Occidental Petroleum 2003 Annual Report Download - page 30

"Off-Balance-Sheet Arrangements" section. The remaining $100 million relates to
various indemnities and guarantees provided to third parties.
Occidental has indemnified various parties against specified liabilities
that those parties might incur in the future in connection with purchases and
other transactions that they have entered into with Occidental. These
indemnities usually are contingent upon the other party incurring liabilities
that reach specified thresholds. As of December 31, 2003, Occidental is not
aware of circumstances that would lead to future indemnity claims against it for
material amounts in connection with these transactions.
It is impossible at this time to determine the ultimate liabilities that
OPC and its subsidiaries may incur resulting from any lawsuits, claims and
proceedings, audits, commitments, contingencies and related matters. If these
matters were to be ultimately resolved unfavorably at amounts substantially
exceeding Occidental's reserves, an outcome not currently anticipated, it is
possible that such outcome could have a material adverse effect upon
Occidental's consolidated financial position or results of operations. However,
after taking into account reserves, management does not expect the ultimate
resolution of any of these matters to have a material adverse effect upon
Occidental's consolidated financial position or results of operations.
ENVIRONMENTAL LIABILITIES AND EXPENDITURES
Occidental's operations in the United States are subject to stringent
federal, state and local laws and regulations relating to improving or
maintaining environmental quality. Foreign operations also are subject to
environmental-protection laws. Costs associated with environmental compliance
have increased over time and are generally expected to rise in the future.
Environmental expenditures related to current operations are factored into the
overall business planning process. These expenditures are mainly considered an
integral part of production in manufacturing quality products responsive to
market demand.
ENVIRONMENTAL REMEDIATION
The laws that require or address environmental remediation may apply
retroactively to past waste disposal practices and releases. In many cases, the
laws apply regardless of fault, legality of the original activities or current
ownership or control of sites. OPC or certain of its subsidiaries are currently
participating in environmental assessments and cleanups under these laws at
federal Superfund sites, comparable state sites and other remediation sites,
including Occidental facilities and previously owned sites. Also, OPC and
certain of its subsidiaries have been involved in a substantial number of
governmental and private proceedings involving historical practices at various
sites including, in some instances, having been named in proceedings under
CERCLA and similar federal, state and local environmental laws. These
proceedings seek funding or performance of remediation and, in some cases,
compensation for alleged property damage, punitive damages and civil penalties.
Occidental manages its environmental remediation efforts through a wholly
owned subsidiary, Glenn Springs Holdings, Inc. (GSH), which reports its results
directly to Occidental's corporate management.
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The following table presents Occidental's environmental remediation
reserves at December 31, 2003, 2002 and 2001 grouped by three categories of
environmental remediation sites:
$ amounts in millions 2003 2002 2001
===================== =============== =============== ===============
# OF RESERVE # of Reserve # of Reserve
SITES BALANCE Sites Balance Sites Balance
----- ------- ----- ------- ----- -------
CERCLA &