<PAGE>
                                                                    EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

This Employment Agreement ("Employment Agreement"), effective September 12,
2005, is between Harvest Natural Resources, Inc. (the "Company") and Karl L.
Nesselrode, a resident of Texas, ("Employee"), the terms and conditions of which
are as follows:

     WHEREAS, the Company and Employee entered into an employment agreement
effective November 17, 2003 (the "Original Employment Agreement");

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

     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 Employment Agreement to receive
the benefit of the provisions contained in it.

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

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 started on November 17, 2003 and ends on May 31,
2006. On May 31, 2006, 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 Employment 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-Engineering and
          Business Development 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


                                       -1-
<PAGE>
          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 Employment 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 $170,000 US, 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. 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 guidelines adopted by the
          Company, the Company's overall performance and any special
          circumstances the Human Resources Committee and the Company's Board of
          Directors deem appropriate. Any such bonus is to be determined at the
          discretion of the Company's Human Resources Committee and the
          Company's Board of Directors. Employee acknowledges that the Company
          is not obligated to award him any bonus in any year.

     (c)  Special Bonus. Concurrently with the execution and delivery of this
          Employment Agreement by the Company, the Company is paying Employee a
          special bonus of $25,000.

     (d)  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.

     (e)  Stock Options and Restricted Stock. Previously Employee has been
          granted certain stock options and restricted stock pursuant to the
          Company's long-term incentive plans. Except as provided in Section
          4(a), this Employment Agreement neither increases nor decreases the
          number of stock options and shares of restricted stock previously
          granted, nor does it change the terms under which they were granted.

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


                                       -2-
<PAGE>
     (g)  Expenses. The Company shall pay or reimburse Employee for all
          reasonable expenses actually incurred or paid by 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.

     (h)  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-Engineering Business Development.

     (i)  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 (v) 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, (w) the Company shall pay to Employee within
               thirty (30) days after the termination or resignation an amount
               equal to twenty-four months of the maximum contribution the
               Company may make for Employee under the Company's 401(k) profit
               sharing plan as in effect immediately before Employee's
               termination of employment or resignation, (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)(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, (y) the restriction period on restricted shares
               of stock granted by the Company to Employee will continue and
               will lapse as if Employee had continued in the employ of the
               Company and a certificate(s) representing such shares will be
               delivered to Employee within thirty (30) days after the end of
               the applicable restriction period,


                                       -3-
<PAGE>
               and (z) Employee shall be reimbursed for up to $20,000 of
               outplacement services with an outplacement service approved by
               the Company.

          (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 (s) the Company shall pay to Employee, within
               thirty (30) days after the termination of employment 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, (t) the Company shall
               pay to Employee, within thirty (30) days after the later to occur
               of the termination, resignation or Change of Control, the Bonus
               Amount, (u) the Company shall pay to Employee within thirty (30)
               days after the termination or resignation an amount equal to
               twenty-four months of the maximum contribution the Company may
               make for Employee under the Company's 401(k) profit sharing plan
               as in effect immediately before Employee's termination of
               employment or resignation, (v) 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 or resignation, or the tenth anniversary
               of the date(s) of the grant(s) specified in the relevant option
               agreement(s), whichever is the shorter period, (w) the
               restriction period on restricted shares of stock granted by the
               Company to Employee will continue and will lapse as if Employee
               had continued in the employ of the Company and a certificate(s)
               representing such shares will be delivered to Employee within
               thirty (30) days after the end of the applicable restriction
               period, (x) Employee shall be reimbursed for up to $20,000 of
               outplacement services with an outplacement service approved by
               the Company, (y) for a period of twenty-four months following the
               later to occur of the termination, resignation or 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
               Employee's termination or resignation, and (z) the Company will
               pay Employee, within thirty (30) days after the later to occur of
               the termination, resignation or Change of Control, an additional
               amount such that the net amount retained by Employee pursuant to
               the benefits described in this Section 4(a)(3) 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 any such excise tax.

          (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 (s) the
               Company shall pay to Employee, within thirty (30) days after the
               later to occur of the termination or Change of Control an amount
               equal to twenty-four months


                                      -4-
<PAGE>
               of Employee's base salary as in effect immediately before
               Employee's termination of employment, (t) the Company shall pay
               to Employee, within thirty (30) days after the later to occur of
               the termination or Change of Control, the Bonus Amount, (u) the
               Company shall pay to Employee within thirty (30) days after the
               later to occur of the termination or Change of Control, an amount
               equal to twenty-four months of the maximum contribution the
               Company may make for Employee under the Company's 401(k) profit
               sharing plan as in effect immediately before Employee's
               termination of employment, (v) any outstanding stock option(s)
               granted by the Company to Employee shall become fully vested and
               shall remain exercisable for twelve (12) months following the
               later to occur of Employee's termination or Change of Control, or
               the tenth anniversary of the date(s) of the grant(s) specified in
               the relevant option agreement(s), whichever is the shorter
               period, (w) the restriction period on restricted shares of stock
               granted by the Company to Employee will continue and will lapse
               as if Employee had continued in the employ of the Company and a
               certificate(s) representing such shares will be delivered to
               Employee within thirty (30) days after the end of the applicable
               restriction period, (x) Employee shall be reimbursed for up to
               $20,000 of outplacement services with an outplacement service
               approved by the Company, (y) for a period of twenty-four months
               following the later to occur of Employee's termination or 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
               Employee's termination, and (z) the Company shall pay to
               Employee, within thirty (30) days after the later to occur of the
               termination or Change of Control, an additional amount such that
               the net amount retained by Employee pursuant to the benefits
               described in this Section 4(a)(4) 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 such benefits before
               payment of any such excise tax.

     (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


                                       -5-
<PAGE>
               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)(v) and, in
               addition, Employee or, if Employee dies, Employee's estate shall
               be entitled to the provisions of Sections 4(a)(2)(w), (x) and (y)
               with respect to the Company's 401(k) profit sharing plan,
               Employee's stock options and Employee's restricted stock.

     (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, 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 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 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


                                       -6-
<PAGE>
          participants, (7) the relocation of Employee more than fifty (50)
          miles from the location of the Company's principal office on the date
          hereof; or (8) the failure of the Company to obtain a satisfactory
          agreement from a successor to assume and agree to perform this
          Employment 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 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, together with its subsidiaries,
               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:


                                       -7-
<PAGE>
               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
               assets of the Company, together with its subsidiaries, 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 its subsidiaries 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 Policy for Termination and
          Separation of Employment (the "Severance Plan")) 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 Employment Agreement, he shall not be entitled to
          participate in the Severance 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
          Employment Agreement relied upon, and


                                       -8-
<PAGE>
          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 Employment Agreement,
          nor shall any such payment be reduced by any earnings that Employee
          may receive from any other source.

     (l)  Stock Award Agreements. In the event of a conflict adverse to Employee
          between the terms of this Employment Agreement and the terms of any
          agreement granting Employee stock options or restricted stock, the
          terms of this Employment 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 or any of its subsidiaries.

          (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
               business, products or services of the Company or any of its
               subsidiaries.

     (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.

          (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


                                       -9-
<PAGE>
               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
               and its subsidiaries which are in addition to those rights the
               Company and its subsidiaries have 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 of the Company or
               an affiliate (not otherwise included in the definition of a Trade
               Secret under this Employment 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, Employee
          covenants and agrees that, in connection with the business operations
          and prospective interests of the Company on the date of Employee's
          termination as an employee of the Company, which prospective interests
          are disclosed to Employee prior to or on the date of Employee's
          termination as an employee of the Company, 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 in competition with the Company or materially adverse to
          the Company (unless the Company's Board of Directors shall have
          authorized such activity and the Company shall have consented thereto
          in writing). 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 5(d), the term "Company" shall include Harvest Natural
          Resources, Inc.


                                      -10-
<PAGE>
          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 5(d), 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, 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,
          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 5(d), and (ii)
          Employee has received a payment from the Company pursuant to Section
          4(a)(2)(v), Section 4(a)(3)(s), Section 4(a)(3)(t), Section 4(a)(4)(s)
          or Section 4(a)(4)(t) of this Employment 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
          Employment 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, the Company or any of the Company's
          subsidiaries.

          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 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,


                                      -11-
<PAGE>
          without limitation, the United States of America, having jurisdiction
          over Employee, the Company or any of the Company's subsidiaries.

          By signing this Employment 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, the Company or any of the Company's subsidiaries.

     (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 are obligations which will continue
          beyond the date Employee's employment 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 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 1177 Enclave Parkway, Suite 300, Houston,
          Texas 77077. Notices and communications to Employee shall be sent to
          Employee's home address as indicated by the records of the Company.

     (b)  No Waiver. Except for the notice described in Section 4(f), 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 EMPLOYMENT 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 EMPLOYMENT AGREEMENT, INCLUDING
          THE ARBITRATOR'S FEES. THE ARBITRATOR SHALL NOT HAVE THE AUTHORITY TO
          ADD TO,


                                      -12-
<PAGE>
          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. 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 EMPLOYMENT AGREEMENT. THIS EMPLOYMENT AGREEMENT SHALL IN ALL
          RESPECTS BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS.

     (d)  Assignment by Company; Meaning of "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
          Employment 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 Employment 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 Employment Agreement. As used in this Employment 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 Employment 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 exception of any of the Company's stock
          option plans (and related agreements), restricted stock plan (and
          related agreements) and incentive plans, and the guidelines referred
          to in Section 3(b), 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


                                      -13-
<PAGE>
          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 provision of this Employment Agreement is held to
          be invalid, illegal or otherwise unenforceable, the remaining
          provisions shall be unaffected and shall continue in full force and
          effect, and there shall be deemed substituted for the provision at
          issue a valid, legal and enforceable provision as similar as possible
          to the provision at issue.

     (i)  Enforceability by Beneficiaries. This Employment 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 Employment Agreement to
          Employee's devisee, legatee or other designee or, if there is no such
          designee, to his estate.

     (j)  Reimbursement of Certain Expenses. To the extent Employee shall
          prevail in any arbitration proceeding pursuant to Section 6(c) to
          resolve any dispute or controversy between Employee and the Company
          arising under or in connection with this Employment Agreement, then
          the Company shall reimburse Employee, or pay on Employee's behalf, all
          of Employee's reasonable expenses, including without limitation
          attorneys' fees, incurred by Employee in connection with the
          arbitration.

7.   NOVATION.

This Employment Agreement is a novation to the Employment Agreement between the
Company and Employee effective November 17, 2003, which is hereby extinguished.
As consideration for this novation, Employee acknowledges the value of the
matters described in the recitals to this Employment Agreement and the other
terms of this 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 Employment
Agreement in multiple originals to be effective as set out above.

HARVEST NATURAL RESOURCES, INC.         KARL L. NESSELRODE


By: /s/ Peter J. Hill                   By: /s/ Karl L. Nesselrode
    ---------------------------------       ------------------------------------
    Peter J. Hill
    President and Chief Executive
    Officer


                                      -14-