Occidental Petroleum

Occidental Petroleum Corporation (often abbreviated Oxy in reference to its ticker symbol and logo) is an American company engaged in hydrocarbon exploration in the United States and the Middle East as well as petrochemical manufacturing in the United States, Canada, and Chile. It is incorporated under the Delaware General Corporation Law and headquartered in Houston. The company ranked 183rd on the 2021 Fortune 500 based on its 2020 revenues[2] and 670th on the 2021 Forbes Global 2000.[3]

History

Occidental Petroleum was founded in Los Angeles, California, in 1920.[4] In 1957, Armand Hammer became the company's president and CEO after acquiring a controlling stake.[5] The 1960s marked a period of expansion as Occidental established operations in Peru, Venezuela, Bolivia, Trinidad, and the United Kingdom. In 1961, the company discovered the Lathrop Gas Field in Lathrop, California.[6]

In 1965, Occidental won exploration rights in Libya,[6] where it operated until 1986 when United States economic sanctions led to the suspension of activities.[7] The company diversified in 1968 by entering the chemical business with the acquisition of Hooker Chemical Company, following the Love Canal contamination incident.[8]

In 1971, Occidental received approval to build an oil refinery in Canvey Island in Essex, England, but construction ceased in 1975 due to the 1970s energy crisis. The site remained derelict; the tanks and the chimney were subsequently demolished. Only some concrete foundations and the river jetty remain extant.[9]

In 1973, Occidental negotiated a phosphate-for-natural-gas deal with the Soviet Union, in which the Hammer-controlled firms Occidental Petroleum and Tower International would export to the Soviet Union phosphate, which Occidental mined in northern Florida, in return for the Soviet Union exporting from Odessa and Ventspils through Hammer's firms natural gas that would be converted into ammonia, potash, and urea.[10][11] The total value of this trade was estimated at $20 billion. The construction of Soviet port facilities, designed by Hammer's firms, was partially financed by the Export-Import Bank as endorsed by Nixon.[12][11]

In August 1973, Libya nationalized 51% of Occidental's assets in the country.[13] In February 1974, the company announced a 35-year oil exploration agreement with Libya. 81% of the oil extracted by Occidental Petroleum was to go to the Libyan government, with 19% retained by Occidental Petroleum.[13] In 1986, the company suspended operation in the country due to economic sanctions imposed by the United States. In 2005, Occidental and its partner, Liwa, won 9 out of 15 exploration spots on the EPSA-4 auction, making both companies among the first to enter the Libyan market since the United States lifted its embargo on Libya.[14]

The company was one of the first companies to research developing oil shale.[15]

In 1983, Occidental and Ecopetrol, the Colombian state-owned oil company, discovered the giant Caño Limón oilfield in Arauca.[16] In July 1996, the company sold its interest in 3 oilfields in the Congo to the Congolese government for $215 million.[17] The following year, it paid $3.65 billion to acquire the Elk Hills Oil Field.[18]

In 1986, the company formed a joint venture with Church & Dwight, which makes Arm & Hammer products, for a potassium carbonate plant at Muscle Shoals, Alabama.[19]

On July 6, 1988, an explosion and subsequent inferno on the company's Piper Alpha platform in the Scottish North Sea, resulted in 167 fatalities in what remains the world's most deadly offshore disaster.[20]

In 1990, Armand Hammer died and Ray R. Irani became chairman and chief executive officer of the company.[21][22] In 1991, Occidental sold its stake in IBP, Inc. In 1993, the company sold its remaining coal operations.[23]

In 2006, the government of Ecuador seized the company's interest in block 15 of the Amazon rainforest, forcing the company to take a $306 million after-tax charge.[24][25] In 2016, Ecuador agreed to pay $980 million in restitution to the company, down from the original award of $1.77 billion. The agreement was based on a 2012 arbitration award from the International Center for Settlement of Investment Disputes.[26]

In 2007, Occidental's compensation policies came under scrutiny after it was announced that Irani received $460 million in compensation in 2006.[27] In May 2011, Irani retired as CEO after CalSTRS and Relational Investors, two major shareholders, objected to the company's compensation policies for top executives.[28] President Stephen I. Chazen was named CEO to replace Irani and in 2013, shareholders ousted Irani as chairman.[29] Despite his outlandish compensation, during Irani's tenure, the company grew from a collection of unrelated businesses to one that focuses on oil and gas and the market capitalization of the company went from $5.5 billion to $80 billion.[30][31]

In December 2010, Occidental acquired shale oil properties in the Williston Basin in North Dakota for $1.4 billion.[32] These assets, as well as other assets acquired by Oxy in the Williston Basin, were sold in 2015 for $600 million.[33] The company also sold its proven and probable reserves of 393 e6BOE in Argentina to Sinopec, a subsidiary of China Petrochemical Corporation, and acquired properties in South Texas and North Dakota for $3.2 billion.[34][35]

In January 2011, Occidental partnered with Abu Dhabi's state oil company in developing the Shah Field, one of the largest natural gas fields in the Middle East, through a joint venture known as Al Hosn Gas.[36] Al Hosn Gas became operational in 2015.[37]

In September 2014, Occidental moved its headquarters to Houston, Texas.[38][39] In November, the company sold its 50% interest in BridgeTex Pipeline Company, owner of a 300,000 barrel-per-day crude oil pipeline system that extends from Colorado City, Texas to Texas City, Texas, for $1.075 billion.[40][41] In December 2014, Occidental distributed 80.5% of its shares in California Resources Corporation, the largest producer of oil and natural gas on a gross-operated barrels of oil equivalent basis in California, to Occidental shareholders[42] and distributed its remaining stake to shareholders in March 2016.[43] In June 2017, the company sold land in the Permian Basin for $600 million and used the proceeds to acquire other assets in the area.[44]

In October 2015, Occidental completed the first phase of a $500 million carbon dioxide flooding project in Hobbs, New Mexico.[45] In March 2017, the company and its 50/50 joint venture partner Mexichem began operations of a 1.2-billion-pound per year capacity ethylene cracker at the OxyChem plant in Ingleside, Texas, along with pipelines and storage at Markham, Texas.[46]

In May 2016, Vicki Hollub, who had worked at Occidental since 1981 and joined the board in 2015, became the chief executive officer of the company, the first female to serve as chief executive officer of a major U.S. oil and gas company.[47]

In January 2018, Occidental was found to be partially responsible for the Bayou Corne sinkhole, along with Texas Brine Company and Vulcan Materials Company.[48]

In October 2020, Occidental sold its onshore operations in Colombia to the Carlyle Group for $825 million. The deal included operations and working interests in the Llanos Norte, Middle Magdalena, and Putumayo Basins.[49] Working interest on exploration offshore in Colombia remained under ownership of Oxy in partnership with Ecopetrol, with plans to drill the first well by 2024.[50]

Operations

Controversies

See also

• List of oil exploration and production companies

Books

• Epstein, Edward Jay. Dossier: The Secret History of Armand Hammer. New York: Random House (1996). ISBN 978-0679448020. 418 pages.

External links