Occidental Petroleum Corporation

Good neighbor. Good business. Social Responsibility Report 2005

Oxy In Brief 16

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1. Elk Hills and Vintage Production California 2. Long Beach 3. Hugoton 4. Permian Basin 5. Horn Mountain 6. Colombia 7. Ecuador 8. Bolivia 9. Argentina 10. Libya 11. Yemen 12. Oman 13. United Arab Emirates 14. Qatar 15. Pakistan 16. Russia

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Occidental Petroleum Corporation (NYSE: OXY) is a world leader in oil and natural gas exploration and production and a major North American chemical manufacturer. In the United States, Oxy is the largest oil producer in Texas and the largest natural gas producer in California, with additional operations in Kansas, Oklahoma and New Mexico and a non-operated interest in the deepwater Gulf of Mexico. In the Middle East – North Africa, Oxy has producing assets in Oman, Qatar, Yemen and Libya and is a partner in the Dolphin Project that will supply natural gas from Qatar to markets in the United Arab Emirates. Oxy’s Latin American operations include producing assets in Argentina, Bolivia, Colombia and Ecuador. In addition, the company has producing oil and gas assets in Russia and Pakistan. Occidental Chemical Corporation (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. Worldwide, Oxy is committed to safeguarding the environment, protecting the safety and health of employees and neighboring communities and upholding the highest standards of social responsibility.

Front cover:

Nizwa, Oman

Good Neighbor. Good Business.

State of Arauca, Colombia

Serving as a good neighbor is good business. Our ethical business conduct, responsible workplace practices and good neighbor initiatives are not only requisite for a socially responsible corporation, but are integral to generating a good return on investment. Our social responsibility efforts help motivate employees, reduce costs, minimize risk, enhance our reputation and, we believe, increase stockholder value. In this report, we profile Oxy people, programs and practices from around the world to demonstrate how we are putting our social responsibility principles into practice. While this is by no means a comprehensive listing of all the programs we have in place, these profiles provide an in-depth and personal perspective into the lives of our employees, the diversity of our communities and a few examples of our achievements as a good neighbor.

Social Responsibility Report 2005



“We have stringent policies in place to safeguard the environment, our employees and our neighbors, but the programs you will read about here extend beyond mere compliance.”

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

Message from the Chairman In today’s highly competitive global energy industry, Oxy has succeeded in achieving exceptional financial and operational performance. Beyond the bottom line, our success can also be measured by our reputation as good corporate citizens. Governments, partners, customers and investors seek to do business with companies that operate responsibly. This is a major impetus driving our continuous investment in health, environmental, safety and social performance through all phases of the business cycle, whether prices are high or low. Operating in a socially responsible manner is the right thing to do from a social and business perspective. I am pleased to introduce our third annual Social Responsibility Report, which profiles a range of initiatives for the past year, while also providing updates on programs profiled in previous years. One of the 2005 highlights is the progress we have made in implementing our human rights policy. In last year’s report, we announced the adoption of this policy. In this report, we provide an update on the comprehensive training programs we have



initiated, the risk assessments we are undertaking in new operational areas, and the partnerships we have forged in our efforts to promote human rights in the areas where we operate. In addition, the report showcases a wide variety of our social responsibility programs and some of the awards we have received as a result of our efforts. Many of this year’s profiles feature our environmental protection programs. Environmental protection is a central focus in oil and gas and chemical operations, and we want to emphasize here the pride we take in our environmental initiatives. We have stringent policies in place to safeguard the environment, our employees and our neighbors,

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but the programs you will read about here extend beyond mere compliance. They demonstrate our commitment to minimizing the impact of our operations. From the biologists engaged in protecting sea turtles in Qatar, to our Colombian employees who organized a conference to promote technological advances in reducing air emissions, Oxy employees and contractors are translating our commitment into action. Our social responsibility efforts have the full support of our Board of Directors and executive management team, and our commitment to corporate citizenship is making a positive impact in the countries where we operate. As we move forward, we will continue to seek the most effective solutions to promote sustainable and environmentally sensitive development in a manner that fosters respect for human rights. As markets become increasingly competitive, it takes more than financial capital to achieve business success. It takes a skilled, dedicated and engaged workforce. I want to thank our

Social Responsibility Report 2005

employees and contractors worldwide, not only for their contributions to Oxy’s business success, but also for their efforts in improving the quality of life in the areas where we operate. It is not always an easy task. There are numerous stakeholders who have an interest in our operations, and it is sometimes difficult to meet their diverse and often conflicting expectations. We are responding to these challenges by incorporating the highest ethical, environmental and safety standards into our business activities, while respecting the cultures and rights of neighboring communities. We believe we are striking the right balance between helping to meet the world’s energy needs and fulfilling our commitment to do so responsibly.

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



Ethical Business Practices Oxy’s policies require the company to be responsible, ethical and accountable. Oxy is fully committed to meeting these high standards of ethical business conduct.

Oxy Oil and Gas Legal Department staff, Houston, Texas.



Ethi ca l Business Pract i c e s

Occidental has long been committed to the promotion and protection of human rights for employees and residents in the areas where we operate.

Field tour as part of Oxy’s social impact assessment, Colombia.

Human Rights Policy Update Last year we outlined our Human Rights Policy, adopted by the Board of Directors in December 2004. In the interim, we have made significant progress in implementing the policy, promoting awareness and assuring compliance through training, assessment tools and alliances. Prom ot i n g Awar e n e s s t h ro u g h T rai n i n g

By year-end 2005, more than 1,100 Oxy employees, including nearly all managers, and 800 contract personnel at our operations in Latin America, the Middle East and the United States completed human rights training. The basic training program includes an in-depth examination of the policy, discussions of actual experiences and a comprehensive review of the rights and freedoms recognized in international law and that are set forth in the Universal Declaration of Human Rights and the Voluntary Principles on Security and Human Rights. Our goal is to ensure all participants have a comprehensive understanding of the importance of the policy and its protections and clear directions on how to handle human rights



issues that may arise. The training is required for all Oxy managers, security employees and contractors and new hires in our international operations. In April 2005, groups of Oxy employees from Colombia, Ecuador and Peru attended a Human Rights Policy Implementation Workshop in Bogotá, Colombia. Oxy officers and managers have responsibility for ensuring that all employees are familiar with the company’s human rights policy. C o n d u c t i n g So c i a l I m pac t A s s e s s m e nts

The policy also requires assessments, consistent with the Voluntary Principles on Security and Human Rights, before new work activities begin in any non-U.S. location. The assessments focus on potential social and economic impacts — positive and negative — in the neighboring communities.

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Human rights training session, Oman

Human rights training session, Colombia

For example, Oxy has collaborated with a Colombian think-tank, Fundación Ideas para la Paz, to develop a risk and impact matrix for its operations in the Caño Limón field. This foundation will also serve as an independent monitor of the assessment process in a new operations area. Ecopetrol, the Colombian national oil company and the senior partner in Oxy’s Colombia operations, strongly supports the efforts and is an active participant in the process. Assuring Com p l ia n ce

Oxy’s master international contract forms have been revised to include provisions which promote human rights and international humanitarian law to Oxy’s contractors and government partners. Generally, all international contracts are required to contain human rights provisions. In addition, Oxy is developing performance metrics to evaluate our progress in incorporating human rights provisions and other social responsibility practices into our management systems.

Social Responsibility Report 2005

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, incorporates 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. Corporate Governance

Strong corporate governance policies are fundamental elements of corporate social responsibility. Oxy’s policies have consistently received high marks from independent agencies. In April 2006, Institutional Shareholder Services, the world’s leading provider of proxy voting and corporate governance services, gave Oxy a Corporate Governance Quotient of 97.5 for companies in the S&P 500 Index, and 100 for companies in the energy group. Based on the ISS report results, Oxy outperformed 97.5 percent of the S&P 500 companies and 100 percent of its peer energy companies in the corporate governance arena. Our executive management and directors will continue to evaluate our governance policies to ensure that the company remains a leader in good corporate governance. Our corporate governance policies are published in our proxy statement and on our web site (www.oxy.com).



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, education, environmental, cultural and economic development programs.

A fisherman repairs his net near Al Bustan, Oman.



Go od Neigh b or Prac t ice s

Responsible health, environment and safety management is an integral part of being a good neighbor and employer. Oxy’s overall performance in these areas is detailed in our 2005 HES Annual Report, but here we profile several of Oxy’s environmental protection projects and awards.

Dr. Riegl measures a coral reef, offshore Qatar.

Protecting the Environment Coral Reef Study and Turtle Protection Program Abu Dhabi and Qatar

Dolphin Energy Limited is sponsoring a comprehensive study of the coral reefs offshore Abu Dhabi and Eastern Qatar in order to generate specific data needed to develop a conservation plan to preserve and protect the coral reef habitats. This initiative is being conducted in conjunction with the World Wide Fund for Nature (WWF), the Environmental Agency-Abu Dhabi (EAD) and Qatar’s Supreme Council for the Environment and Nature Reserves (SCENR). Over the years, the corals that grow in the shallow waters of the Arabian Gulf have been damaged by pollution, increased shipping and oscillating temperatures. However, reports from diver surveys have confirmed that while coral reefs in the area are damaged, there are clear signs of coral regeneration. Dr. Bernard Riegl, a world-renowned coral expert from the National Coral Reef Institute at Nova Southeastern University in Florida, was hired by the WWF to manage the project. “We can’t change what has happened,” he said, “but we can take steps, such as with this project, to understand what is going on and how we can help in the future. It is heartening to see Dolphin step up to the plate and give its support to this project.”

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At the conclusion of the project, WWF will produce maps of the coral reef distribution in the southern Arabian Gulf and coordinate a series of workshops for interested parties. “I think that the benefits will extend beyond the coral research project,” said Dr. Fred Launay, WWF Director for the United Arab Emirates. “It will seriously contribute to a new approach for environmental partnership in the region.” This is the first time in the Gulf Cooperation Council region that a major corporation, an international non-governmental organization and environmental regulatory agencies from two different countries have collaborated together on a single project.

Occidental Petroleum Corporation

Hawksbill Turtle

Turtle eggs in nest.

Biologists monitoring turtle nest.

D ol phin C a ring f o r Tu rt l e s

Dolphin Energy’s environmental stewardship extends onshore as well. Dolphin employees are literally taking matters into their own hands to minimize the environmental impact from operations. When Dolphin was granted its Qatar pipeline rightof-way on a stretch of beach near the Ras Laffan Industrial Complex, environmental surveys revealed the area was already spoken for — sea turtles had been returning to the same Qatari shores to lay their eggs for hundreds of years. Working with environmental authorities and turtle specialists, Dolphin has found ways to both protect the native Hawksbill and Green Turtles and proceed with the project. In the spring and summer, female turtles drag themselves up these beaches — the same beaches where they were hatched — and lay up to 150 eggs each. Two to three months later, the baby turtles hatch from their shells and, attracted by the reflection of the moon, run a gauntlet to the sea, with hopes of avoiding predators such as foxes and birds. Only one out of approximately 1,000 turtles survives to return to the same shores to repeat the nesting tradition.

Social Responsibility Report 2005

To help improve their odds, Dolphin, together with SCENR and the Environmental Department of Ras Laffan Industrial City, developed a “Turtle Nest Relocation Protocol,” under the guidance of internationally renowned turtle expert, Dr. Nicholas Picher. The protocol provides for trained Dolphin biologists to monitor the nests, and if the nests are in a high activity area, to gently transfer the eggs to a safer plot. All nests are tagged and surrounded by barriers to protect the eggs from predators. Noise generation is restricted during the nighttime hours, and artificial light is prohibited near the beach so as not to confuse the hatchlings on their moonlit jaunts. To date, biologists have protected 28 nests, with only one nest requiring relocation to safer ground. The Dolphin protocol has now been adopted as a guide for other oil and gas companies to use in the future.

Dolphin Energy Limited is developing the Dolphin Project to bring natural gas from Qatar to the United Arab Emirates. Mubadala Development Company, on behalf of the Government of Abu Dhabi, is the majority owner. Occidental Petroleum holds a 24.5percent interest.

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Go od Neigh b or Prac t ice s

Tom Menges accepts award from Carter Smith.

Oxy habitat enhancement project near Matagorda Bay, Texas.

Mad Island Marsh is home to a variety of bird species.

Protecting the Environment Conservation Leadership Award The Nature Conservancy of Texas

In October 2005, Oxy was honored with the Nature Conservancy’s Conservation Leadership award for environmental best practices. The award was based on a compilation of projects Oxy has implemented in its oil and gas and chemical operations in Texas. “Occidental Petroleum has really infused environmental and conservation concerns into every part of its business which is something that, at the Nature Conservancy, we’re extremely grateful for,” said Carter Smith, Director of the Nature Conservancy of Texas. “They have a wonderful spirit of volunteerism and they encourage employees at all their company sites in Texas to get involved in community projects. It’s a wonderful group of people that is embracing the environment and nature.” Tom Menges, President and General Manager of Oxy Permian, accepted the award on behalf of all Texas-based Oxy employees. “There’s no single success story here. Our success is compiled of dozens of projects both big and small. Oxy employees in our oil and gas business and our chemical business strive to be good stewards of the environment. We can talk about

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our successes internally, but with third-party recognition, we feel like we’re making some real headway.” Oxy Permian was recognized for its water conservation efforts, implementing an improved technique for handling drill cuttings and its beautification projects in Midland, Levelland and Denver City. Oxy’s volunteer efforts were also honored for a habitat enhancement project in conjunction with the Nature Conservancy at the Mad Island Marsh Preserve (southwest of Houston near Matagorda Bay). In addition, OxyChem was honored for its Responsible Care® efforts (see page 24). “Oxy has set an internal goal for leading the industry with respect to environmental practices,” noted Smith. “They have led the way in water quality, recycling projects and in their volunteer efforts.”

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Roger Fernandez, EPA; Krish Ravishankar, Oxy; Wes Scott, Oxy; Carey Bylin, EPA.

Oxy has significantly reduced methane emissions at its Elk Hills field in California.

2005 International Partner of the Year Natural Gas STAR

In 2004, we reported that Oxy had joined the U.S. Environmental Protection Agency’s Natural Gas STAR program, a flexible, voluntary program that works with oil and gas companies to implement cost-effective practices to reduce methane emissions from their operations. As a follow up, we are pleased to report that in 2005, Oxy was named the EPA Natural Gas STAR’s International Partner of the Year. The criteria for the award are based on a company’s active involvement in promoting methane reduction programs internationally. Oxy was specifically recognized for its work in organizing a major Methane-to-Markets (M2M) workshop in Bogotá, Colombia, the first of its kind in Latin America. The workshop provided a forum for government officials and industry representatives from eight Latin American countries to meet and discuss viable, market-based best practices for reducing emissions. M2M is an international initiative that advances cost-effective recovery of methane to use as a clean energy source. “Occidental has done an amazing amount of work to encourage methane reductions outside of the U.S.” said Roger Fernandez, Program Director for the EPA. “We are especially grateful for their work

Social Responsibility Report 2005

in organizing the workshop in Bogotá, where we had an excellent turnout. Perhaps the most important result that came from the workshop was the strong commitment made by Occidental de Colombia’s President to find and implement cost-effective ways to reduce methane emissions.” The Natural Gas STAR program requires partner companies to submit annual reports on their achieved methane reductions. Oxy reported it has reached 7.8 billion cubic feet of cumulative methane emission reductions. (In the initial year companies report aggregated results from previous years. In future years, Oxy will report solely on its single year results.) Fernandez lauded Oxy for contributing one of the “largest and most comprehensive reports we’ve seen to date.”

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Go od Neigh b or Prac t ice s

In its operations worldwide, Oxy contributes to hundreds of organizations that are enhancing the quality of life for local residents. Frank Komin presents Oxy donation to Eleanore Schmidt. The Long Beach Public Library

Supporting Community Enhancement Long Beach Public Library Long Beach, California

A donation to the Long Beach Public Library is a gift that keeps on giving. Oxy’s contribution has enabled the library to purchase more than 1,400 items, mostly books, but a few DVDs and other materials as well. “This donation will benefit so many people,” said Eleanore Schmidt, Director of Library Services. “If you assume a title circulates just ten times in a year, and that’s conservative, 14,000 people will be able to enjoy the experience and the benefit from those books. And that’s just for one year… some of these books will be in the collection for 15 or 20 years. The benefit of this donation is exponential!” The Long Beach Public Library system has a main library and 11 neighborhood branches. More than 250,000 Long Beach residents are active library card holders — roughly half the population of the City of Long Beach — with more than 5,000 patrons on average visiting the city’s libraries each day. Oxy’s books will be used to enhance numerous programs the library offers, including the Raising a Reader program, which promotes reading and

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literacy primarily to families who speak English as a second language. Parents of young children are loaned a bag of books each week for 12 weeks and asked to read to their children 20 minutes per day. The program has been enormously successful in bringing families into the library who would have been unlikely to come otherwise. The library also provides teen programs, reading and multimedia materials for disabled patrons, after-school homework assistance, Internet services, and even coordinates a city-wide “book club” among numerous other programs and services. “The library offers something for everyone,” said Frank Komin, President and General Manager of Oxy Long Beach Company. “Giving to the library is one of the best ways we know to give to the entire community.”

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Blind and visually impaired students study the angel’s costume.

Center Theatre Group Los Angeles, California

Center Theatre Group gives the gift of magic. Each year, the group brings live theater performances to more than 35,000 school children, many of whom have never experienced a live production. “It’s an enriching experience for these students,” said Patrick Owen with the Center Theater Group. “Many studies show that exposure to theater helps kids develop better communication skills, enhance creative thinking and improve their self-esteem.” In November 2005, Center Theatre Group opened the play, A Very Old Man with Enormous Wings, based on a short story by Nobel Prize Laureate Gabriel García Márquez at the Kirk Douglas Theater. Blind and visually impaired students from the Los Angeles Unified School District, were among the attendees. In preparation for the play, Centre Theater Group sent recordings of the actors’ voices, swatches of materials from the costumes and descriptions in Braille to acquaint the sight-impaired students with the story line and characters. Throughout the performance, a narrator provided an audio description of the scenery and stage movements via headsets.

Social Responsibility Report 2005

“This is truly an exciting adventure for this group of students, who I think without exception, are coming to a play for the very first time. This is a venue that is not generally open to blind and visually impaired children and it is wonderful, just wonderful,” said Shirley Kirk, Coordinator for the L.A. Unified School District’s Visually Impaired Program. As the students filed into the theater, they were able to feel the angel character’s feathered wings. Touching the wings, one student said, “Wow! Those wings are definitely enormous!” With support from Oxy and other patrons, the Center Theatre Group is able to bring professional productions to underserved schools and communities to create memorable experiences and ultimately foster long-lasting appreciation for performing arts.

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Go od Neigh b or Prac t ice s

Regardless of location, culture or socioeconomic status, education is a means for advancement. Throughout its worldwide operations, Oxy supports educational programs that are opening the doors of opportunity.

Chicken farms provide sustainable income to local families.

Food preparation classes provide on-the-job training.

Providing Educational Enrichment Block 15 Schools Ecuador

Oxy has helped to build more than 57 elementary classrooms, as well as one secondary school, in the remote areas near its Block 15 operations in Ecuador. Oxy provides the materials to build the classrooms and the Ministry of Education is responsible for hiring the teaching staff and overseeing the curriculum.

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More than 2,000 children and adults benefit from these educational projects and classrooms. School children attend classes on weekday mornings and study math, reading and social science among other subjects. Oxy also provides 15-20 scholarships per year so local students can continue on to college or technical schools in larger cities. Graduates are encouraged to return to the communities to educate future generations.

Fish breeding ponds and chicken farms have been introduced as sustainable sources of income, and have the added benefit of improving the nutritional content of the local diet. Sewing and food preparation classes are training participants for work in local businesses and to start their own small businesses. In 2005, approximately 800 residents participated in Oxy’s agricultural training programs, investing a cumulative 41,000 hours in classes.

But the educational opportunities are not only limited to school children — the schools provide comprehensive adult education programs as well. Economic development is a prevailing need in these communities and Oxy is working to provide residents with the skills and means to help improve their overall quality of life. In addition to basic reading and math classes, Oxy has introduced agricultural programs that provide technical training, tools and resources to help local families plant crops that produce greater yields and can be sold at market.

One of the most recent educational accomplishments is the January 2005 opening of the Schlumberger Excellence in Education Development (SEED) program in which Oxy is a partner in the virtual classroom of the Pedagogical Institute of Limoncocha. SEED has opened up a whole new world to students in these isolated villages by introducing computer courses and the vast resources available through Internet access.

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Quality health care is a universal need that bridges all cultures and communities. In order to foster healthier and safer communities, Oxy contributes to numerous organizations that promote healthy lifestyles and support important medical research and educational programs.

Team Oxy training for the MS 150 ride from Houston to Austin.

Krista Dietz with her “Pedal Partner.”

Promoting Community Health Initiatives MS150 Houston, Texas

Team Oxy spirit peaks every April during one of the world’s largest charitable cycling events. The Houston to Austin MS150 ride brings cyclists, volunteers and supporters together from numerous Oxy locations, along with nearly 13,000 other cyclists, to raise funds for multiple sclerosis research and education programs. The MS150 ride from Houston to Austin is a 182-mile, two-day cycling marathon. Team Oxy has “ridden” to the challenge each year, adding to its numbers, both in members and fundraising. “Corporate teams are the gears that drive events like the MS150 bike tour,” said James Black of the Lone Star Chapter of the National MS Society. “The Oxy team members go beyond just solid community relations; they show passion, enthusiasm and determination in their efforts to help people with MS and their families. That drive is what will truly help us move forward on the road to a cure for multiple sclerosis.” “The Pedal Partners program really brings into focus why we ride,” said Dave Dietz, an Oxy geologist in Houston, who rode in 2005 with his children Zac, Sara and Krista. “The program pairs a cyclist with

Social Responsibility Report 2005

an individual who has multiple sclerosis. It really personalizes the event for the riders. My daughter was able to meet her pedal partner along the route, who by coincidence, turned out to be a neighbor. It’s a great feeling to get to know the people who you are helping.” Bill Roby, Vice President of Engineering for Oxy Oil and Gas, agrees. “It’s a terrific feeling to see so many people come together to help those you’ve never met. The ride is a good reminder of the importance of our social responsibility efforts, not only for our company but for our community.” About 70 employees from Oxy operations in California, Ecuador and Libya and offices in Houston and Dallas are training for the 2006 MS150 ride.

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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.

An Oxy Ecuador employee in Block 15, Ecuador.

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Res ponsi b le work place prac t ic e s

Mobile, Alabama

Oxy is strongly committed to providing safe and healthy work environments and has rigorous health, environment, safety and security policies in place at every worksite to protect employees, contractors and neighboring communities.

Taft, Louisiana

Ingleside, Texas

Promoting Safe and Healthy Working Environments Responsible Care® OxyChem

OxyChem’s active participation in the American Chemistry Council’s Responsible Care initiative is an excellent example of how Oxy is seeking continuous improvement in its health environment, safety and security (HESS) management systems. Responsible Care is a stringent chemical industry initiative that requires each member company to submit a report against a set of uniform industrywide metrics to measure company and industry performance, often beyond governmental regulations. In the U.S. alone, the Responsible Care program has resulted in emission reductions of more than 70 percent and a worker safety record four times better than the manufacturing sector as a whole. OxyChem has been an active member in the program for the past 18 years. In 2002, chemical industry leaders convened to strengthen the Responsible Care principles. “In working toward our vision of no accidents, injuries or harm to the environment, we concluded that we could enhance the Responsible Care program by requiring external certification, instead of internal verification as we had relied on in the past,” said Steve Kemp, OxyChem’s Vice President of Health,

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Environment, Safety and Security. “The Responsible Care program has always been strong, but this action further improves our credibility with external stakeholders.” As a result, in 2005 OxyChem underwent a comprehensive audit of its corporate Responsible Care management systems by BVQi, an independent third party auditor, which certified that the company’s HESS policies and practices are in accordance with the requirements of the Responsible Care guidelines and fully integrated into its core business management systems. OxyChem’s immediate goal is to certify a sampling of plants by year-end 2007, as required. As verification of the company’s sustained safety and environmental excellence, in June 2005, Oxy received the American Chemistry Council’s Responsible Care Leadership Award, one of the industry’s most prestigious awards.

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Luis Carlos Rodriguez Los Angeles, California

OxyChem employees in Talcahuano, Chile.

Oxy Qatar employees confer on new communications equipment.

Developing Expertise in Our International Workforce Oxy is committed to developing employees’ technical skills to enable them to reach their full potential. This is particularly important in countries emerging in the global economy as they strive to grow their economies, develop quality jobs for their citizens and provide the educational opportunities necessary for a properly trained workforce. In our non-U.S. operations, Oxy works closely with our host governments to deliver comprehensive recruitment and development programs. These programs have been successful in increasing local employment, transferring technical expertise and reducing dependence on expatriate workers. Oxy’s operations in Latin America have been very successful in recruiting and hiring local employees. In Argentina, Ecuador, Chile and Colombia, national employees comprise from 93 to 99 percent of our workforce. Similar programs in our Middle East operations are gaining ground, even given extremely competitive job markets and smaller populations. In last year’s report, we profiled Oxy Oman’s successful “Omanization” program that has increased the number of Omani employees in established operations to 229 (89 percent), up from 5 in 1984 when Oxy Oman made its first discovery. In Qatar, Oxy, in partnership with the national oil company, Qatar Petroleum, is participating in an industry-wide Qatarization program. Through Social Responsibility Report 2005

aggressive recruitment, scholarship and development campaigns, Oxy Qatar is on target to achieve the common goal of 50 percent Qatarization by 2008. Worldwide, Oxy has a long-standing practice of moving employees through both international and U.S. positions to expose them to new career development opportunities. Luis Carlos Rodriguez is an example of Oxy’s success in maximizing the effectiveness of its global talent. In 2005, Luis Carlos transferred from a position as a reservoir engineer in Colombia to a temporary assignment in Oxy’s corporate Business Planning and Analysis Department in Los Angeles. “My work here has been quite interesting and has given me insight into strategic decision making at the corporate level, as well as helped me develop specific skills in accounting, business development and finance. As an engineer, it is easy to focus only on your immediate production or reserve goals, so I have definitely benefited from the broader view.” 21

Res ponsi b le work place prac t ic e s

Traders track global energy markets. Trading floor, Houston, Texas

An Oxy employee checks a financial report. Buenos Aires, Argentina

Oxy’s Legal Department reviews corporate governance policies. Los Angeles, California

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. 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 on age, color, gender, sexual orientation, national origin, religion, or 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. Employee Rights Oxy 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. Oxy 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. Oxy strives to maintain constructive and respectful relationships with all of its social partners. Work practices at all Oxy locations are consistent with responsible industry practices and local customs.

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An Oxy geoscientist utilizes the 3-D Visualization Center. Houston, Texas.

An Oxy employee enjoys coffee with a Bedouin. Near Ibri, Oman.

Oxy HES employees perform inspection. Offshore Qatar.

Fair Compensation and Benefits Oxy’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. Equal Opportunity Employment All Oxy employees and applicants are considered without regards 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, work assignments and performance evaluations. 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 struggle with family, emotional or other issues that can affect their well-being and their ability to function effectively at work or in their 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.

Social Responsibility Report 2005

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Moving Forward

At Occidental, social responsibility is a core value and we are proud of our accomplishments, our dedicated employees and our success in operating safely, responsibly and ethically. As our business continues to grow, we recognize and welcome the challenges inherent in adapting our social responsibility programs accordingly. With Oxy operations spanning 4 continents, 12 countries and numerous cultures and languages, we are always looking for better ways to bridge cultural gaps while assuring compliance with our worldwide standard of care. This requires savoir faire in developing policies that are stringent enough to meet global standards, but also flexible enough to allow local managers to tailor their community relations programs so they are aligned with local customs and cultures. To further this objective, we are currently developing an assessment tool to help measure our progress in our social responsibility efforts and set future goals. In 2005, we conducted a pilot program of an assessment tool in several locations and learned that, while it is a good start, it requires further modification and testing in 2006 before we can achieve our ultimate goal of worldwide implementation. We will continue to work toward that target and look forward to updating you on our progress in next year’s Social Responsibility Report. We continue to improve our programs, broaden our stakeholder outreach and integrate these efforts into our business planning and operations activities. As we seek to meet the diverse, and sometimes conflicting needs of our stakeholders, we will draw upon our past successes, as well as our many lessons learned, to address our future challenges.

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Occidental Petroleum Corporation

United States

Colombia

Libya

Wherever you go, the sky is the same color. – Arabic Proverb

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