<PAGE>
                                                                    EXHIBIT 10.7

                              SEPARATION AGREEMENT

          This Separation Agreement is between Harvest Natural Resources, Inc. a
     Delaware corporation (the "Company"), and Peter J. Hill, a resident of
     Houston, Texas ("Employee").

          WHEREAS, Employee and the Company are parties to an Amended and
     Restated Employment Agreement effective as of February 20, 2003 (the
     "Employment Agreement");

          WHEREAS, Employee's employment with the Company will end on September
     30, 2005; and

          WHEREAS, the Company and Employee desire to reach agreement as to the
     terms of Employee's separation from employment.

          NOW, THEREFORE, in consideration for the payments and benefits
     provided to Employee and the agreement and covenants of Employee and the
     Company as provided below this Agreement is made.

1.   Separation Date. Employee's separation date from the Company shall be
     September 30, 2005 (the "Separation Date"). Employee and the Company waive
     any requirement of a termination notice under the Employment Agreement.
     Employee and the Company acknowledge that Employee agrees to continue to
     serve on the Board of Directors of the Company until his successor is duly
     appointed or elected.

2.   Termination of Employment Agreement; Continuation of Covenants. Employee
     and the Company agree that Employee's employment with the Company shall
     terminate on the Separation Date. This termination of employment is by
     mutual agreement of Employee and the Company, and Sections 4(a), 4(b), 4(c)
     and 4(h)of the Employment Agreement shall not apply with respect to
     Employee's termination of employment on the Separation Date. Employee
     acknowledges, agrees and affirms that the covenants of Employee in Section
     5 of the Employment Agreement including, without limitation, in respect of
     property of the Company, trade secrets, confidential information and
     non-competition continue to apply after the Separation Date in accordance
     with the terms of the Employment Agreement. Employee further acknowledges
     and agrees that the benefits provided to Employee in this Separation
     Agreement provide additional and sufficient consideration for such
     covenants.

3.   Consulting Agreement. Upon execution of this Separation Agreement, the
     Company and Employee shall execute and deliver a Consulting Agreement
     substantially in the form as set forth in Exhibit A hereto.

4.   Bonus. Within 5 days after May 31, 2006, the Company shall make lump sum
     bonus payment to Employee of $300,000.

5.   Reimbursement for Expenses. The Company shall reimburse Employee for all
     reasonable expenses, including travel and lodging, incurred in connection
     with his service on the Board of Directors of the Company. Employee shall
     not receive any other compensation for service as a director of the
     Company.
<PAGE>
6.   401(k) Match. Within 5 days after May 31, 2006, the Company shall pay
     Employee a lump sum amount equal to the Company's contributions that it
     would have made to Employee's 401(k) profit sharing plan for the period
     from the Separation Date through May 31, 2006, had Employee remained an
     employee of the Company during such period and made any required
     contributions to such plan.

7.   Stock Options. Employee has been granted the stock options listed in
     Exhibit B attached hereto (the "Options"). Notwithstanding any provision in
     the Employment Agreement or the stock option agreements pertaining to the
     Options to the contrary, after the termination of his employment on the
     Separation Date, Employee shall have until May 31, 2008 or the tenth
     anniversary of the dates of the grants of the Options, whichever is the
     shorter period, to exercise his rights with respect to all Options which
     are vested or become vested during this period. Except as modified by this
     Separation Agreement, all exercises of the Options must be in accordance
     with and pursuant to the terms of the applicable option plans and option
     agreements. The Company shall take any and all further actions necessary or
     reasonably requested by Employee to effect the foregoing, and to confirm
     Employee's ability to exercise the Options in accordance with the
     provisions of this paragraph 7, without regard to the termination of his
     position as an employee of the Company. Nothing contained in this
     Separation Agreement shall be deemed to accelerate or otherwise alter the
     vesting schedule for the Options.

8.   Restricted Stock. Employee has been awarded the restricted stock listed in
     Exhibit A attached hereto (the "Restricted Stock"). Employee shall be
     deemed to have terminated his employment for "Good Reason" (as defined in
     the Restricted Stock Agreements between the Company and Employee) for
     purposes of the Restricted Stock Agreements and, accordingly, the
     Restriction Period (as defined in the 2004 Long Term Incentive Plan) will
     continue and will lapse as if Employee had continued in the employ of the
     Company. Employee's rights with respect to the Restricted Stock shall be
     subject to the terms of the 2004 Long Term Incentive Plan and related
     Restricted Stock Agreements. The Company shall take any and all further
     actions necessary or reasonably requested by Employee to permit the
     Restricted Stock to vest in accordance with the provisions of this
     paragraph 8, without regard to the termination of his position as an
     employee of the Company.

9.   Continuation Benefits. After Employee's termination of employment on the
     Separation Date, Employee and his eligible dependents on the Separation
     Date shall receive the welfare benefits set forth in this Section 9.

          a. From the Separation date through May 31, 2006, the Company will
     provide Employee and his spouse medical benefits substantially the same as
     those provided expatriate employees of the Company or its subsidiaries
     working outside of the United States. From June 1, 2006 through May 31,
     2008, the Company shall reimburse Employee for the cost to Employee and his
     spouse for his reasonable cost of providing a medical insurance policy to
     supplement his coverage under the New Zealand national health care program.


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<PAGE>
          b. From the Separation Date through May 31, 2008, the Company will
     provide Employee and his spouse dental benefits substantially the same as
     those provided expatriate employees of the Company or its subsidiaries
     working outside of the United States; provided, however, that the Company
     will have no obligation to provide dental benefits to the extent such
     benefits are covered by the insurance reimbursed under Section 9a above.

          c. From the Separation Date through May 31, 2008, the Company will
     provide Employee and his spouse vision benefits substantially the same as
     those provided expatriate employees of the Company or its subsidiaries
     working outside of the United States; provided, however, that the Company
     will have no obligation to provide vision benefits to the extent such
     benefits are covered by the insurance reimbursed under Section 9a above.

          d. The Company will provide term life insurance on Employee through
     May 31, 2006 at the same level provided expatriate employees of the Company
     or its subsidiaries working outside of the United States. In addition, the
     Company will pay the premiums through May 31, 2008 for additional term life
     insurance on Employee providing benefits of up to $300,000 under similar
     terms and conditions to the term life insurance provided expatriate
     employees of the Company or its subsidiaries working outside of the United
     States .

          e. Except for those welfare benefits expressly provided to Employee
     under this Section 8, from and after the Separation Date Employee shall
     have no right to any other welfare benefits including, without limitation,
     short term disability, long term disability and accidental death and
     dismemberment.

10.  Other Compensation and Benefits. After Employee's termination of employment
     on the Separation Date, Employee shall have no further rights under Section
     3 of the Employment Agreement. Without limiting the generality of the
     foregoing sentence, after Employee's termination of employment on the
     Separation Date, (a) Employee shall not be entitled to the payment of any
     bonus based on the Company's performance contract guidelines and (b)
     Employee shall be paid for any accrued and unused vacation time as of the
     Separation Date in accordance with the Company's standard policy.

11.  Change of Control Benefits.

          a. If a Change of Control occurs prior to the Separation Date or
     within 240 days after the Separation Date, then, in addition to the
     benefits accruing to Employee under this Separation Agreement and
     notwithstanding any other provision in this Separation Agreement, (i) the
     Company shall pay to Employee, within 30 days after the Change of Control,
     the Bonus Amount, (ii) for a period of 36 months following the Change of
     Control, 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 the Separation Date, (iii) the Company shall pay to
     Employee, within 30 days after the Change of Control, an amount equal to
     $1,200,000,less any amount paid to Employee under the Consulting Agreement
     provided for in paragraph 3, (iv) any outstanding Options shall become
     fully vested and exercisable, and the restriction period on the Restricted
     Stock will continue and will lapse as if Employee remained in the employ of
     the Company, and (v) the Company will pay Employee, within 30 days after
     the Change of Control, an additional


                                        3
<PAGE>
     amount such that the net amount retained by Employee pursuant to the
     benefits described in clauses (i), (iii) and (iv) of this paragraph 11,
     after 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 such excise tax.

          b. The term "Bonus Amount" means three times the amount of the higher
     of (i) the highest annual bonus earned by Employee for the last three
     fiscal years ending prior to the Separation Date, excluding any bonus
     payment related to the sale of Arctic Gas, and (ii) (A) the target bonus
     percentage, if any, as established by the Company's Board of Directors for
     the fiscal year in which the Change of Control occurs multiplied by (B)
     $400,000.

          c. 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
          paragraph 11(c) 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
          paragraph 11(c); or

               (2) individuals who, as of the date of this Separation 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 Separation
          Agreement 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;
          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,
          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


                                        4
<PAGE>
          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.

12.  Section 409A. Notwithstanding anything in this Separation Agreement to the
     contrary, if any provision of this Separation Agreement would result in the
     imposition of an applicable tax under Section 409A of the Code and related
     regulations and Treasury pronouncements (collectively, "Section 409A"),
     such provision, to the extent possible, will be reformed to avoid
     imposition of the applicable tax, and any payment due under this Separation
     Agreement shall be paid on the first day on which no tax under Section 409A
     would be imposed. No action taken to comply with Section 409A shall be
     deemed to adversely affect the Employee's rights under this Separation
     Agreement. Employee acknowledges and agrees that he is solely responsible
     for complying with Section 409A and the Company's only obligation under
     this Paragraph 12 is to reasonably cooperate with Employee to reform the
     applicable provision of this Agreement to avoid the imposition of the
     applicable tax.

13.  General.

          a. All applicable withholding, including but not limited to federal,
     state and Social Security taxes, and any applicable garnishment, liens or
     other attachments, shall be deducted from all amounts payable or stock
     distributable to Employee.

          b. Employee acknowledges that the terms of the Company's insider
     trading policies (as well as applicable securities laws) shall remain in
     effect with respect to any securities of the Company, and Employee shall
     comply with such policies through May 31, 2006 and applicable securities
     laws from and after the date of this Agreement.

14.  Effect on Employment Agreement. To the extent (and only to the extent)
     applicable, this Separation Agreement shall be deemed to be an amendment
     and novation to the Employment Agreement. Employee acknowledges the value
     of the matters described in this Separation Agreement and agrees that those
     matters are adequate consideration for such amendment and novation. To the
     extent (and only to the extent) there is a conflict between this Separation
     Agreement and the Employment Agreement, the provisions of this Separation
     Agreement shall govern. Provisions


                                        5
<PAGE>
     of the Employment Agreement that do not conflict with the provisions of
     this Separation Agreement shall continue in full force and effect. Without
     limiting the foregoing provisions of this paragraph 14, the miscellaneous
     provisions contained in Section 6 of the Employment Agreement shall apply
     to this Separation Agreement. If Employee's employment with the Company is
     terminated before the Separation Date, the provisions of the Employment
     Agreement shall prevail, without giving effect to the provisions of this
     Separation Agreement, and this Separation Agreement shall terminate upon
     any such termination of employment.

15.  Release.

          a. Employee hereby releases any and all claims of any kind that he may
     have against the Company and its subsidiaries, affiliates, and any of its
     or their directors, officers, employees, or agents (in this paragraph 15,
     collectively "the Company") that arise from any events occurring on or
     before the date on which this Separation Agreement is executed by Employee.
     Employee waives any and all rights that he might have to bring any suit,
     charge, or demand of any kind against the Company for claims that he is
     releasing. The claims that Employee is releasing include, but are not
     limited to (i) all claims arising under federal, state, or local laws
     prohibiting discrimination based upon age, race, sex, religion, disability,
     national origin, or any other basis; (ii) any claims for "wrongful
     discharge", breach of contract, or other legal restrictions on the
     Company's right to control or terminate the employment of its employees;
     (iii) all claims under any tort or contract theory, including but not
     limited to infliction of emotional distress, harassment, libel, slander,
     fraud, misrepresentation, or invasion of privacy; (iv) all claims,
     including but not limited to claims for retaliation, arising under common
     law or any federal, state, or local statute, including but not limited to
     federal laws prohibiting discrimination based upon age, race, sex,
     religion, disability, national origin or any other basis, such as those
     arising under the Civil Rights Act of 1964, the Age Discrimination in
     Employment Act, the Americans with Disabilities Act, the Equal Pay Act of
     1963, the 1978 Pregnancy Discrimination, the Rehabilitation Act of 1973, or
     any state counterparts to such acts; and (v) all claims for discharge,
     demotion, suspension, threats, harassment or discrimination under the
     Sarbanes-Oxley Act of 2002. The release contained in this paragraph 15 does
     not waive claims arising under this Separation Agreement for
     indemnification for acts within the scope of employment as a result of
     Employee being a director, officer, employee or agent of the Company or of
     any other corporation or any partnership, joint venture, trust or other
     enterprise for which Employee served as such at the request of the Company.

          b. Employee understands that the release contained in this paragraph
     15 (i) specifically waives all claims arising under any statute, regulation
     or contract, or under common law, which are based on events occurring at
     any time before the signing of this Separation Agreement; (ii) does not
     waive rights or claims based on events occurring after the signing of this
     Separation Agreement; (iii) includes the future consequences of events that
     occurred before the signing of this Separation Agreement; and (iv) includes
     all possible claims, including without limitation those of which Employee
     is not currently aware or that Employee does not now suspect to exist.

16.  Miscellaneous.


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<PAGE>
          a. Successors; Binding Agreement. In addition to any obligations
     imposed by law upon any successor to the Company, the Company will require
     any successor (whether direct or indirect, by purchase, merger,
     consolidation or otherwise) to all or substantially all of the business
     and/or assets of the Company to expressly assume and agree to perform this
     Separation Agreement in the same manner and to the same extent that the
     Company would be required to perform it if no such succession had taken
     place.

          b. Enforceability by Beneficiaries. This Separation Agreement shall
     inure to the benefit of and be enforceable by the Employee's personal or
     legal representatives, executors, administrators, successors, heirs,
     distributees, devisees and legatees. If the Employee shall die while any
     amount is payable to the Employee hereunder, all such amounts, unless
     otherwise provided herein, shall be paid in accordance with the terms of
     this Separation Agreement to the executors, personal representatives or
     administrators of the Employee's estate.

          c. Amendment. No amendment to this Separation Agreement shall be
     effective unless it is in writing and signed by the Company and by
     Employee.

          d. Invalidity. If any part of this Separation 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 Separation Agreement.

          e. Governing Law. This Separation Agreement shall be construed in
     accordance with the laws of the State of Texas.

Date: September __, 2005                HARVEST NATURAL RESOURCES, INC.


                                        By:
                                            ------------------------------------
                                        Title:
                                               ---------------------------------

Date: September __, 2005


                                        ----------------------------------------
                                        PETER J. HILL


                                        7
<PAGE>
                                    EXHIBIT A

                              CONSULTING AGREEMENT

     THIS CONSULTING AGREEMENT (the "Agreement"), effective October 1, 2005, is
made and entered into by and between HARVEST NATURAL RESOURCES, INC. ("Harvest"
or "the Company") of 1177 Enclave Parkway, Suite 300, Houston, Texas, 77077 and,
Peter J. Hill with an residence at 3333 Allen Parkway, Apartment 2206, Houston,
Texas, 77019 ("Consultant").

RECITALS:

     A. Harvest desires to engage Consultant to render consulting services; and

     B. Harvest and Consultant wish to memorialize the terms and conditions upon
which Consultant is engaged to provide consulting services to Harvest.

     NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:

1.   SERVICES AND NATURE OF RELATIONSHIP

     1.1 ENGAGEMENT. Harvest hereby retains Consultant and Consultant hereby
accepts such appointment and agrees to perform the services covered by this
Agreement with all due skill and care on the terms and conditions set forth in
this Agreement.

     Consultant's services shall be provided in connection with the interests of
Harvest and its affiliates in Russia and such other assignments as Harvest may
make from time to time within the area of Consultant's expertise

     1.2 REPORTING RELATIONSHIP AND ASSIGNMENT. Consultant shall report to the
President and Chief Executive Officer of the Company or his or the Company's
designees.

     1.3 METHOD OF PERFORMING SERVICES. Consultant, as an independent
contractor, shall determine the method, details, and means of performing any
services furnished pursuant to this Agreement, but the services contemplated
herein shall meet the approval of Harvest. Consultant will devote sufficient
time, attention and energies to the business and interests of Harvest and
diligently and to the best of its ability perform such duties incident to this
Agreement, and perform such other duties as requested commensurate with the
terms of this Agreement.

     1.4 COMPLIANCE WITH LAW AND HARVEST POLICY. Consultant shall not commence
services if he has not familiarized himself with Harvest's and Harvest's
affiliates' safety and health rules. Consultant shall comply with all applicable
safety and health rules, and policies, procedures and codes of conduct of
Harvest and its affiliates, together with all applicable U.S., Russian or other
provisions of federal, state or local safety and health laws, rules, regulations
or orders.


                                        8
<PAGE>
     Consultant acknowledges that he has been provided copies of, and has read
and understands Harvest's Code of Business Conduct and Ethics (the "Code") and
Harvest's Compliance Manual, and Consultant agrees:

               (a) to comply with all policies of Harvest and Harvest's
affiliates, including, without limitation, the Code and the Compliance Manual;

               (b) to comply with all applicable laws and regulations,
including, without limitation, the laws and regulations of the United States,
Russia and Venezuela; and

               (c) to promptly report as provided in the Code any violation or
suspected violation of any law, regulation or Harvest policy.

     This clause will not require Harvest to police Consultant's compliance with
the Code, laws, regulations or company policies and shall not impose any
obligation on the part of Harvest or its affiliates under such laws, regulations
or Company policies. Nothing contained in this provision shall be interpreted as
enlarging the legal duty of Harvest or its affiliates to Consultant or alter the
status of Consultant as set forth in this Agreement.

     The preceding paragraphs of this provision are agreed to by both Harvest
and Consultant to be of the highest importance. A breach or violation of any of
the terms of this provision by Consultant will be considered to be a material
breach of this Agreement.

     1.5 NO AUTHORITY TO BIND. Consultant shall have no authority to obligate
Harvest in any manner whatsoever in the absence of specific prior written
authority from the President and Chief Executive Officer of Harvest permitting
Consultant to do so, including without limitation incurring expenses or entering
into contracts.

     1.6 STATUS AS INDEPENDENT CONSULTANT. Consultant acknowledges and agrees
that, in performing services pursuant to this Agreement, Consultant shall be
serving as an independent contractor. Consultant agrees that Consultant is not
and will not become an employee of Harvest or any of its affiliates while this
Agreement is in effect. Consultant agrees that the provision of services
pursuant to this Agreement will not entitle Consultant to any rights or benefits
afforded to the employees of Harvest or its affiliates, including such benefits
as Worker's Compensation insurance, health insurance, sick leave, retirement
benefits or any other employment benefit. Consultant agrees that the
indemnification provisions of Section 5.1 shall apply to any claims relating to
the subject matter of this Section 1.5.

     1.7 PAYMENT OF TAXES. Consultant agrees that he is solely responsible for
paying when due all income taxes, including estimated taxes, as a result of or
in connection with the compensation paid by Harvest to Consultant for services
rendered under this Agreement. Harvest shall issue applicable U.S.or other tax
forms or reports to Consultant with respect to the compensation paid pursuant to
this Agreement. Consultant hereby indemnifies, and undertakes to defend and hold
Harvest free and harmless from and against any demands or claims for any taxes,
interest or penalties assessed by any taxing authority with respect to sums paid
to Consultant pursuant to this Agreement.


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<PAGE>
2.   TERM AND TERMINATION

     2.1 TERM. The term of this Agreement shall commence on October 1, 2005, and
shall continue through May 31, 2006 (the "Term").

     2.2 TERMINATION. This Agreement may be terminated by either party at any
time for material breach by the other party, upon ten (10) days written notice,
if the breaching party has failed to remedy the breach leading to the
termination during that ten (10) day period.

3.   FEES AND EXPENSES

     Harvest shall compensate Consultant for services rendered pursuant to this
Agreement as follows:

     3.1 RATES. Harvest agrees to compensate Consultant for services provided
pursuant to this Agreement at the rate of $33,334 per month.

     3.2 EXPENSE REIMBURSEMENTS. Harvest agrees to reimburse Consultant for
reasonable business expenses incurred by Consultant in performing services
pursuant to this Agreement; provided, however, that Consultant shall have
furnished Harvest promptly with receipts and/or other documentation concerning
any reimbursable business expenses.

     3.3 TIMING OF PAYMENTS. Consultant's monthly fee shall be paid within
fifteen (15) days after the calendar month in which the services were provided.
Payments to Consultant for reimbursement for expenses incurred shall be made
within thirty (30) days after Harvest's receipt of an expense statement.

4.   ADDITIONAL COVENANTS BY CONSULTANT

     4.1 PROPERTY OF THE COMPANY.

          4.1.1 Consultant covenants and agrees that upon the termination of
this Agreement for any reason or, if earlier, upon the Company's request, he
shall promptly return all Property which had been entrusted or made available to
Consultant by the Company.

          4.1.2 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 Consultant during the term of this Agreement relating to the
Company or its business, operations or prospects (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 Consultant individually or with others during the term of this Agreement
relating to the Company or its business, operations or prospects.

     4.2 CONFIDENTIAL INFORMATION. Except as required in the performance of
Consultant's obligations hereunder, or otherwise specifically required by law,
or with the prior written consent of Harvest on a case-by-case basis, Consultant
shall hold confidential and shall not in any manner disclose, use for personal
benefit, or directly or indirectly use for the benefit of any other


                                       10
<PAGE>
person, Confidential Information (defined below) that has come or shall
hereafter come into Consultant's possession. Consultant recognizes the
importance to Harvest of protecting its Confidential Information without regard
to the passage of time, and further recognizes that this restriction shall
continue in full force and effect during the Term of this Agreement and for a
period of five (5) years after the end of the Term, except as to Confidential
Information which constitutes a trade secret, in which case the restriction
shall continue so long as such information remains a trade secret. No later than
the end of the Term of this Agreement, Consultant shall return to Harvest,
without making and retaining copies thereof, all documents, records, computer
information, maps and charts and other repositories containing Confidential
Information. Consultant shall also return Confidential Information to the
Company promptly following its usefulness in performing its consulting services.
As used in this Agreement, the term "Confidential Information" shall mean all
information of a confidential or non-public nature concerning Harvest's and
Harvest's affiliates existing or proposed business activities, including without
limitation, geological, geophysical and seismic data and interpretations,
computer analysis, maps, charts, reports, results of operations, proposed
methods of operation, gas plant designs, specifications or processes, financial
information, information with respect to parties with whom Harvest or its
affiliates has or intends to have business relationships and similar
information.

     4.3 OWNERSHIP. Consultant agrees that all processes, technologies, computer
analysis, discoveries and inventions whether new or enhanced and expanded,
whether patentable or not, conceived, developed, invented or made by Consultant
during the Term of this Agreement which grew out of Consultant's work for
Harvest shall belong to Harvest and not to Consultant. Consultant shall not
contribute or publish articles based upon the results of the services performed
under this Agreement unless such articles are approved in advance by Harvest.

     4.4 CONFLICT OF INTEREST AND FCPA. Consultant covenants and agrees that
Consultant's and Consultant's personnel and their immediate family will not
receive and has not received any payments, gifts or promises and Consultant will
not engage in any employment or business enterprises that in any way conflict
with its ability to provide services for, or conflict with the interests of, the
Company or its affiliates under this Agreement. Consultant shall make all
reasonable efforts consistent with the terms of this Agreement to prevent
occurrences of and eliminate conditions which could result in a conflict with
the best interest of Harvest or its affiliates. Consultant shall make all
reasonable efforts to prevent conflicts of interest from arising out of
relationships between Consultant, agents or employees of Consultant and agents
or employees of Harvest or its affiliates.

     Consultant shall not make any payments, loans, gifts or of anything of
value or promises or offers of payments, loans, gifts or of anything of value,
directly or indirectly, to or for the use or benefit of any official or employee
of any government, political party or candidate for political office or to any
other person for the purpose of obtaining or retaining business, or if
Consultant 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, Russia and the United States of
America, having jurisdiction over Consultant or the Company or its affiliates.


                                       11
<PAGE>
     By signing this Agreement, Consultant acknowledges that he has not made any
payments, loans, gifts or of anything of value, or promises of payments, loans,
gifts or of anything of value to or for the use or benefit of any official or
employee of any government, political party or candidate for political office or
to any other person for the purpose of obtaining or retaining business, or which
would violate the laws or regulations of any country, including, without
limitation, Russia and the United States of America, having jurisdiction over
Consultant or the Company or its affiliates.

     4.5 REASONABLE AND CONTINUING OBLIGATIONS. Consultant agrees that
Consultant's obligations under Section 4 are obligations which will continue
beyond the date this Agreement terminates and that such obligations are
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 Section 4 (including, without limitation, seeking a court order for specific
performance).

5.   GENERAL PROVISIONS

     5.1 INDEMNITIES. CONSULTANT RECOGNIZES THAT INTERNATIONAL ACTIVITIES,
INCLUDING ON-SITE WORK AND TRAVEL INVOLVE A HIGH DEGREE OF RISK, WHICH RISK
CONSULTANT ALONE ASSUMES AS PART OF THE CONSIDERATION FOR HIS COMPENSATION.
CONSULTANT HEREBY AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARVEST AND ITS
AFFILIATES, CONTRACTORS AND SUBCONTRACTORS AND ALL OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, LICENSEES AND INVITEES
(HEREINAFTER REFERRED TO COLLECTIVELY AS THE "HARVEST GROUP") HARMLESS FROM AND
AGAINST ANY AND ALL LOSS, COST, DAMAGE OR EXPENSE OF EVERY KIND AND NATURE
(INCLUDING, WITHOUT LIMITATION, FINES, PENALTIES, REMEDIAL OBLIGATIONS, TAXES,
COURT COSTS AND EXPENSES AND REASONABLE ATTORNEYS' FEES INCLUDING ATTORNEYS'
FEES INCURRED IN THE ENFORCEMENT OF THIS INDEMNITY CLAUSE) (HEREINAFTER REFERRED
COLLECTIVELY AS "INDEMNIFIABLE CLAIMS") ARISING OUT OF BODILY INJURY (INCLUDING
SICKNESS TO OR DEATH OF PERSONS AND LOSSES THEREFROM TO RELATIVES OR DEPENDENTS)
TO CONSULTANT, LOSS OR DESTRUCTION OF PROPERTY OR INTERESTS IN PROPERTY OF
CONSULTANT, OR IN ANY MANNER CAUSED BY, RESULTING FROM, INCIDENT TO, CONNECTED
WITH OR ARISING OUT OF PERFORMANCE OF THE SERVICES HEREUNDER WHETHER OR NOT
RESULTING IN WHOLE OR IN PART FROM THE SOLE, CONCURRENT, OR COMPARATIVE
NEGLIGENCE, OR STRICT LIABILITY OF THE HARVEST GROUP, OR DEFECT IN THE PREMISES,
EQUIPMENT, OR TOOLS OWNED, OPERATED OR CONTROLLED BY THE HARVEST GROUP. THIS
INDEMNIFICATION AND RELEASE SHALL BE BINDING UPON THE HEIRS, NEXT OF KIN,
BENEFICIARIES, ASSIGNS, EXECUTORS AND ADMINISTRATORS OR OTHER PERSONAL
REPRESENTATIVES OF CONSULTANT. HARVEST HEREBY AGREES TO RELEASE, DEFEND,
INDEMNIFY AND HOLD THE CONSULTANT HARMLESS FROM AND AGAINST ANY AND ALL
INDEMNIFIABLE CLAIMS ARISING OUT OF BODILY INJURY (INCLUDING SICKNESS TO OR
DEATH OF PERSONS AND LOSSES THEREFROM TO RELATIVES OR DEPENDENTS) TO THE HARVEST
GROUP, OR LOSS


                                       12
<PAGE>
OR DESTRUCTION OF PROPERTY OR INTERESTS IN PROPERTY OF THE HARVEST GROUP, IN ANY
MANNER CAUSED BY, RESULTING FROM, INCIDENT TO, CONNECTED WITH OR ARISING OUT OF
PERFORMANCE OF THE SERVICES HEREUNDER WHETHER OR NOT RESULTING IN WHOLE OR IN
PART FROM THE SOLE, CONCURRENT, OR COMPARATIVE NEGLIGENCE, OR STRICT LIABILITY
OF THE CONSULTANT, OR DEFECT IN THE PREMISES, EQUIPMENT, OR TOOLS OWNED,
OPERATED OR CONTROLLED BY THE CONSULTANT.

     5.2 NOTICE. 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 1177 Enclave Parkway, Suite 300, Houston, Texas 77077. Notices and
communications to Consultant shall be sent to the Consultant's address provided
above. Either party may change its/his address by providing notice to the other
party consistent with the terms of this section.

     5.3 ASSIGNMENT/SUBCONTRACTING. This Agreement, and all duties and
obligations hereunder are personal in nature, and Consultant shall not assign
this Agreement, or any portion thereof, voluntarily or involuntarily by
operation of law, or enter into any subcontract for the performance of any
services under this Agreement, or any portion thereof, without Harvest's prior
written approval. In the event Harvest consents to a subcontract hereunder,
Consultant shall assume full responsibility for the acts or omissions of
subcontractors. Harvest may assign this Agreement (1) to any affiliate of
Harvest, (2) to any person who agrees in writing to be bound by the terms of
this Agreement or (3) upon written notice to and written consent by Consultant,
which written consent shall not be unreasonably withheld.

     5.4 AUDIT. Harvest, or its designated representative, shall have the right
to inspect and audit Consultant's books, records and all associated documents to
ensure compliance with the terms and conditions of this Agreement. Consultant
agrees to maintain such books, records and associated documents for a period of
two (2) years from the end of the calendar year in which such costs were
invoiced and to make such books, records and associated documents available to
Harvest at all reasonable times within such period and for so long thereafter as
any dispute remains unresolved. Harvest may photocopy or reproduce any such
books and records.

     5.5 GOVERNING LAW. This Agreement and all matters relating to the meaning,
validity or enforceability thereof and the performance of the services hereunder
shall be governed by the laws of the State of Texas, U.S.A., exclusive of its
conflict of laws rule.

     5.6 ARBITRATION. SUBJECT TO THE PROVISIONS OF SECTION 4.5 OF THIS
AGREEMENT, ANY UNRESOLVED DISPUTE OR CONTROVERSY BETWEEN CONSULTANT AND THE
COMPANY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE SETTLED
EXCLUSIVELY BY ARBITRATION, CONDUCTED BEFORE A SINGLE ARBITRATOR IN ACCORDANCE
WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. THE
ARBITRATOR SHALL NOT HAVE THE AUTHORITY TO ADD TO, DETRACT FROM, OR MODIFY ANY
PROVISION HEREOF. 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


                                       13
<PAGE>
ARBITRATION PROCEEDING SHALL BE HELD IN HOUSTON, TEXAS, UNITED STATES OF
AMERICA.

     5.7 DRUGS, DEADLY WEAPONS AND SEARCHES. Consultant shall abide by the
following Harvest policy regarding drugs, deadly weapons and alcohol:

               (a) Using, possessing, or being under the influence of alcoholic
beverages, illegal drugs, narcotics, or other controlled substances, and
unauthorized drugs for which a person does not have a current prescription,
while on Harvest's Premises, is prohibited. Possession of deadly weapons or
explosives while on Harvest's Premises is prohibited.

               (b) The term "Harvest's Premises" is used in its broadest sense
to include all work locations, buildings, structures and all other facilities
owned or controlled by Harvest or one of its affiliated companies or otherwise
being utilized for Harvest's or its affiliate's business.

               (c) Violation of the Harvest policy will be cause for immediate
removal from Harvest's Premises, and termination as a material breach under this
Agreement.

     5.8 COMPUTER FACILITIES. If required for Consultant to perform the
services, Consultant will have access to certain parts of Harvest's and its
affiliates computer facilities and programs. Consultant agrees that such access
shall be subject to the following conditions:

               (a) Access to Harvest's or its affiliate's computers shall be
made only in the manner prescribed by a Harvest representative. Access shall be
made using only terminals owned or controlled by Harvest and its affiliates and
only by Consultant.

               (b) Any user identification code provided by Harvest or its
affiliates shall be used solely for access to the computers for conduct of the
services for Harvest or its affiliates and only by Consultant.

               (c) Consultant shall not access software or data on Harvest's or
its affiliate's computer system other than Consultant's software or data without
Harvest's prior written consent.

               (d) In the event that Consultant should accidentally or
inadvertently access any Harvest or Harvest affiliate software or data which
Consultant is not authorized to access, then Consultant shall immediately inform
Harvest and shall deliver to Harvest or destroy as Harvest may advise any
tangible materials (and all copies thereof) resulting from such improper access.

               (e) Harvest or its affiliates may copy, use, disclose,
distribute, dispose of or destroy anything placed on Harvest's or its affiliates
computer systems by Consultant.

     5.9 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes any and
all agreements, either oral or written, between the parties with respect to the
rendering of consulting services by Consultant for Harvest, and contains all
representations, covenants and agreements between the parties with respect to
the rendering of such services by Consultant. Any


                                       14
<PAGE>
modification of this Agreement will be effective only if it is in writing and
signed by the party to be charged.

     5.10 SEVERABILITY. If any term, provision, covenant or condition of this
Agreement shall be or become illegal, null, void or against public policy, or
shall be held by an arbitrator to be illegal, null or void or against public
policy, the remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected, impaired or invalidated thereby. The term,
provision, covenant or condition that is so invalidated, voided or held to be
unenforceable shall be modified or changed by the parties to the extent possible
to carry out the intentions and directives set forth in this Agreement.

     5.11 SUCCESSORS AND ASSIGNS. Except as restricted herein, this Agreement
shall be binding on and shall inure to the benefit of the parties and their
respective heirs, legal representatives, successors and permitted assigns.

     5.12 WAIVER. No waiver of any provision or consent to any action shall
constitute a waiver of any other provision or consent to any other action,
whether or not similar. No waiver or consent shall constitute a continuing
waiver or consent or commit a party to provide a waiver in the future except to
the extent specifically set forth in writing. Any waiver given by a party shall
be null and void if the party requesting such waiver has not provided a full and
complete disclosure of all material facts relevant to the waiver requested. No
waiver shall be binding unless executed in writing by the party making the
waiver.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date(s) set forth below.

PETER J. HILL

Date:
      -------------------------------


HARVEST NATURAL RESOURCES, INC.

Date:
      -------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                       15
<PAGE>
                                    EXHIBIT B

                          SEPARATION AGREEMENT BETWEEN

                         HARVEST NATURAL RESOURCES, INC.

                                       AND

                                  PETER J. HILL

<TABLE>
<CAPTION>
                                                NO OF    RESTRICTED   VEST
      OPTION               GRANT      EXER.    OPTIONS      STOCK      PER
      HOLDER        Plan   DATE*      PRICE    GRANTED     GRANTED     YRS
-----------------   ----   -------   -------   -------   ----------   ----
<S>                 <C>    <C>       <C>       <C>       <C>          <C>
HILL, PETER         1999   8/29/00    2.1250   175,000                  3
HILL, PETER         2001   7/30/01    1.6600   325,000                  3
HILL, PETER         2001   2/20/03    6.1000    50,000                  3
HILL, PETER         2004   5/26/04   13.0100    54,575     13,500       3
HILL, PETER         2004    3/4/05   12.7950   100,000     10,000       3
                                               -------     ------
HILL, PETER TOTAL                              704,575     23,500
                                               =======     ======
</TABLE>


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