EMPLOYMENT AGREEMENT



This Employment Agreement, effective August 1, 2002 is between Harvest Natural

Resources, Inc. (hereinafter sometimes called the "Company") and Peter J. Hill,

a resident of Texas, ("Employee"), the terms and conditions of which are as

follows:



         WHEREAS, the Company and Employee entered into an employment agreement

on July 10, 2000;



         WHEREAS, since July 10, 2000, the Company has experienced significant

changes in its operations and financial condition, including, without

limitation, the relocation of its corporate headquarters, changes in its

management and the effects of the sale of its interest in Arctic Gas Company;



         WHEREAS, the Company has agreed to increase Employee's base salary and

to provide him with the additional benefits (including without limitation

additional severance benefits and extension of the term of employment) described

in this Employment Agreement;



         WHEREAS, the Company has agreed to increase the maximum amount of

bonuses that Employee may be entitled to and has established (or will establish)

new "performance contract" guidelines applicable to Employee to determine the

amount of his bonuses;



         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; and



         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 starts on July 10, 2000 and ends on May 31, 2004. On

May 31, 2004, and on each anniversary thereafter (an "Extension Date") the term

of this Employment Agreement shall automatically be extended for a one-year

period unless and until either party has given written notice to the other at

least one year before any Extension Date that it or he wishes to terminate this

Agreement as of such Extension Date.





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2.       POSITION AND DUTIES.



         (a)      Position. Subject to annual election by the Company's Board of

                  Directors, Employee's position shall be President and Chief

                  Executive Officer of Harvest Natural Resources, Inc.



         (b)      Duties and Responsibilities. Employee's duties and

                  responsibilities initially shall be those normally associated

                  with Employee's position, plus any additional duties and

                  responsibilities the Company initially may assign orally or in

                  writing to Employee. Employee shall undertake to perform all

                  Employee's duties and responsibilities for the Company and its

                  affiliates in good faith and on a full-time basis and shall at

                  all times act in the course of Employee's employment under

                  this Employment Agreement in the best interest of the Company

                  and Company's affiliates.



         (c)      The Company's Right to Change Position or Duties. Subject to

                  the terms of this Agreement, the Company shall have the right,

                  to the extent the Company from time to time reasonably deems

                  necessary or appropriate, to change Employee's position, or to

                  expand or reduce Employee's duties and responsibilities.



3.       COMPENSATION AND BENEFITS.



         (a)      Base Salary. Beginning August 1, 2004, and during the

                  remainder of the term of this Employment Agreement, Employee's

                  yearly base shall be not less than $375,000 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. Base salary for any partial period of employment

                  shall be prorated. The Company shall annually review

                  Employee's base salary.



         (b)      Annual Bonus. Employee shall be eligible for such annual bonus

                  as may be determined by the Human Resources Committee of the

                  Company's Board of Directors and the Company's Board of

                  Directors, which bonus shall be based on Employee's

                  performance under the performance contract guidelines adopted

                  by the Company, the Company's overall performance and any

                  special circumstances the Human Resources Committee and the

                  Board deem appropriate. Any such bonus is to be determined at

                  the discretion of the Company's Human Resources Committee and

                  the Board of Directors. Employee acknowledges that the Company

                  is not obligated to award him any bonus in any year.



         (c)      Employee Benefit Plans. Employee shall be eligible to

                  participate in the employee benefit plans, programs and

                  policies maintained by the Company for similarly situated

                  employees in accordance with the terms and conditions to

                  participate in such plans, programs, and policies as in effect

                  from time to time.



         (d)      Stock Options. Previously Employee has been granted certain

                  stock options pursuant to the Company's stock option plans.

                  This Novation neither increases





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                  nor decreases the number of stock options previously granted,

                  nor does it change the terms under which they were granted.



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

                  vacation.



         (f)      Expenses. The Company shall pay or reimburse Employee for all

                  reasonable expenses actually incurred or paid by Employee in

                  the performance of his services hereunder upon the

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