                  amount of any severance payment contemplated by this
                  Agreement, nor shall any such payment be reduced by any
                  earnings that Employee may receive from any other source.

         (l)      Stock Option Agreements. In the event of a conflict adverse to
                  Employee between the terms of this Agreement and the terms of
                  any agreement granting Employee stock options, the terms of
                  this Agreement shall govern.

5.       COVENANTS BY EMPLOYEE

         (a)      Property of the Company.

                  (1)      Employee covenants and agrees that upon the
                           termination of Employee's employment for any reason
                           or, if earlier, upon the Company's request, Employee
                           shall promptly return all "Property" which had been
                           entrusted or made available to Employee by the
                           Company.

                  (2)      The term "Property" shall mean all records, files,
                           memoranda, reports, price lists, drawing, plans,
                           sketches, keys, codes, computer hardware and software
                           and other property of any kind or description
                           prepared, used or possessed by Employee during
                           Employee's employment by the Company (and any
                           duplicates of any such property) together with any
                           and all information, ideas, concepts, discoveries,
                           and inventions and the like conceived, made,
                           developed or acquired at any time by Employee
                           individually or with others during Employee's
                           employment which relate to the Company's business,
                           products or services.

         (b)      Trade Secrets.

                  (1)      In consideration for the promises made in section
                           5(d) of this Agreement, the Company promises that it
                           shall provide and make available to Employee certain
                           confidential, proprietary information and trade
                           secrets.

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<PAGE>

                  (2)      Employee covenants and agrees that Employee shall
                           hold in a fiduciary capacity for the benefit of the
                           Company and each of its affiliates, and shall not
                           directly or indirectly use or disclose, any Trade
                           Secret that Employee may have acquired pursuant to
                           section 5(b)(1) above during the term of Employee's
                           employment by the Company for so long as such
                           information remains a trade secret.

                  (3)      The term "Trade Secret" shall mean information,
                           including, but not limited to, technical or
                           non-technical data, a formula, a patent, a
                           compilation, a program, a device, a method, a
                           technique, a drawing, a process, financial data,
                           financial plans, product plans, or that: (a) derives
                           economic value, actual or potential, from not being
                           generally known to, and not being generally readily
                           ascertainable by proper means by other persons who
                           can obtain economic value from its disclosures or
                           use, and (b) is the subject of reasonable efforts by
                           the Company and its affiliates to maintain its
                           secrecy.

                  (4)      This section 5(b) is intended to provide rights to
                           the Company which are in addition to those rights the
                           Company has under the common law or applicable
                           statutes for the protection of trade secrets.

         (c)      Confidential Information.

                  (1)      Employee covenants and agrees while employed under
                           this Employment Agreement and thereafter during the
                           Restricted Period he shall hold in a fiduciary
                           capacity for the benefit of the Company and each of
                           its affiliates, and shall not directly or indirectly
                           use or disclose, any of the Company's or the
                           Company's affiliates' Confidential or Proprietary
                           Information that Employee may have acquired (whether
                           or not developed or compiled by Employee and whether
                           or not Employee is authorized to have access to such
                           information) during the term of, and in the course
                           of, or as a result of Employee's employment by the
                           Company or its affiliates.

                  (2)      The term "Confidential or Proprietary Information"
                           shall mean any secret, confidential or proprietary
                           information that the Company or an affiliate (not
                           otherwise included in the definition of a Trade
                           Secret under this Agreement) that has not become
                           generally available to the public by the act of one
                           who has the right to disclose such information
                           without violation of any right of the Company or its
                           affiliates.

         (d)      Non-Competition. During the period of Employee's employment
                  with the Company and thereafter during the Restricted Period,
                  the Employee covenants and agrees that, in connection with the
                  countries of Russia and Venezuela, he shall not directly or
                  indirectly own any interest in, manage, control, participate
                  in, consult with, render services for, or in any manner engage
                  in any businesses competing with the Company (unless the Board
                  of Directors shall have authorized such activity and the
                  Company shall have consented thereto in writing).

                                      -9-

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                  Investments in less than 5% of the outstanding securities of
                  any class of the Company subject to the reporting requirements
                  of Section 13 or Section 15(d) of the Securities Exchange Act
                  of 1934, as amended, shall not be prohibited by this section.
                  For purposes of this section (d), the term "Company" shall
                  include Harvest Natural Resources, Inc. and any of its
                  affiliates or subsidiaries or any company in which it is a
                  minority shareholder or a joint venture partner. For purposes
                  of this section, the term "businesses" shall mean any
                  enterprise, commercial venture, or project involving oil and
                  gas exploration or production activities in the same
                  geographic areas as the Company's activities during the period
                  of Employee's employment.

                  Further, during the period of Employee's employment with the
                  Company and thereafter during the Restricted Period, the
                  Employee covenants and agrees that he will not directly or
                  indirectly through another entity induce or otherwise attempt
                  to influence any employee of the Company to leave the
                  Company's employment or in any way interfere with the
                  relationship between the Company and any employee thereof.
                  Further, the Employee will not induce or attempt to induce any
                  customer, supplier, licensee, joint venture partner,
                  shareholder, licensor or other business relation of the
                  Company to cease doing business with the Company or in any way
                  interfere with the relationship between any such customer,
                  supplier, licensee, joint venture partner, shareholder,
                  licensor or business relation of the Company.

                  If (i) pursuant to the arbitration process described in
                  Section 6(c) of this Employment Agreement (or such other
                  process as to which the Company and Employee may agree upon in
                  writing), it is determined that Employee has violated the
                  provisions of this Section 7(d), and (ii) employee has
                  received a payment from the Company pursuant to Section
                  4(a)(2)(x) or Section 4(a)(4)(x) of this Agreement (the "Lump
                  Sum Severance Amount"), then, in addition to any other
                  remedies that the Company may have, Employee shall be
                  obligated, and hereby agrees, to pay the Company, as
                  liquidated damages, an amount (but not less than zero) equal
                  to the product of (x) the Lump Sum Severance Amount and (y) a
                  fraction whose numerator is the excess of twenty-four (24)
                  over the number of calendar months that have elapsed since the
                  last day of employee's termination of employment under Section
                  4 of this Agreement and whose denominator is twenty-four (24).

         (e)      Employment Restriction - Conflict of Interest: Employee
                  covenants and agrees that he will not receive and has not
                  received any payments, gifts or promises and Employee will not
                  engage in any employment or business enterprises that in any
                  way conflict with his service and the interests of the Company
                  or its affiliates. In addition, Employee agrees to comply with
                  the laws or regulations of any country, including, without
                  limitation, the United States of America, having jurisdiction
                  over Employee or the Company.

                  Employee shall not make any payments, loans, gifts or promises
                  or offers of payments, loans or gifts, directly or indirectly,
                  to or for the use or benefit of any

                                      -10-

<PAGE>

                  official or employee of any government or to any other person
                  if Employee knows, or has reason to believe, that any part of
                  such payments, loans or gifts, or promise or offer, would
                  violate the laws or regulations of any country, including,
                  without limitation, the United States of America, having
                  jurisdiction over Employee or the Company.

                  By signing this Agreement, Employee acknowledges that he has
                  not made and will not make any payments, loans, gifts,
                  promises of payments, loans or gifts to or for the use or
                  benefit of any official or employee of any government or to
                  any other person which would violate the laws or regulations
                  of any country, including, without limitation, the United
                  States of America, having jurisdiction over Employee or the
                  Company.

         (f)      Restricted Period. The term "Restricted Period" shall mean the
                  two-year period which starts on the date Employee's employment
                  terminates with the Company without regard to whether such
                  termination comes before or after the end of the term of this
                  Employment Agreement.

         (g)      Reasonable and Continuing Obligations. Employee agrees that
                  Employee's obligations under this section 5 will continue
                  beyond the date Employee's employment terminates if such
                  continuance is reasonable and necessary to protect the
                  Company's legitimate business interests. The Company
                  additionally shall have the right to take such other action as
                  the Company deems necessary or appropriate to compel
                  compliance with the provisions of this section 5.

6.       MISCELLANEOUS.

         (a)      Notices. Notices and all other communications shall be in
                  writing and shall be deemed to have been duly given when
                  personally delivered or when mailed by United States
                  registered or certified mail. Notices to the Company shall be
                  sent to 15835 Park Ten Place Drive, Houston, Texas 77084.
                  Notices and communications to Employee shall be sent to
                  Employee's home address.

         (b)      No Waiver. Except for the notice described in section 4(d), no
                  failure by either the Company or Employee at any time to give
                  notice of any breach by the other of, or to require compliance
                  with, any condition or provision of this Employment Agreement
                  shall be deemed a waiver of any provisions or condition of
                  this Employment Agreement

         (c)      Arbitration and Governing Law. ANY UNRESOLVED DISPUTE OR
                  CONTROVERSY BETWEEN EMPLOYEE AND THE COMPANY ARISING UNDER OR
                  IN CONNECTION WITH THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY
                  BY ARBITRATION, CONDUCTED IN ACCORDANCE WITH THE RULES OF THE
                  AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. THE COMPANY
                  WILL BEAR THE ADMINISTRATIVE COSTS OF ANY ARBITRATION UNDER
                  THIS AGREEMENT, INCLUDING THE ARBITRATOR'S FEES. THE

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<PAGE>

                  ARBITRATOR SHALL NOT HAVE THE AUTHORITY TO ADD TO, DETRACT
                  FROM, OR MODIFY ANY PROVISION HEREOF. THE ARBITRATOR SHALL
                  HAVE THE AUTHORITY TO ORDER REMEDIES WHICH EMPLOYEE COULD
                  OBTAIN IN A COURT OF COMPETENT JURISDICTION, INCLUDING
                  BACK-PAY, SEVERANCE COMPENSATION, REIMBURSEMENT OF COSTS,
                  INCLUDING THOSE INCURRED TO ENFORCE THIS AGREEMENT, AND
                  INTEREST THEREON IN THE EVENT THE ARBITRATOR DETERMINES THAT
                  EMPLOYEE WAS TERMINATED WITHOUT DISABILITY OR GOOD CAUSE, AS
                  DEFINED HEREIN, OR THAT THE COMPANY HAS OTHERWISE MATERIALLY
                  BREACHED THIS AGREEMENT. A DECISION BY THE ARBITRATOR SHALL BE
                  IN WRITING AND WILL BE FINAL AND BINDING. JUDGMENT MAY BE
                  ENTERED ON THE ARBITRATOR'S AWARD IN ANY COURT HAVING
                  JURISDICTION. THE ARBITRATION PROCEEDING SHALL BE HELD IN
                  HOUSTON, TEXAS, UNITED STATES OF AMERICA. NOTWITHSTANDING THE
                  FOREGOING, THE COMPANY SHALL BE ENTITLED TO SEEK INJUNCTIVE OR
                  OTHER EQUITABLE RELIEF FROM ANY COURT OF COMPETENT
                  JURISDICTION, WITHOUT THE NEED TO RESORT TO ARBITRATION IN THE
                  EVENT THAT EMPLOYEE VIOLATES SECTIONS 5(b), 5(c), 5(d) OR 5(e)
                  OF THIS AGREEMENT. THIS AGREEMENT SHALL IN ALL RESPECTS BE
                  CONSTRUCTED ACCORDING TO THE LAWS OF THE STATE OF TEXAS.

         (d)      Assignment by Company. This Employment Agreement shall be
                  binding upon and inure to the benefit of the Company and any
                  successor to all or substantially all of the business or
                  assets of the Company. The Company may assign this Employment
                  Agreement to any affiliate or successor, and no such
                  assignment shall be treated as a termination of Employee's
                  employment under this Employment Agreement; provided, however,
                  that in the case of an assignment to an affiliate, the Company
                  shall not be relieved of its obligations under this Agreement.
                  The Company will require any successor corporation (whether
                  direct or indirect, and whether by purchase, merger,
                  consolidation or otherwise) to all or substantially all of the
                  business or assets of the Company to expressly assume and to
                  agree to perform this Agreement in the same manner and to the
                  same extent as the Company, as if no such succession had taken
                  place. Failure of the Company to obtain such assumption and
                  agreement prior to the effectiveness of any such succession
                  shall be a material breach of this Agreement. As used in this
                  Agreement, "Company" shall mean the Company as hereinbefore
                  defined and any successor to its business or assets as
                  aforesaid which assumes and agrees to perform this Agreement
                  by operation of law, or otherwise.

         (e)      Assignment by Employee. Employee's rights and obligations
                  under this Employment Agreement are personal, and they shall
                  not be assigned or transferred without the Company's prior
                  written consent.

         (f)      Other Agreements. With the exceptions of any of the Company's
                  stock option plans (and related agreements), incentive plans
                  and change of control plans, and

                                      -12-

<PAGE>
                  the performance contract guidelines adopted by the Company,
                  this Employment Agreement replaces and merges any and all
                  previous agreements and understandings regarding all the terms
                  and conditions of Employee's employment relationship with the
                  Company, and this Employment Agreement constitutes the entire
                  agreement of the Company and Employee with respect to such
                  terms and conditions.

         (g)      Amendment. No amendment to this Employment Agreement shall be
                  effective unless it is in writing and signed by the Company
                  and by Employee.

         (h)      Invalidity. If any part of this Employment Agreement is held
                  by a court of competent jurisdiction to be invalid or
                  otherwise unenforceable, the remaining part shall be
                  unaffected and shall continue in full force and effect, and
                  the invalid or otherwise unenforceable part shall be deemed
                  not to be part of this Employment Agreement.

         (i)      Enforceability by Beneficiaries. This Agreement shall inure to
                  the benefit of and be enforceable by the parties hereto and
                  their respective heirs, legal or personal representatives and
                  successors and if Employee should die while any amount would
                  still be payable to him hereunder if he had continued to live,
                  all such amounts shall be paid in accordance with the terms of
                  this Agreement to Employee's devisee, legatee or other
                  designee or, if there is no such designee, to his estate.

7.       NOVATION.

This Agreement is a novation to that Employment Agreement between the Company
and Employee entered into on November 12, 2001 and August 1, 2002, which are
hereby extinguished. As consideration for this novation, Employee acknowledges
the value of the matters described in the recitals to this Amended and Restated
Employment Agreement and the other terms of this Amended and Restated Employment
Agreement and agrees that they are adequate to make the novation binding in all
respects.

         IN WITNESS WHEREOF, the Company and Employee have executed this Amended
and Restated Employment Agreement in multiple originals to be effective as set
out above.

HARVEST NATURAL RESOURCES, INC.                     KURT A. NELSON

By: /s/ PETER J. HILL                               By: /s/ KURT A. NELSON
    -------------------------------------               -----------------------
    Peter J. Hill
    President and Chief Executive Officer


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