Occidental Petroleum Corporation is a major American petroleum-producing company headquartered in Los Angeles. Its history is a tale of two very different strategies. It started as a small, unprofitable driller. It ended up as a diversified international energy and chemical conglomerate. The pivot point was Armand Hammer.
In 1920, Occidental was founded in Los Angeles. For decades, it was largely a losing proposition. That bleak outlook was exactly what attracted Hammer. He was an international businessman looking for a tax shelter. He bought a controlling interest in 1957. He intended to use the company to minimize taxes. He abandoned that plan almost immediately. His rigs struck a rich crude oil deposit in southern California. The money changed.
With capital flowing in, Hammer moved fast. He acquired another drilling company. Then, in 1961, Occidental struck a massive natural gas deposit near Stockton in northern California. These finds did more than just fill coffers. They spurred expansion. The company reached beyond oil and gas. It went outside the United States. From the 1960s through the 1980s, Occidental branched into coal mining. It entered the manufacturing of chemicals, plastics, and fertilizers. It even got into the processing and marketing of meat.
“From the 1960s through the 1980s, the company acquired interests in coal mining, in the manufacture of chemicals, plastics, and fertilizers, and in the processing and marketing of meat.”
The firm’s nickname became “Oxy.” The moniker stuck as the company grew into a major international player. A key driver of that growth was Libya. In 1967, Hammer personally won an oil concession there. This followed a major oil discovery in the country. But the geopolitical landscape shifted. The revolutionary Libyan government threatened to nationalize oil production in the 1970s. Occidental offered concessions to prevent that outcome. Those deals severely limited income from the region. Tensions between Libya and the United States worsened. By 1986, operations ceased entirely.
To replenish reserves, Occidental looked north. It expanded into the North Sea. A major oil discovery there came in 1973. The strategy continued with acquisitions. In 1982, the company bought Cities Service Company. It sold off all refining and marketing operations the very next year. Then, in 1986, it acquired Midcon Corporation. This gave Occidental one of the largest natural gas pipelines in the United States.
The chemical segment gained structural importance during this period. In 1987, the company gathered its chemical activities into Occidental Chemical Corporation, or OxyChem. The new subsidiary was headquartered in Dallas, Texas. This move marked Hammer’s decisive effort to shift away from exclusive reliance on energy ventures. Diversification was the goal.
Hammer died in 1990. The leadership passed to Ray R. Irani. He served as president and chief executive officer for 20 years. His tenure had a clear objective. Reduce the debt burden. Refocus operations on profitable oil and gas production. The broad diversification of the Hammer era was unwound. Interests in meatpacking were sold. Agricultural products were divested. Coal mining operations exited. The North Sea assets and gas pipelines from Midcon were sold off.
The focus narrowed, but the scale remained huge. In 1998, Occidental bought huge natural gas deposits in the Elk Hills Field. This field was in southern California and was formerly part of the U.S. government’s Strategic Petroleum Reserve. Two years later, in 2000, the company bought Altura Energy, Ltd. This added reserves in the Permian Basin of Texas and New Mexico.
Geopolitical risks remained a factor. The company pursued lucrative production and pipeline projects in the Persian Gulf. Operations expanded particularly in Oman and Qatar. In 2005, Occidental renewed operations in Libya. This time, the context had changed. The political risk was managed differently. Through OxyChem and other subsidiaries, chemicals remained a pillar. They generated as much as one-third of Occidental’s revenue.
Ray R. Irani stepped down in 2011. Stephen I. Chazen took over. The company had come a long way from its days as a tax shelter experiment. It had survived nationalizations, market crashes, and corporate diversification traps. The focus on core energy assets and chemical production defined the post-Hammer era. The legacy of those early strikes in California and Libya still echoes in the company’s portfolio today.
