Last year, ChevronTexaco Corporation issued its first Corporate Responsibility Report. At that time, we presented a comprehensive look at the actions our company is taking globally to address a range of complex and challenging issues - issues such as human rights, work-force diversity, small business development and environmental protection. This is an update to that report. Events of the past year continue to remind us that these challenges are as great as ever and that we live in an interconnected world where events in one part of the globe can impact all of us.

Our company's primary obligations are to responsibly supply the energy the world needs while delivering the strong financial results that our stockholders expect of us. We are fully committed to doing both.

Additionally, we recognize that companies like ours have a global reach and, with that, the opportunity to be a positive force. Recently, there has been an increasing focus on the role of the private sector in supporting international development efforts. This is an issue of profound importance to ChevronTexaco. We operate in some of the poorest parts of the world and, thus, see daily the devastating effects of poverty. At the same time, the product we provide - energy - can fuel economic and social progress. This gives us a unique opportunity, through the energy we produce, to benefit not only our company and its stockholders, but also local communities and host governments.

Linked to economic development is the issue of governance. Over the past few years, there has been a growing recognition of the need to help build the capacity of governments in developing countries so they can raise the quality of life for their citizens. The management of revenues in the oil and gas industry has been a central focus of this discussion because of the important contribution such revenues can make to resource-rich, developing countries. Our company has supported efforts to bring greater transparency in this area.

Finally, our company also is focused on another key global challenge - finding ways to meet growing energy demand while reducing the environmental impacts of energy development and use.

Supporting Economic Development

Our company's objectives are tied to economic growth around the globe. However, we will achieve those objectives only if the benefits of growth are a positive force for society at large. What must be created is a reinforcing cycle that improves lives, expands markets, and builds safer societies and more stable governments.

Toward this end, we are building new types of partnerships aimed at encouraging both energy development and broad, sustainable economic growth. These partnerships bring together the expertise of nongovernmental and multilateral organizations, financial institutions, development agencies, other companies and, most important, the local communities where we work.

One of our best examples is the Angola Partnership Initiative, a more-than-US$50 million effort to build human capacity and a higher standard of living for communities across the country. In 2003, more than 660,000 Angolans benefited from the agricultural program. Now we are taking steps to open Angola's first micro-credit bank, launch an enterprise development center at a local university and create several distance-learning centers.

Promoting Revenue Transparency

We believe transparency and good governance are the underpinning of social and economic development and critical to ensuring that the benefits of that development are widely shared. That is why we are actively working to encourage greater transparency in the accounting of revenues from oil and natural gas operations. In 2003, we saw remarkable progress in this area in Angola and Nigeria, where our company has a major presence.

In a groundbreaking action, the government of Angola agreed to disclose the signing and social bonus payments associated with a contract extension with our company's Angolan subsidiary. In Nigeria, we are supporting the government in its efforts to publish a number of key government financial indicators, including revenues from the oil and natural gas sector.

Finding Environmental Solutions

One of the greatest challenges our industry faces is the widespread view that energy development is at odds with a healthy environment. Of particular concern is the issue of climate change. We recognize these concerns and are continuing to take steps to address them. At the same time, we are seeking new solutions to another key challenge for our industry: finding ways to safely and reliably supply the energy the developing world needs to fuel economic development.

To meet those challenges, we are working to minimize the environmental impacts of our operations today and also are working to advance the promising cleaner technologies of tomorrow. For example, in 2003, ChevronTexaco was selected by the U.S. Department of Energy to be part of a team to showcase the practical applications of hydrogen energy technology.

We also are working to improve our efficiency and reduce emissions of greenhouse gases. In 2003, our company initiated its first third-party verification of greenhouse gas emissions, which has enabled us to set an emissions goal for 2004 with the assurance that the goal is based on sound and robust baseline data. We also continued to promote consistency in greenhouse gas measurement and reporting in our industry.

A Year of Progress - But More to Do

We have made progress in some key areas over the past year, and I am proud to tell you that we received outside recognition for our corporate responsibility efforts. Employees in our Nigerian affiliate were given the U.S. Department of State's 2003 Award for Corporate Excellence for their sustained efforts to contribute to a higher quality of life in that country.

We also recognize that many of the issues of importance to our company and our customers, employees, neighbors, partners and investors are long-term, and there is still much to be done. I can assure you that ChevronTexaco people everywhere are committed to continuing our work in these areas and looking for new solutions that will improve the lives of people everywhere we operate.

Dave O'Reilly
Chairman of the Board and
Chief Executive Officer

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