Good Neighbor. Good Business. Occidental Petroleum Corporation Social Responsibility Report

2004

OCCIDENTAL IN BRIEF

Occidental Petroleum Corporation (NYSE: OXY) is a world leader in oil and natural gas exploration and production. With oil and gas operations concentrated in the United States, the Middle East and Latin America, Occidental is helping to meet the world’s energy needs. OxyChem manufactures vinyls and specialty chemicals, in addition to chlorine and caustic soda — the building blocks for such indispensable products as pharmaceuticals, water disinfectants and plastics.

Front cover Left: Relay for Life, Bakersfield, CA; Colombia; Oman Center: Oman Right: Colombia, Dallas, Qatar Back cover Left: Colombia; Los Angeles; Bakersfield Center: Oman Right: Oman, Colombia, Bakersfield

Message from the Chairman

Oxy’s 2004 performance was outstanding across the spectrum, including our achievements in the area of corporate social responsibility. Dr. Ray R. Irani Chairman, President and Chief Executive Officer

Our social responsibility efforts generate a good return on investment —

While this report calls particular attention to some of the ways Oxy

they energize employees, minimize our environmental footprint and

employees are converting broad human rights principles into concrete

enhance relationships with our neighbors, partners and host governments.

actions, it is by no means limited strictly to Oxy’s human rights

We believe these initiatives ultimately benefit our stockholders as well,

initiatives. It provides a broad array of the good neighbor practices,

because good corporate citizenship translates into better company

responsible workplace programs and ethical business conduct efforts

performance overall.

in which Oxy is engaged around the world.

One of the highlights of our 2004 corporate social performance was

I would like to commend our employees worldwide, who are working to

the implementation of our new human rights policy, which was approved

ensure Oxy has a positive impact in the areas where we operate. They

by our Board of Directors in December. The policy is the result of

are on the front lines making our operations safer, our environmental

constructive dialogue with representatives from the Interfaith Center

practices stronger, and our communities even better places to live. I am

on Corporate Responsibility, an institutional investment group. I would

pleased to showcase their hard work and dedication.

like to thank these representatives for their thoughtful and productive approach in working with Oxy. Also, it was at their suggestion at last year’s stockholders’ meeting, that the Directors expanded the scope of one of our existing board committees — now called the Nominating, Corporate Governance and Social Responsibility Committee — to include corporate citizenship oversight.

Dr. Ray R. Irani Chairman, President and Chief Executive Officer

2004 Social Responsibility Report

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Good Neighbor. Good Business.

Serving as a good neighbor makes good business sense. As we explore for and develop oil and gas sources to help meet the world’s energy needs, we have found that our strong environmental, social and safety performance is linked intrinsically with our financial success.

Our community relations efforts, safety programs and environmental initiatives have helped us minimize risk, reduce costs, enhance our reputation and, we believe, increase stockholder value. Being a socially responsible corporate citizen is the right thing to do for our employees, our communities and our business. In this report we demonstrate how we are putting Oxy’s good neighbor principles into action, project by project, employee by employee, community by community. The profiles provide a glimpse into the lives of our employees, the diversity of our operating environments and the lengths we go to make a positive impact in the communities near our operations. Enjoy your journey around the world of Oxy...

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ethical business practices Stockholders deserve nothing less than our full commitment to the highest standards of ethical business conduct. From the boardroom to Oxy offices and field locations worldwide, employees are expected to act responsibly, ethically and respectfully and to be accountable for their actions.

E T H I C A L B USINESS PRACTICES

Huma n R i g h t s Occidental has long been committed to the promotion and protection of human rights. In 2004, Oxy adopted a corporate-wide human rights policy to formalize this commitment. The policy incorporates checks and balances into our business practices in a proactive effort to ensure that our operations promote economic development, without jeopardizing human rights, either directly or indirectly.

Oman; Ecuador; Los Angeles; Dallas; Oxy human rights training session, Oman

Human Rights Policy All Oxy Locations Oxy’s human rights policy, one of the most comprehensive of its kind in the petroleum industry, incorporates specific provisions into Oxy’s business activities to protect and promote human rights for employees and residents in the areas where we operate.

TRAINING AND HIRING

SOCIAL IMPACT ASSESSMENTS

date, about 660 employees and security contractors have been trained

Oxy requires that social impact assessments conducted prior to

in Colombia, Oman, Peru, Qatar, the United Arab Emirates, Yemen and

beginning work in non-U.S. locations include evaluations of the potential social and economic impact of Oxy’s operations on local communities and any potential for violence, as required by the

Oxy now requires human rights training for all security employees, including contract employees, as well as for all Oxy managers and new hires. Oxy officers and managers have the responsibility for ensuring that all employees are familiar with the company’s human rights protections. In addition, Oxy will require selected contractors to provide human rights training for their employees. Oxy’s first human rights training session was held in late 2004, and to

the United States. Employees in all Oxy locations are scheduled to complete the training by the end of 2005. The policy also requires background checks for all security department employees and security

Voluntary Principles on Security and Human Rights. The

contract personnel to screen for criminal or human rights violations.

company will identify measures to address specific issues based

CONTRACT PROVISIONS

on the findings.

Oxy will communicate its expectations for ethical conduct and human rights protections to its contractors and suppliers. Its foreign contracts, with some minor exceptions, will be required to include human rights provisions and appropriate monitoring mechanisms.

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Oman; Peru; Oman; Oman; Ecuador; Colombia

“Occidental’s Human Rights policy is one of the stronger company

the ground in difficult environments like Colombia and to devise an

policies on record,” said Sister Doris Gormley, a human rights activist

objective process to measure and verify policy compliance in all

and one of the representatives of the Interfaith Center on Corporate

company operations. As stockholders, we are confident that Occidental

Responsibility, who collaborated with Oxy on developing the policy.

will bring the same energy and commitment to this work as it has

“It positions human rights as a vital component in the company’s

demonstrated during policy development.”

business decisions. The challenge now is to implement the policy on

HUMAN RIGHTS DEFINED

HUMAN RIGHTS COLLABORATION

Occidental’s commitment to human rights includes those rights

Occidental’s human rights policy was developed in collaboration

and freedoms universally recognized in law and set forth in the

with representatives from the Interfaith Center on Corporate

Universal Declaration of Human Rights (adopted by the United

Responsibility, a 33-year-old coalition of 275 faith-based

Nations in 1948), the International Labor Organization’s Declaration

institutional investors, including religious communities, denomina-

of Fundamental Principles and Rights at Work, and the Voluntary

tions, pension funds, health care systems, foundations and

Principles on Security and Human Rights (developed by the U.S.

dioceses with combined portfolios worth an estimated $100 billion.

and U.K. governments, companies in the energy and extractive

The center’s members include, the California Province of the

sectors and private human rights groups, including Human Rights

Society of Jesus, the New Orleans Province of the Society of Jesus,

Watch, Amnesty International, the Prince of Wales International

Brethren Benefit Trust, Catholic Equity Fund, Christian Brothers

Business Leaders Forum and Business for Social Responsibility)

Investment Services and CHRISTUS Health, among others.

and as expressed in the Global Sullivan Principles.

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E T H I C A L B USINESS PRACTICES

Local Cultures and Indigenous People Oxy’s approach in its community relations programs is to minimize operational impact and to serve as a catalyst for social advancement by helping the local residents work with government agencies and charitable organizations to improve their quality of life in a manner that respects the prevailing legal, cultural and social norms in their communities.

Oxy presenting work program to community; OSHAM worker with Oxy geologist; OSHAM work team; Block 64 environmental assessment; Plaza de Armas, Lima, Peru

Community Relations Oxy Peru

In Peru, where Oxy is exploring for oil in the remote, rugged jungles, the company has worked hard to establish open communication and mutual trust with the local communities. Oxy’s interface with indigenous communities is a complex issue and an interesting story. Understanding the interests and needs of the various parties involved offers insight into the complexity of the issue.

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• The Peruvian government, in an effort to revive its struggling economy, has initiated reforms to attract investment from multinational companies. The government views responsible oil and gas development as a means to generate income, promote economic development and improve overall living standards in the country. • Oxy, which holds the petroleum exploration rights to Block 64 in Peru’s northeastern region, is actively exploring for oil and gas reserves. Oxy is steadfast in its commitment to interact harmoniously with the local people, respect their rights, and carry out business activities in a socially and environmentally responsible manner. Oxy’s community relations initiatives are

focused on enabling local communities to assume responsibility

emphasized that an environmental and social impact assessment,

for their own development, while preserving traditional values

with their active participation, would be completed before any

and culture.

drilling began.

• The members of the indigenous communities, within and surrounding

The wisdom of the OSHAM leaders was evident in their first request —

Block 64, live in remote areas generally without electricity or other

negotiation skills training workshops. Oxy organized two workshops,

modern conveniences. Many are seeking broader economic

which were taught by independent consultants. Later, Oxy flew OSHAM

opportunities that will enable them to support their families and

representatives to visit the company’s operations in neighboring

educate their children without leaving their communities. They are

Ecuador to demonstrate the company’s environmental performance in

working through the issues to decide whether it is in their best

sensitive ecological areas.

interest to allow access to their land and increased exposure to the outside world, in exchange for the economic and social benefits, such as jobs, technical training, health care and schools that development brings. • Competing agendas from outside interests further complicate the

In 2002, OSHAM and Oxy completed negotiations and signed an agreement that would allow Oxy to conduct seismic work and drill two exploration wells in exchange for compensation payments for the community. Both sides were mindful of potential pitfalls involving cash payments, so they set up a unique system in which 12 percent of the

issue. Some activists are working in these communities to promote

funds are held in a bank account requiring the signatures of three

ideological views that development should be categorically rejected.

OSHAM designees for withdrawal. The remaining 88 percent of funds

However, this would effectively deny the communities significant

are held in a separate account, administered by Oxy, to fund development

resources that would enable them to raise their standard of living,

projects voted on by the communities. As a result of the agreement,

and challenges the government of Peru’s prerogative to develop its

OSHAM has purchased medical supplies, communication equipment

resources for the benefit of all Peruvians.

and peke-pekes (motorized canoes). In addition, OSHAM is funding

OXY’S NEGOTIATIONS WITH OSHAM

In 2001, Peruvian government officials began holding a series of informational workshops to initiate dialogue on oil and gas development with the area’s Achuar communities and other native groups.

dozens of scholarships that enable its young adults to attend boarding schools and technical trade schools outside the community. “Our people feel better off compared to the past,” said Peas Kaiser, President of OSHAM Federation. “They now feel that there is more

Leaders from five Achuar federations in the area voluntarily attended

interest and support, not only from Oxy, but from the government.”

the workshops, and upon conclusion, all five requested that their

“Before we had no school. I did not study. Now we have a school and

representatives be given a chance to meet with Oxy in Lima to learn more about potential projects. During this time, Oxy, using existing seismic data, identified

our [older] youth are studying in Lima, San Lorenzo and Iquitos thanks to Oxy’s support,” said Pitiur Kunti, OSHAM’s Culture Secretary. “Oxy is honoring our customs. We are working well together. Both parties

prospective exploration areas on the land owned by the OSHAM

are honoring the agreement.”

community, one of the Achuar federations. Following the initial

In addition, Oxy has trained about 25 of the OSHAM community

government workshop, Oxy met nine times with OSHAM leaders to discuss the scope of a proposed work plan, including seismic work and drilling. From the beginning, Oxy made clear that it would not work on OSHAM land without the community’s consent, and

members to assist with the environmental assessment, seismic work and drilling projects. The community members benefit from the jobs, acquired technical skills and medical care, and Oxy is able to utilize their extensive local experience and knowledge.

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E T H I C A L B USINESS PRACTICES

Huma n R i g h t s

Oxy employees, Doha, Qatar; Oxy Oman headquarters Muscat, Oman; Occidental Energy Marketing, Houston

Code of Business Conduct Our Code of Business Conduct, in place since 1997, reinforces our business ethics, policies and procedures. The code requires compliance with all applicable laws, reflects a high standard of ethical behavior and summarizes the company’s policies on matters ranging from conflicts of interest to responsible workplace practices. In addition, the code promotes prompt reporting of suspected violations. It applies to directors, officers and employees and is overseen by the Board of Directors’ Audit Committee. In 2004, the new human rights policy was incorporated into a revised Code of Business Conduct.

Corporate Governance Strong corporate governance policies are a fundamental element of good corporate social responsibility. Oxy’s policies have received high marks from independent agencies. In January 2005, Oxy received a corporate governance score of 10 (out of 10), from GovernanceMetrics International, an independent governance rating agency. Of the 3,200 U.S. and foreign companies rated, Oxy was one of only 34 companies — and the only oil company — to be rated a “perfect 10.” In April 2005, Institutional Shareholder Services, the world’s leading provider of proxy voting and corporate governance services, gave Oxy a Corporate Governance Quotient of 94.3 for companies in the S&P 500 Index, and 96.9 for companies in the energy group. This means Oxy outperformed 94 percent of the S&P 500 companies and 97 percent of the energy companies. Our management and directors will continue to evaluate our governance policies to ensure that the company stays at the forefront of good corporate governance. Our corporate governance policies are published in our proxy statement and on our web site (www.oxy.com).

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OXY LOCATIONS WORLDWIDE

good neighbor practices Oxy has a long and successful track record of working with local communities to provide a positive impact and generate economic opportunities in the areas where we operate. We do this by working with public and private institutions to help raise the standard of living and improve the quality of life through health, educational, environmental, cultural and economic development programs.

G O O D N E I G HBOR PRACTICES

Provi d i n g E d u c a t i o n a l E n r i c h m e n t In disadvantaged and privileged communities alike, education opens the door to opportunity and helps students reach their full potential. Throughout its worldwide operations, Oxy supports educational programs that enhance, enrich and advance the curriculum.

Al Wafa students; Oxy’s three scholarship recipients with students

Al Wafa Handicapped Center Ibri, Oman Oxy Oman In 2001, Aisha Al Shandudi, the director of the Al Wafa Handicapped Center, asked

back at the center applying their new skills and knowledge.

a simple question that would significantly

“We began to see differences immediately and we are so happy with

change the course of the school’s future.

used to teach only sign language, but in Jordan, we learned to teach

Al Wafa serves 120 blind, deaf and physically and learning disabled students in Ibri, the town nearest Oxy’s Safah oil and gas field. The

the results,” said Maya Mohammed Al Azri. “For the deaf children, we them to both sign and use their voices. Some of our deaf students can now pronounce complete sentences.”

director was challenged to provide a quality education with primarily

“We learned so much,” said Jokha Fadhil Al Shandudi. “One of the

volunteer teachers, who put heart and soul into their jobs, but

most important things we learned is to set objectives and targets for

lacked formal training in special education. The training issue was

our students and follow up with evaluations.”

particularly difficult given that there are no special education teaching programs in Oman. So, taking a bold step on behalf of her students, the director asked the visiting Minister of Oil and Gas during a school tour if it might be possible to fund scholarships for three teachers to attend a two-year special education program in Jordan. The Minister, in turn, approached Oxy and the partners collaborated to coordinate the teacher scholarship

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program. Today the three teachers have completed the program and are

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“We also took a course to help us train the parents, so both the school and the parents are teaching the same skills,” said Sabha Sulaim Al Hinai. “Surely the kids have benefited a lot.” In 2005, Oxy will help the school build two additional classrooms for its growing student population.

National Chemistry Week demonstrations, Dallas

National Chemistry Week Dallas, Texas U.S.A. OxyChem www.scienceplace.org Exploding potatoes, chemically frozen ice cream and bacteria-eating bugs…

Because National Chemistry Week is a main attraction for elementary school field trips, the exhibitions are geared to attract the sometimes short attention span of the younger crowd. Often, this means resorting

just another National Chemistry Week

to the lowest common denominator — the “Yuck Factor.”

at The Science Place.

“I hate to say it, but the grosser our experiments are, the better response

With OxyChem’s support, The Science Place puts on a sizzling, fizzling, fascinating and sometimes even explosive display of chemistry experiments for more than 3,400 visitors during one week in October each year. The 2004 theme centered on the ways in which chemistry helps us stay healthy. National Chemistry Week is the primary community outreach activity for the American Chemical Society, an organization of 159,000 chemists and chemical engineers. “Chemistry improves our lives,” said Bill Carroll, Vice President of Chlorovinyl Issues at OxyChem and 2005 American Chemical Society President. “From water disinfection to food safety, chemistry is critical, but it’s easy to take these benefits for granted. Here we can engage the public and remind them of the

we get from the kids,” said Summer Smith, Director of Visitor Experience at The Science Place. “Anything that hits the senses or involves bodily functions grabs their attention. Kids come in expecting something boring, but when we bring it down to their level and show them that chemistry is cool, they walk away inspired!” Among the exhibits were demonstrations on bacteria-eating bugs, using luminescent tools to solve crimes and applying chromatography to remove the dyes in candy. Scientists also dissected a pig’s heart to discuss anatomy, shot potatoes out of PVC pipes to illustrate inertia, and made ice cream to explain the effects of liquid nitrogen. Upon sampling the ice cream experiment, one young visitor said, “Wow! Chemistry tastes great!”

benefits of chemistry in a fun and entertaining way.”

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G O O D N E I G HBOR PRACTICES

Prom o t i n g C o m m u n i t y H e a l t h I n i t i a t i v e s Regardless of location, culture or socioeconomic status, health care is a universal need. Oxy supports health care programs in the areas where we operate to foster healthier and safer communities.

Oveida’s prenatal examination; One week later: Oveida’s newborn; Tatiana is treated for severe burns: Tatiana returns home.

La Variante Health Clinic State of Arauca Oxy Colombia In Colombia, Oxy has helped bring medical care and health education to the rural communities surrounding the Caño Limón oil field in northeastern Colombia. Prior to Oxy’s arrival, residents traveled long distances to seek medical care, or did without. Oxy has helped build, equip and staff 11 medical facilities that provide emergency medical treatment and preventative care. Oxy’s La Variante health clinic is located within the Caño Limón oil production facilities. Doctors on rotating shifts staff the office three mornings each week and in 2004, treated an average of 380 patients per month. The doctors are paid by Oxy, but employed by a private organization. The clinics introduced childhood immunizations into the area and provide medical care to treat a broad array of ailments, from arthritis to snakebites. 12

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“The medical clinic is marvelous,” said patient Paula Correa Rodriquez. “I give thanks to God first of all, and after that for the doctor, because he is very good to me. When I first came here, my knee was very swollen, but today I am healthy.” Severely injured patients are transported from the clinic to Caño Limón’s emergency medical center. Six-year-old Tatiana was brought to the clinic on a motorcycle after she spilled a pan of hot milk, scalding her face, shoulders and chest. Her third-degree burns were treated and bandaged at the clinic and she was then airlifted, at Oxy’s expense, to a hospital burn center. Because her family had no money for medical care, the Caño Limón Employees Association contributed to help pay for her hospital treatment. Tatiana has recovered from her burns with very little scarring and has returned home. One of the highlights of treating community patients is welcoming new babies into the world. La Variante provides prenatal care for expecting mothers throughout their pregnancies, and when it comes time for the babies to be born, the mothers often — as time allows — come to Caño Limón for delivery. To date, more than 480 babies have been delivered at the Caño Limón medical center.

Candlelight ceremony; Oxy employees Gloria Williams and Dennis Robins celebrate life; members of Team Oxy; survivor lap

American Cancer Society Relay for Life Bakersfield, California Occidental of Elk Hills

Oxy’s Relay for Life team was organized in 1997 by an Oxy employee who lost her husband to cancer and was left to raise their two young children alone. Her colleagues rallied in support, and today, that support has carried the team through eight annual relays. The team has grown in spirit and numbers over the years, and fundraising has soared. Relay for Life is the American Cancer Society’s signature event to support cancer education, research and advocacy. In 2004, more than 2.5 million supporters participated worldwide, raising $265 million from 3,800 sites. Team members solicit pledges and take

Why do they walk? “I walk to support cancer research,” said Dennis Robins, an Oxy engineer and an esophageal cancer survivor. “The surgery performed on me didn’t even exist 10 years ago. When I collect pledges, I remind my friends and coworkers that I am probably alive today only because of cancer research. By walking, I feel I am sharing the benefits I’ve received.” “I walk because it’s so uplifting,” said Gloria Williams, an Oxy employee. “We’ve all been impacted by cancer in some way and while it’s so sad to remember those we’ve lost, I am inspired by the survivor lap and reminded how brave these survivors are and how much they have overcome. By walking, I feel that I am personally helping to find a cure.” The Bakersfield Relay for Life is the third largest in the United States, and Oxy is proud to contribute to its success.

turns walking laps over a 24-hour period. The event begins

“We are so amazed by the incredible support that Occidental and their

with an emotional survivor lap, and when evening falls, a candle-

employees provide to the Bakersfield Relay For Life,” said Theresa

light ceremony honors those who have both won and lost their

Olson, Co-Chair of the 2005 event. “Year after year, Team Oxy gives

battles with cancer.

their time, talent and treasure to support our efforts.”

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G O O D N E I G HBOR PRACTICES

Prote c t i n g t h e E n v i r o n m e n t Responsible health, environment and safety management is an integral part of being a good neighbor and employer. Oxy’s strong performance in these areas is detailed in our 2004 HES Annual Report, but here, we profile two of the environmental projects in which we are engaged.

Recycling program kickoff, Qatar; Rashid, the Recycler; The Corniche, Doha, Qatar

Recycling Program Doha, Qatar Oxy Qatar

Qatar is enjoying the benefits of one of the world’s fastest growing economies, but it is also grappling with one of the challenges growth can bring: waste management. Qataris dispose of approximately 479 kilograms (1,100 pounds) of waste per person per year — on the high end compared with other nations. To help resolve the growing household waste disposal problem in the capital city of Doha, Oxy and other sponsors are teaming up to promote cost-effective, environmentally friendly recycling programs. Rashid the Recycler is the project’s poster child — literally. Rashid and his friend, Dana, are featured in a recycling activity book aimed at children that promotes the benefits of waste reduction and encourages families to recycle paper, glass, plastic and aluminum cans.

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The Rashid the Recycler program was developed by UNESCO, the United Nations’ science and education office. The recycling guide, printed on recycled paper in both Arabic and English, has been distributed, along with recycling bins, to 86 elementary schools in Doha. “Science and technology-based waste management will not only contribute to cleaner landscapes, it will also help save energy and generate jobs,” said Dr. Benno Boer, UNESCO Ecological Science Advisor – Arab Region. “We are already seeing results that the Rashid the Recycler program is leading to positive environmental changes in Qatar. Influencing the behavior of our children is key, because the children of today will be the environmental managers of tomorrow.” Several government offices and Doha businesses, including Oxy, have initiated their own recycling programs. With the support of Oxy, Qatar Petroleum and other sponsors, UNESCO plans to expand the recycling program to 19 countries in the region.

Napo River, Ecuador; Long Beach operations, California; Safah field operations, Oman; Natural Gas STAR signing ceremony, Elk Hills field, California

Natural Gas STAR Oxy Oil & Gas U.S.A. Environmental protection and financial success are two links of the same chain. Projects that help a company achieve both environmental and economic goals strengthen the company’s overall performance. A prime example is the U.S. Environmental Protection Agency’s Natural Gas STAR Program, a flexible, voluntary program that helps companies reduce methane emissions while lowering operating costs. Oxy joined the program in 2004. “The EPA is excited to be partnering with Oxy on emission reductions,” said Roger Fernandez, EPA Program Manager. “Natural Gas STAR is a win-win approach to addressing concerns about global climate change. Our partners reduce gas losses, improve operational efficiencies and protect the environment by reducing emissions of

The program requires partner companies to submit a plan for reducing methane emissions and document their progress. STAR also provides a forum for companies to interact and share best management practices and technologies for lowering emissions. Since the program started, Natural Gas STAR partners together have eliminated more than 220 billion cubic feet of methane emissions, the equivalent of removing 20 million cars from the nation’s highways, planting 26 million acres of trees, or heating more than 3 million homes for a year. While the EPA’s Natural Gas STAR program is, of course, aimed at U.S. operations, Oxy has ongoing programs at all of its worldwide operations to identify and install equipment that reduces emissions or increases energy efficiency, as appropriate for individual operations. For example, Oxy Oman, in partnership with the government, is selling 66 million cubic feet per day of previously stranded natural gas. The project is environmentally and financially beneficial in that it captures gas for profit that would otherwise be flared. Oxy intends to build on this success through the Natural Gas STAR program.

greenhouse gases and other air pollutants.”

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G O O D N E I G HBOR PRACTICES

Supporting Disadvantaged Communities In its operations worldwide, Oxy contributes to hundreds of organizations that are successfully addressing societal issues in the areas where we operate. Some of these projects, such as immunization clinics, can quickly make a significant positive impact. Others, like Colombia’s Civil Sector Initiative, are addressing longer-term systemic issues.

Bogotá; Colombian students

Colombia Civil Sector Initiative Oxy Colombia

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With its white sand beaches, rugged

strong and Colombia has made steady

mountains and historic cities, Colombia

progress in restoring civil order. Rays of

offers abundant natural beauty and a rich

hope and reconciliation are radiating from

culture. Unfortunately, Colombia is often

Bogotá to the most remote villages as the

associated with its notorious 40-year

country works to transition from internal

struggle against guerrilla warfare and

strife to peaceful prosperity. Private sector

drug trafficking. Despite these troubles,

investment is rising, the economy is

Colombia’s democracy — one of the

growing, and homicide, theft and kid-

oldest in Latin America — has remained

napping rates are all down dramatically.

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Colombian student; Colombia’s rugged Andes mountains; A Crecer, adult literacy program

Oxy is helping these efforts and promoting human rights through its

“Achieving peace is the greatest challenge our country faces and this

support of the Colombia Civil Sector Initiative, a collaboration between

Initiative is helping to fill a huge void,” said Dr. Cesar Vallejo,

Colombian universities and nonprofit organizations working to repair

President of Colombia’s University Autonoma de Manizales. “It offers

the nation’s frayed economic and social fabric. The goal is to support

the universities the opportunity to engage in peace-building efforts,

the efforts of, and provide training and resources to, the numerous

and it has created a much-needed forum for peace-promoting

grass roots organizations that are successfully implementing peace

organizations to interact and support one another. We are grateful for

and development programs.

Oxy’s active involvement.”

Since 2002, the Initiative has organized two major conferences to bring

Luis Fernando de Angulo, Oxy’s Director of Corporate Social

together academic experts and business and social leaders to discuss

Responsibility, and the faculty at Harvard University’s Hauser Center

conflict resolution, human rights issues and economic development

for Nonprofit Organizations, Center for Latin American Studies and

projects in order to decrease violence and improve living conditions in

Program on Non-Violent Sanctions and Cultural Survival were

Colombia, especially in its poorest regions.

instrumental in helping to launch the Initiative (see page 21).

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G O O D N E I G HBOR PRACTICES

Ecuador; Dubai, United Arab Emirates; Team Oxy charity race, Houston

Standard of Care Because the communities in which Oxy operates are geographically and culturally diverse, we apply our “Standard of Care” approach in our community relations programs to allow us to tailor programs to individual operating situations. • In Latin America, Oxy operates in remote regions where our community neighbors have historically been subsistence farmers living off the land. Oxy’s objective is to serve as a catalyst by helping the communities work with the appropriate government agencies to improve the quality of life. We strive to help facilitate change while enabling the community to assume the responsibility for its own economic, social, cultural and educational development. • In the Middle East, Oxy generally operates in countries with higher per capita income, but in varied operating environments. In Oman, Oxy operates in remote and sparsely populated desert regions, which require a community relations strategy customized to meet the needs of these small, isolated communities and roaming Bedouin populations. In Qatar, Oxy operates offshore, so contributions are directed to help meet community needs in Doha, the capital city. • In the United States, community needs vary widely. Since fundamental infrastructure needs, such as schools, roads, sanitation and water systems generally are met through the public sector, Oxy focuses efforts on enhancing the health and community programs provided by both public and private agencies in the areas near our operations.

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responsible workplace practices A fundamental measurement of any company’s performance is the quality of the working conditions the company provides for its own employees. Oxy is a responsible employer committed to treating every employee with respect and dignity and providing a safe, hospitable and quality work environment. Oxy recognizes that a motivated, well-trained, diverse workforce is a strong competitive advantage.

R E S P O N S I B LE WORKPLACE PRACTICES

Developing Expertise in our International Workforce Oxy’s international operations have ongoing, comprehensive programs in place to recruit and train national employees for jobs at all levels of the company. This is critical in emerging countries striving to enhance economic development, transfer technical expertise to the workforce, increase national employment, and reduce dependence on expatriate workers.

Oxy contractor Salim Bin Ali Tanaf Al Derai; Oxy contractor Nassar Al Abri (far right); the road to Safah; Oxy Oman employee

Oman Community Contractors Safah Field Oxy Oman Oxy is committed to “Omanization,” an initiative to increase the number and enhance the skills of Omani employees in Oxy’s workforce. Oxy is on track to hit its target of a 90-percent Omani workforce in 2005, up from a 10percent Omani workforce when Oxy

the organization set up to oversee Omanization programs. Nassar Al Abri and his team began work as heavy equipment operators for Oxy in December 2004. “I am very happy and optimistic that we got this opportunity from Oxy,” he said. “We are so happy that Oxy is giving Omanis the opportunity to prove they can deliver.” “We have a vested interest in supporting the community,” said Isam Al Zadjali, Oxy Oman’s Business Development Manager. “You have to

began operating in Oman in 1984.

know the people, the tribes and the culture to make it work, but it’s been

Beyond staffing its own workforce with qualified Omani employees,

contractors and 33 Omani employees into the operations and, to date,

Oxy has further expanded its Omanization program to include its contractors. Oxy works with entrepreneurs in the local communities to help them start and build their own companies. Since 2001, Oxy has provided work opportunities to seven contractors. In 2002, with Oxy’s assistance, Salim Bin Ali Tanaf Al Derai set up a business co-op to maintain the gravel roads within Oxy’s Safah field. Three years later, Al Derai’s Safah operations have achieved an 87percent Omanization rate, as well as an excellent health, environment

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and safety record. His company received a five-star rating from OPAL,

Occidental Petroleum Corporation

a very successful program across the board. We’ve brought seven local these contractors haven’t had a single health, environment or safety incident. The true test of the program’s success is that our field operators have requested us to extend these contracts because they’ve been so pleased with the reliability and the high quality of the service.” Omanization is the vision of Sultan Qaboos bin Said, who in the past 35 years has led Oman through a period of remarkable modernization and economic expansion.

Respecting Diversity In Oxy’s 40-year global pursuit of oil and gas, the company has assembled a talented workforce from locations around the world and strategically intermingled employees from all cultures and walks of life to best leverage their talent and expose them to career development opportunities. As a result, Oxy has a strong multicultural, multiethnic heritage that promotes a broader cultural perspective and enables Oxy to work effectively in diverse settings.

Luis Fernando de Angulo Director of Corporate Social Responsibility Luis Fernando de Angulo, Houston

Luis Fernando de Angulo’s experience illustrates Oxy’s strategy in maximizing

of efforts, only limited access to research, and no method of replicating the best practices.”

the effectiveness of its global talent.

So began the Colombia Civil Sector Initiative (see page 16) which

After 16 years working as Oxy Colombia’s Community Relations

progress the country has achieved in improving civil order. Oxy

Manager, Luis Fernando’s life took a dramatic turn. He left his

funded Luis Fernando’s sabbatical enabling him to serve as

comfortable life in Bogotá, where he was born and raised, and headed

Co-Director of the Initiative from 2002 until 2004. During this time,

coincided with other reforms in Colombia which have led to the

for Boston, Massachusetts to serve as a visiting scholar on a special

he also completed 17 graduate level courses at Harvard with an

project at Harvard University.

emphasis on corporate social responsibility and human rights.

This opportunity came about through his previous work with Harvard

“Moving to the United States has been a very rewarding experience,

faculty on community and environmental issues in Colombia. While

although I must admit it was a challenge at times,” recalled Luis

working together, Luis Fernando and Dr. Ted McDonald, Director of

Fernando. “Academic work requires subtle shades of innuendo in

Harvard’s Program on Non-Violent Sanctions and Cultural Survival,

speaking and writing, and I find that it’s difficult to be nuanced in my

had numerous in-depth conversations about how Colombians could

second language. But the experience helped me grow both personally

rise above the strife, and focus on reconciliation and a life beyond

and professionally, and most importantly, I’m very pleased with the

armed conflict.

Initiative’s early results. It is just one part of a larger solution, but we’ve

“The long-standing war with the guerillas had captured the mind and

already seen signs of progress.”

mood of Colombia,” explained Luis Fernando. “We Colombians were

In 2004, Luis Fernando returned to Oxy where he serves as the Director

battle-fatigued. We were putting all of our energy into countering the

of Corporate Social Responsibility. In this position, he has been actively

guerillas’ activities and that was very depressing. Dr. McDonald and I

involved in developing Oxy’s human rights policy and implementing

began talking about how Colombians could refocus that energy into

the employee training program (see page 4). He works in Oxy’s Houston

positive activities that could help revitalize the economy and reduce the

office and serves on the advisory board for the Civil Sector Initiative.

violence. Many good initiatives existed, but there was little coordination 2004 Social Responsibility Report

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E T H I C A L B USINESS PRACTICES

Equal Employment Opportunity All Oxy employees and applicants are considered without regard to race, color, religion, ethnicity, gender, national origin, disability, age, sexual orientation or veteran status. This applies to all phases of employment including recruitment and hiring, compensation, promotion, training, assignment of work and performance evaluation.

A Workplace Free from Discrimination, Hostility or Harassment Oxy is firmly committed to a workplace free from discrimination, hostility or harassment. Hostility or harassment of any employee based upon age, color, gender, sexual orientation, national origin, religion or upon any racial, ethnic, or other personal characteristic is a violation of Oxy’s “zero tolerance” policies. Every Oxy manager is responsible for the communication, implementation and enforcement of this policy at each Oxy location and for complying with all applicable anti-discrimination laws and regulations.

Fair Compensation and Benefits Occidental’s wages, benefits and terms are designed to attract and retain top-quality talent. Compensation is targeted to be competitive within the respective labor markets and to provide significant opportunity for personal growth based on performance.

Employee Rights Occidental has a long-standing policy of respecting employees’ voluntary freedom of association with respect to causes, organizations or political parties they may wish to support or join. Occidental encourages employees to participate in the political process on their own time. Employees have a right to make political contributions in their own name and from their own assets. Employees are not required by the company to make any political contributions. Occidental strives to maintain constructive and respectful relationships with all of its social partners. Work practices at all Occidental locations are consistent with responsible industry practices and local customs.

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Occidental Petroleum Corporation

Safe and Healthy Working Environment Oxy is strongly committed to providing a safe and healthy work environment for every employee. Oxy has stringent health, environment and safety (HES) policies in place at every work site. On all company premises, every employee and contractor is required to abide by these policies, assume responsibility for taking the necessary precautions to protect themselves and their coworkers, and immediately report accidents or unsafe practices or conditions. Oxy has an outstanding safety performance record. Our 2004 Injury and Illness Incident Rate (IIR — the number of recordable injuries and illnesses per 100 workers per year) was just 0.33. This is the ninth year Oxy has achieved an IIR of less than one, an impressive industry accomplishment. Further details are available in the company’s 2004 Annual Report on Health, Environment and Safety.

Work Life Balance Oxy recognizes that maintaining a healthy balance between job duties and the responsibilities associated with everyday life is important in order to retain talent and maximize performance. In addition to competitive paid vacation time off, many sites offer flexible work schedules, telecommuting and other programs aimed at accommodating the needs of a diverse workforce. There are times when employees may struggle with family, emotional or other issues that can affect their well-being and the ability to function effectively in their work and personal lives. Acknowledging the impact of these issues, Oxy offers an Employee Assistance Program, which provides free counseling sessions to support employees, dependents and retirees.

Empowering Employees Oxy is committed to providing its employees with a working environment that is conducive to development and advancement. The company provides employees with numerous opportunities to improve their skills, further their education and otherwise achieve promotions within the company.

2004 Social Responsibility Report

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Moving Forward

Social responsibility is a journey — with no set starting point and no definitive finish line. The further we go, the more we understand, and the better we get at fine-tuning our social contributions. While there are universally recognized financial performance indicators, it is much more difficult to establish measurable standards for social performance that are both relevant and appropriate for our company. However, we truly believe that good corporate citizenship translates into better overall performance, and we are working to put in place comprehensive standards by which to measure our progress and set future goals. We are proud of our accomplishments, our dedicated employees and our success in operating safely, responsibly and ethically, and we will continue to enhance our efforts to meet the diverse and changing needs of our business and the communities where we operate. The journey continues...

An Oxy employee cycling in the MS150, a 150-mile bike ride from Houston to Austin, that supports Multiple Sclerosis research and education programs.

Families of Oxy employees, Los Angeles.

“One hand alone does not clap.” — Arabic proverb

This report was printed on recycled paper.

10889 Wilshire Boulevard Los Angeles, California 90024-4201 310.208.8800 www.oxy.com