Corporate Responsibility Report 2005

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A view of the Pascagoula, Mississippi, refinery six months after hurricanes Katrina and Rita struck the U.S. Gulf Coast.

Front cover, right More than 120 Indonesian youth from Aceh and Nias – areas devastated by the December 2004tsunami – received training sponsored by Chevron to learn vocational skills that they will use in reconstruction efforts. The training was held at Politeknik Caltex Riau, the company-funded, first-ever polytechnic university incentral Sumatra, whose classes began in 2001 in such fields as telecommunications, electronic engineering, computerscience and, recently, robotics. Front cover, left During construction of the Benguela Belize compliant piled tower andtopsides, installed offshore Angola, Chevron successfully managed the engineering challenges within budget, ahead of schedule and in a safe manner. This is the first compliant piled tower to be installed outside the U.S. Gulf of Mexicoand is one of the tallest structures in the world. The tower and topsides were built in Angola, South Korea and theUnited States. In December 2005, the Offshore Energy Association awarded it Project of the Year.

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Welcome

Case Study

27 Chevron’s Response to the U.S. Gulf Coast Hurricanes

–After the Asian Tsunami: Chevron’sCommitment to Recovery and Rebuilding

32 About This Report

32 Glossary

IBC GRI and API/IPIECA Index

[ 1 ] www.chevron.com/cr_report/2005/

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Priorities, Progress and Plans

10 Summary of Priorities, Progress and Plans

12 Integration

14 Stakeholder Consultation

16 Community Engagement

18 Human Rights

19 HIV/AIDS

20 Health and Safety

22 Environmental Management

24 Climate Change, Energy Efficiency and Renewables

This Corporate Responsibility Report describes Chevron’s performanceduring 2005 in the eight priority areas we identified and covered in our2004 report. The report contains our most recent annual performancedata as well as descriptions of new and ongoing initiatives in a range ofsocioeconomic and environmental areas. Together, they provide a pictureof how the vision, values and strategies described in The Chevron Wayguide our business success.

Additional information can be found on the corporate responsibilitysection of our Web site [1]. The three previous editions of our corporateresponsibility report are also available on the site.

We welcome your comments and feedback, which may be directed toCRReport@chevron.com.

Overview

1 Welcome

2 A Message From Our CEO

3 Chevron at a Glance

4 Performance Overview

6 A World-Class Workforce

8 The Chevron Way andCorporate Responsibility

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In 2005, the people of Chevron were tested by multiplehurricanes and the challenge of a major acquisition, yet we delivered world-class performance across our business. That performance reflected an enduring commitment to our employees, customers, stockholders, partners and thecommunities in which we operate.

I am particularly proud of the men and women of Chevron who showedtremendous courage and commitment in their response to last year’s naturaldisasters when many of them, like somany others, lost everything.

At the core of our corporate responsibilityperformance are the company’s ongoingbusiness investments to developaffordable, reliable energy supplies in asafe, environmentally responsible way.Highlights of our business performanceare included in our 2005 Annual Report,titled Human Energy. We leverage thoseinvestments in a manner intended tocreate social and economic value in thecommunities and countries where we dobusiness. Our progress in doing that – andareas for improvement – are highlightedin this report and on our Web site [ 1].

We made progress in a number of areas.Among our accomplishments were oursafest year ever; a relaunch of TheChevron Way, our statement of valuesthat drive all our actions and businessdecisions; deployment of a global HIV/AIDSpolicy; the development of a HumanRights Statement; and meeting our goalfor greenhouse gas emissions. We’reparticularly pleased to note that Lloyd’sRegister Quality Assurance determinedthat our management system foroperational excellence in health, safety

and the environment met or exceededthe ISO 14001 and OHSAS 18001international standards.

Going forward, we will continue to focuson areas of improvement, with safe andreliable operations being foremost amongthem. We deeply regret that six peopledied in 2005 working on behalf of Chevron.We will not rest until we achieve our goalof zero injuries across the company. We also recognize and share the concernsof governments and the public aboutclimate change, and we will continue toimplement the climate change strategywe developed four years ago. Human and institutional capacity building willremain at the center of our communityengagement programs. Other areas offocus include global implementation ofour HIV/AIDS policy and the deployment of our new Human Rights Statement.

The past year was one of great change in the energy industry. Growing demand,difficult-to-access resources and complexoperating environments make deliveringreliable, affordable energy one of thebiggest challenges we face as an industryand as a global community. As part of a continuing dialogue on this dynamicenergy future, we launched a uniquecorporate advertising campaign. It includes an interactive forum atwww.willyoujoinus.com to encourage a

global conversation about the criticalissues that will shape the future ofenergy, such as the development of newenergy sources and energy conservation.Since its launch in September 2005,several hundred thousand people from170 countries have visited the site.

We believe dialogue of this kind is the firststep on the path toward real solutions.But, ultimately, the creation of a secureenergy future will require responsible,informed leadership from everyone in theenergy value chain – producing countries,consuming countries, energy companies,policy makers and communities. Thisleadership must be rooted in action. We stand ready to work with ourstakeholders to build that future.

The success of our business rests on theconfidence and trust put into our companyby employees, stockholders, businesspartners and communities. The corporateresponsibility efforts detailed in thisreport are focused on contributing to and enhancing that trust. We hope you’llfind it informative and useful.

Sincerely,

Dave O’Reilly

A Message From Our CEO

Dave O’Reilly, Chairman and CEO of Chevron Corporation.

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OverviewChevron is the fifth-largest integratedenergy company in the world, measuredby market capitalization. Headquarteredin San Ramon, California, and conductingbusiness in approximately 180 countries,we are engaged in every aspect of the oil and natural gas industry, includingexploration and production; refining,marketing and transportation; chemicalsmanufacturing and sales; and powergeneration. Chevron has a diverse,multicultural workforce of more than53,000 employees whose experience,talent and creativity enable the companyto achieve and sustain world-classperformance.

Chevron’s acquisition of UnocalCorporation in August 2005complemented our existing upstreampositions in key strategic regions,including Southeast Asia, the Caspianand the deepwater U.S. Gulf of Mexico.

In 2005, we produced an average of more than 2.5 million barrels per day of crude oil and oil-equivalent, withapproximately 70 percent of theproduction occurring outside the UnitedStates in more than 20 different countries.

UpstreamMajor producing areas include Angola,Australia, Canada, Indonesia, Kazakhstan,Nigeria, the Partitioned Neutral Zone(between Saudi Arabia and Kuwait), Thailand,the United Kingdom, the United States andVenezuela. Major exploration areas includeAngola, Australia, Nigeria, the U.S. Gulf ofMexico, Thailand and the Gulf of Thailand.

Chevron holds vast natural gas resources in some of the world’s most prolific basins,including Australia, where we are the largestholder of undeveloped natural gas resources.Plans are under way to commercialize theseresources through liquefied natural gas andgas-to-liquids technologies.

DownstreamWith 20 wholly owned and affiliatedrefineries, Chevron processed approximately1.9 million barrels of crude oil per day in 2005 and averaged approximately 3.8 million barrels per day of refinedproducts sales worldwide. Strategic focusareas are Asia, the West and Gulf coasts of North America, Latin America and sub-Saharan Africa. Worldwide, we marketproducts under the Chevron, Texaco andCaltex motor fuel brands. Our products are sold through a network of approximately 26,500 retail outlets, including those of affiliated companies.

Chevron at a Glance

At the Hawaii Refinery and across the company, a main tenet of operation is “Do it safely or not at all.”Caltex™ service station, Singapore.

[ 1 ] www.chevron.com/cr_report/2005/[2] www.chevron.com/about/

www.chevron.com/operations/www.chevron.com/brands/

Other BusinessesOur businesses extend beyond production,exploration, refining, marketing andtransportation and include:

� Chevron Energy Solutions Company,which helps businesses and publicinstitutions conserve energy anddevelop renewable and conventionalpower projects.

� Chevron’s geothermal business, whichdevelops and produces geothermalenergy in various countries. Chevron has developed more than a quarter of the world’s geothermal energy and is currently the world’s largestgeothermal energy producer.

� Chevron Global Power Generation, whichdevelops and markets commercial powerprojects worldwide.

� Chevron Technology Ventures LLC, whichdevelops and commercializes emergingtechnologies and new energy systems.

� Chevron Phillips Chemical Company LLC,one of the leading manufacturers ofcommodity petrochemicals. Chevronowns 50 percent of the company.

� Chevron Oronite Company LLC, whichmarkets more than 500 performance-enhancing products and supplies one-fourth of the world’s fuel andlubricant additives.

Chevron is a publicly traded company listedon the New York Stock Exchange and thePacific Exchange. More information on ourstructure, operations and brands can befound on our Web site [2].

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Performance Overview

The following are capsule summaries ofachievements and events we have identifiedas significant to our corporate responsibilityperformance in 2005 and challenges weface in 2006 and beyond.

Response to Natural Disasters We provided immediate and long-termresponse and assistance to communitiesaffected by such natural disasters ashurricanes along the U.S. Gulf Coast and in Central America and the Caribbean; thetsunami in South Asia; and the earthquakein Pakistan. Along the Gulf Coast, we safelyevacuated all offshore employees andcontractors, encouraged those workingonshore to evacuate to safe locations, and shut down and secured onshore andoffshore facilities. We pledged immediaterelief and supported short-term recoveryefforts, including $8 million in contributionsto relief agencies and nearly $9 million ingrants and loans to employees.

Management Systems Lloyd’s Register Quality Assurance reviewedour Operational Excellence ManagementSystem (OEMS) and concluded that “thedesign of OEMS fully addresses, and in some

respects goes beyond, the requirements of ISO 14001 and OHSAS 18001.” These are leading international standards forenvironmental management, and health andsafety management. We also made progresson developing global standards in selectareas to make sure OE expectations are met across the company. One example is the Environmental, Social and Health ImpactAssessment (ESHIA) newly developed by our international upstream organization for major capital projects.

Human Rights We approved a Human Rights Statement inearly 2006. Grounded in The Chevron Way,it makes clear our commitment to humanrights, provides guidance to employees and acts as a framework for constructivedialogue. Deployment will begin in 2006.

Challenging Situations Together with others, we continue to seekconstructive solutions to the complex issueswe face in countries where we operate. In the Niger Delta, Chevron Nigeria Limited(CNL) began working with multistakeholderRegional Development Councils that willdesign and implement their own community

development projects. Like many othercompanies that operate in the Delta andwhose employees live there, CNL also hasbeen affected by the violence in the region.A serious incident involving a nonworkforcefatality occurred at CNL’s Escravos facility in February 2005.

Revenue Transparency We began participating in the newlyestablished International Advisory Group, a panel of representatives from acrosssectors who are working to internationalizethe scope of the Extractive IndustriesTransparency Initiative. We also engagedwith the government of Kazakhstan in itsendorsement of the initiative.

Renewable Energy With the acquisition of Unocal, we are now the largest renewable energy produceramong global oil and gas companies. We produce 1,152 megawatts of renewableenergy, primarily from geothermal sources (1,150 megawatts). In 2005, operation of thesegeothermal assets avoided the generationof 1.88 million tons of greenhouse gas (GHG)emissions (CO2 equivalent) compared withconventional coal-fired operations.

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Change over the year

Area of improvement Area of decline Unchanged or no significant improvement or declineNOx (nitrogen oxides) SOx (sulfur oxides) VOCs (volatile organic compounds)

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Socioeconomic

Fatalities (workforce) 17 6 [0] -11

Days Away From Work Rate (workforce) 0.18 0.12 [0.14] -33%

Total Recordable Incident Rate (workforce) 0.51 0.41 [0.40] -20%

Employee Motor Vehicle Incidents (per million miles driven) 3.01 3.65 21%

Percent of female and non-Caucasian males at the senior-executive level worldwide 20.8 19.4 -7%

Percent of females at midlevel positions and above worldwide 9.9 10.0 1%

Total corporatewide spending in community investment (US$ million) 63.8 73.1 15%

Environmental

Number of petroleum spills 986 846 -14%

Volume of petroleum spills (barrels) 15,514 47,934 209%

Global SOx emissions (thousands of metric tons) 133 119 - 1 1%

Global NOx emissions (thousands of metric tons) 114 122 7%

Global VOC emissions (thousands of metric tons) 427 469 10%

Number of environmental, health and safety fines and settlements 469 577 23%

Total GHG emissions (millions of metric tons of CO2 equivalent) 60.7 59.7 [61.5] -2%

GHG emissions from flaring and venting (millions of metric tons of CO2 equivalent) 14.9 14.8 -1%

Total energy use (trillions of Btu) 873 853 -2%

Energy efficiency (Chevron Energy Index) 76 76 0%

Key Corporate Responsibility Performance Indicators 2004 2005[Goals, shown in brackets, were established prior to Chevron’s acquisition of Unocal]

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Performance RecognitionDuring 2005, several independentorganizations recognized Chevron for our practices and performance.

Chevron was included in the newly launchedDow Jones Sustainability Indexes for NorthAmerica and for the United States, whichevaluate the top 20 percent of eachindustry sector in terms of economic,environmental and social criteria. Theindexes were compiled by SAM Group(Sustainable Asset Management), whichanalyzed 600 companies using an approachthat considers such issues as corporategovernance, climate change, supply chainstandards, human capital development and labor practices.

For the second consecutive year, theCarbon Disclosure Project’s (CDP) ClimateLeadership Index ranked Chevron in the top

five of all global energy companies. The CDP is sponsored by 155 institutionalinvestors with a combined $21 trillion inassets. It recognizes best-in-classcompanies according to managementstructure, climate strategy and capabilities.

Chevron placed in the top quartile of theGoldman Sachs Environment, Social andGovernance Index, which ranks energycompanies for environmental and socialperformance and overall managementquality. The ranking, announced in 2005, is based on 2004 data.

The Human Rights Campaign recognizedChevron for earning a perfect score on its 2005 Corporate Equality Index. Theindex is a tool to measure how equitablycompanies are treating their gay, lesbian,bisexual and transgender employees,consumers and investors.

Flaring The Sanha Condensate Project, whichbecame operational in 2005 in Angola,addresses the largest single source of flaringfrom our operations. It will reduce our flaring and venting, cutting GHG emissionsby more than 2 million tons per year. We alsoestablished an environmental performancestandard to ensure operational excellence in the management of upstream flaring andventing across all operations outside NorthAmerica. The standard, which is aligned withinternational best practices, will help lowerour greenhouse gas emissions.

Global Supplier Development During 2005, we increased spending with small businesses to $1.8 billion, or 27.5 percent of total U.S. domesticexpenditures. This increase from $1.4 billionin 2004 reflects our commitment to build a supplier base that reflects the diversity of our customers, host communities and the markets we serve. Overall, we spentapproximately $20 billion globally on goods and services. To learn more about our global supplier development, pleasevisit our Web site [ 1].

[ 1 ] www.chevron.com/cr_report/2005/stakeholder/

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Net income $13,328 $14,099

Sales and operating revenue $150,865 $193,641

Capital exploratory expenditures $8,315 $11,063

Total assets at year-end $93,208 $125,833

Total debt and capital lease obligations at year-end $11,272 $12,870

Stockholder equity at year-end $45,230 $62,676

Per-share data

– Net income – diluted $6.28 $6.54

– Cash dividends $1.53 $1.75

– Common stock price at year-end $52.51 $56.77

Return on capital employed 25.8% 21.9%

Return on stockholders’ equity 32.7% 26.1%

Total debt to total debt-plus-equity ratio 19.9% 17%

Tax expense

– U.S. income taxes $2,301 $2,435

– International income taxes $5,216 $8,663

– Income taxes on discontinued operations $100 $0

– Taxes other than on income $19,821 $20,782

Research and development $242 $316

Stock repurchases $2,100 $3,000

Financial Highlights 2004 2005US$ million, except per-share amounts

Net production of crude oil and natural gas liquids 1,850 1,812(thousands of barrels per day)

Net production of natural gas 3,958 4,233(millions of cubic feet per day)

Net oil-equivalent production 2,509 2,517(thousands of oil-equivalent barrels per day)

Refinery input (thousands of barrels per day) 1,958 1,883

Sales of refined products (thousands of barrels per day) 3,908 3,768

Net proved reserves of crude oil, condensate and natural gas liquids (millions of barrels)

– Consolidated companies 5,511 5,626

– Affiliated companies 2,462 2,374

Net proved reserves of natural gas (billions of cubic feet)

– Consolidated companies 16,128 20,466

– Affiliated companies 3,547 2,968

Net proved oil-equivalent reserves (millions of barrels)

– Consolidated companies 8,199 9,037

– Affiliated companies 3,053 2,869

Number of employees at year-end 47,265 53,440

Total payroll (millions of dollars) $2,858 $3,151

Employee benefit costs (millions of dollars) $1,386 $1,777

Operating Highlights 2004 2005

Felicia Hernandez is an employee at a Texaco™station in Lake Jackson, Texas, United States.

1 Excludes approximately 9,600 service station employees2Excludes approximately 6,000 service station employees

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Chevron’s vision to be “the global energy company most admired for its people, partnershipand performance” guides us in creating an inclusive company culture that helps attract, retainand inspire our diverse global workforce. More than any other asset, the creativity and talentof our people enable the company to achieve and sustain world-class performance.

Invest in PeopleOur Invest in People strategy, which builds on previous work, continued to be the focusof our efforts in 2005. Its broad emphasis is on increasing the global nature andnationalization of our workforce, building thetalent pool of our leadership worldwide, anddeveloping the core skills and competenciesof our employees. We believe that thisstrategy will help us maintain and strengthenthe diverse workforce that has made us the partner of choice around the world.

Metrics have been identified to track ourperformance over time in achieving theobjectives of our strategy. For example, wetrack our progress in increasing the diversityof our total non-U.S. workforce who workoutside their countries of origin. We alsocapture the percentage of senior-levelleaders who have completed assignmentsoutside their home countries. In addition, we evaluate the key drivers that lead to ahighly engaged workforce, whose level ofmotivation and commitment to our businessis an important competitive advantage.

While developing a strategy and metrics to assess our progress are important, anumber of projects and initiatives are now under way to support our strategy.

Examples include:

� Implementing programs at the corporateand business unit level to incorporatestaffing requirements into businessplanning and capital budgeting in order to better forecast our short- and long-term workforce needs.

� Progressing on a talent sourcing initiativeto recruit from a wider range ofuniversities and colleges worldwide as well as to increase global hiring ofexperienced people.

� Creating new-leader developmentprograms across the company in additionto supporting existing programs.

� Continuing the Horizons and ChevronTechnical University training programs fornewly hired engineers and earth scientists.

In addition to the measurements describedabove, we continue to track metrics thatreflect our efforts to increase therepresentation of women and non-Caucasianmen in senior-level positions companywide.At the end of 2005, women representedapproximately 21.1 percent of our totalglobal workforce. At midlevel and above,women represented 9.8 percent of

A World-Class Workforce

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At the end of 2005, our worldwide staffing was 53,440, excluding service station employees.This represents an 11.6 percent increase in staffing from the previous year. The increase is due primarily to the addition of employees who joined the company as a result of the Unocalacquisition. Unocal had approximately 6,300 employees prior to the acquisition, and about5,800 continue to work for Chevron. At the end of 2005, approximately 700 employees weregranted or were to be granted severance packages, or otherwise had chosen to leave thecompany. Approximately 17.2 percent of our U.S. workforce is represented by unions.

North America 45.7%

Asia-Pacific 25.6%

Africa 13.0%

Europe/Middle East 9.6%

South America 6.1%

Global Workforce at Year-End 2005 – Geographic Breakdown

employees. At the senior-executive level,women and non-Caucasian men heldapproximately 19.4 percent of the positionsat the end of 2005, down from 20.8 percentin 2004. We will continue to focus ourefforts on the global people strategies toaddress our goal of increasing diversity atthe senior-executive level.

To succeed in diverse operatingenvironments, we need a skilled globalworkforce who represent the communitiesin which we operate and the markets weserve. At the end of 2005, approximately94.6 percent of Chevron’s employees wereworking within their home countries.

Employee FeedbackSeveral mechanisms exist for our employeesto provide their feedback to the company.The Chevron Hotline is a 24-hour resourceavailable to employees to share theirconcerns or report issues (see page 12).Employees can also speak confidentially to a Chevron ombudsperson who providesproblem-solving assistance.

To assess our employees’ level of engagement,as well as their perspectives of our overallperformance, we conduct a global employeesurvey approximately every two years. The next survey is scheduled to take place in 2007. On a more frequent basis, weconduct Pulse Surveys, which draw on arepresentative sample or subset of employeesfor feedback on a particular issue.

In 2005, we invited nearly 6,000 randomlyselected employees from around the worldto complete one such survey, which includedtheir views about working for Chevron. The overall response rate for the survey was 65 percent. Results from this most recentsurvey were compared with earlier resultsfrom our 2004 Global Employee Survey and are presented in the table to the right.

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Employees rate their level of agreement with these statements

I believe strongly in the goals and objectives of Chevron.

I am proud to be a part of Chevron.

Chevron is a company that cares about the health and well-being of employees.

Comparison Between Employee Surveys

We continued to post very positive results on most survey items comparedwith norms identified by International Survey Research, a leading employeeresearch firm, for high-performing companies across all industries as wellas the oil and gas industry alone. The improvement was made in specifictargeted areas, and we will continue to concentrate our efforts onengagement, retention and performance.

Right Fabio Teixeira in Lagos, Nigeria, is a memberof the XYZ Network, geared toward youngeremployees. XYZ is one of 10 diverse, interregionalemployee networks. Below Representatives from the San Ramon, California, XYZ Network meet withgroup adviser Don Paul, Chevron vice president andchief technology officer.

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The decreases in percentages for 2005 are due to a number of factors,including attrition and the inclusion of employees from Unocal, which had aless diverse workforce. While our recruitment efforts have yielded positiveresults, we have yet to achieve the diversity we seek in our workforce. Wewill continue to pursue our current staffing initiatives to address this issue.

2004 2005

Minorities among total employees 34% 31%

Women among total employees 28% 29%

Minorities among officials and managers 23% 20%

Women among officials and managers 23% 21%

Minorities among professionals 24% 24%

Women among professionals 24% 28%

U.S. Equal Employment Opportunity Commission Statistics

Employee NetworksAs a way of supporting diversity andfostering inclusion in the workplace,Chevron has 10 officially recognizedemployee networks; each is open to anyemployee who wants to support itsmission. There are established networksfor women, Asian, Black, boomers, Filipino,lesbian and gay, Hispanic, Native American,and disabled employees. The XYZ Networkis geared specifically for younger-generation employees.

Profile: XYZ Network’s Fabio Teixeira As a younger employee, Fabio Teixeira looks atChevron’s more seasoned employees and seeksto someday attain their level of experienceand knowledge. Fabio’s interest in developinghis own career motivated him to get involvedin our XYZ Network, an organized group ofyounger employees who network acrossorganizational boundaries to explore careerdevelopment opportunities. In 2005, the XYZNetwork hosted a Career Expo that featuredChairman Dave O’Reilly as the keynotespeaker and offered a number of careerdevelopment workshops for participants.

Until his recent reassignment to Nigeria,where he is the joint-venture planningmanager for the Nigeria/Mid-Africabusiness unit, Fabio served as thecoordinator of the network’s Houstonbranch, the largest of 15 XYZ sites acrossthe company. Now settled, Fabio hasreconnected with the company’s local XYZbranch in Nigeria so that he can continue to achieve his own career goals and help his peers advance theirs. Worldwide, thenetwork has approximately 2,280 members.

2004 Global Employee Survey

87%

87%

80%

2005 Employee Pulse Survey

91%

89%

83%

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[ 1 ] www.chevron.com/about/chevron_way/

The Chevron Way

VisionAt the heart of The Chevron Way is ourVision... to be the global energy companymost admired for its people, partnershipand performance.

ValuesOur company’s foundation is built on ourValues, which distinguish us and guide our actions. We conduct our business in a socially responsible and ethical manner.We respect the law, support universalhuman rights, protect the environment andbenefit the communities where we work.

These Values are: Integrity, Trust, Diversity,Ingenuity, Partnership, Protecting People and the Environment, and High Performance.

StrategyOur Strategic Plan translates our Vision into action. It aligns and integrates ourorganization, inspires confidence anddifferentiates us from the competition.

Major Business Strategies Global Upstream: Grow profitability in core areas and build new legacy positions. Global Gas: Commercialize our equity gasresource base by targeting North Americanand Asian markets.

Global Downstream: Improve returns by focusing on areas of market and supply strength.

Enabling StrategiesThree enabling strategies apply to all parts of the company:Invest in people to achieve our strategies.Leverage technology to deliver superiorperformance and growth.Build organizational capability to deliverworld-class performance in operationalexcellence, cost reduction, capitalstewardship and profitable growth.

To read more, please visit The Chevron Way Web site [ 1].

The Chevron Way andCorporate Responsibility

1 BC&E Code – Business Conduct and Ethics Code2OEMS – Operational Excellence Management System

The Chevron Way establishes a common understanding of our vision, values and strategy foreveryone who works at Chevron and for all who interact with us. It forms the core aroundwhich our corporate responsibility priorities are integrated into our overall business. The firstpriority, integration, refers to the use of our existing business systems, processes and policiesto effectively manage the other priority areas and drive measurable progress in each.

Climate Change, Energy Efficiencyand Renewables

StakeholderConsultation

EnvironmentalManagement

CommunityEngagement

Human RightsHealth and Safety

HIV/AIDS

The Chevron Way• Vision

• Values

• Strategy

Integration

• Corporate Governance

• Strategic & BusinessPlanning Process

•BC&ECode1

• OEMS2

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Tengizchevroil is constructing new homes for families affected by a government-mandated move fromSarykamys, Kazakhstan, a village south of the Tengiz Field. The relocation is being conducted according to World Bank guidelines. Chevron is a 50 percent partner in Tengizchevroil.

This section describes our progress in eight priority areas we first identifiedthrough internal and external consultation for the 2004 CorporateResponsibility Report. These priorities, which reflect the core elements of our corporate responsibility framework, may change over time as ourbusiness and business environment change.

Priorities, Progress and Plans

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1010

Summary of Priorities, Progress and Plans

PRIORITY AREA

� Conduct training with business units on the Corporate Responsibility (CR)Expectations, beginning in 2005.

WHAT WE SAID WE WOULD DO IN 2005

� Continue to consult regularly with stakeholders on key issues at alllevels, as well as develop a more systematic approach to stakeholderconsultation at the corporate level.

� Develop tools that will encourage a more consistent approach tostakeholder consultation, where appropriate, across our businesses.

� Continue annual CR reporting, with the goal of continualimprovement.

� Continue deployment of our community engagement strategy; target an increased portion of our community investment towardcapacity building and economic development programs.

� Initiate a plan to develop the additional internal capacity andcompetencies to manage these programs.

� Continue to explore mechanisms to monitor and measure theexecution and impact of these programs.

� Complete consultation on our Human Rights Statement and trainingmaterials with major business units.

� Begin corporatewide deployment of the statement by early 2006.

� Target completion of implementation of companywide, global HIV/AIDSpolicy by the end of 2006. High-risk countries with high or risingprevalence rates will be the initial implementation priorities.

� Continue to focus on safety, aiming to meet short-term performancetargets and the long-term goal of zero incidents.

� Expand our motor vehicle safety effort to look at opportunities to help address road safety more broadly in the communities in which we operate.

� Implement our enhanced environmental expectations over the next five years, focusing on continued development of operatingstandards, measuring and communicating performance, anddemonstrating continuous performance improvement.

� Continue implementation of climate change strategy, focusing on reducingemissions of greenhouse gases (GHGs) and increasing energy efficiency.

� Develop long-term GHG emissions forecast based on our portfolio andbusiness strategy; use forecast to develop longer-term emissionsmanagement plan that aligns with our fourfold climate change strategy.

� Comply with the European Union Emissions Trading Scheme; exploredevelopment of projects under Clean Development Mechanism.

IntegrationPage 12

Stakeholder ConsultationPage 14

Community EngagementPage 16

Human RightsPage 18

HIV/AIDSPage 19

Health and SafetyPage 20

Environmental ManagementPage 22

Climate Change, Energy Efficiency and RenewablesPage 24

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WHAT WE DID IN 2005

� Deploy a self-assessment process that business unit leaderswill use to assess their OEMS implementation againstexpectations; this supplements corporate reviews.

� Make CR training available to business units.

� Continue regular stakeholder consultations on key issues. � Make stakeholder engagement guide available to business units.� Participate in formulating IAG recommendations for presentation

to the global EITI conference in late 2006 to promote wideracceptance of EITI among resource-rich nations.

� Continue to improve annual CR reporting and align itspublication with Annual Meeting of Stockholders.

� Increase the portion of our community investment targetedtoward capacity building and economic development programs.

� Continue to develop measurement tools that enableevaluation of our community engagement efforts, includingengagement through the ESHIA process.

� Continue to develop workshops and training to build thecapability to effectively implement our communityengagement strategy.

� In early 2006 adopted a Human Rights Statement to provide guidance toemployees and act as a framework for constructive dialogue with stakeholders.

� Develop practical training to support statement’sdeployment. The training will be designed to enhanceawareness of human rights and further explain Chevron’ssupport for universal human rights.

� Launched a companywide, global HIV/AIDS policy, and in 2006 publishedHIV/AIDS policy on www.chevron.com.

� Hired two employees dedicated to implementing the policy.� Appointed 33 regional coordinators who conducted local situation analyses.� Shared best practices internally.

� Develop action plans and timelines that will focus on theHIV/AIDS-related needs of our local workforces.

� Develop standardized training curricula for managementand employees, and develop principles for offeringHIV/AIDS testing and treatment to employees and theirdependents.

� Achieved our safest year on record, as measured by workforce TotalRecordable Incident Rate.

� There were six fatalities in 2005 compared with 17 in 2004.� Continued our focus on motor vehicle safety, expanding areas of focus

and countries of implementation for Project Preserve.

� Continue to focus on safety, aiming to meet short-termperformance targets and the long-term goal of zero incidents.

� Approved an updated environmental strategy focused on world-class performance. � Confirmed alignment of OEMS with leading standards for the environment

(ISO 14001) and health and safety (OHSAS 18001).� Adopted international upstream standard processes for flaring and venting,

as well as ESHIA for major capital projects.

� Continue implementation of environmental expectations throughOEMS, including global collection of data on hazardous waste andoil discharges to water.

� Develop and deploy additional standards as needed.� Demonstrate continual improvement in environmental performance.

� Met our 2005 GHG emissions goal; established a 2006 goal.� Established carbon markets team to lead participation in carbon trading,

including Clean Development Mechanism.� Met our 2005 energy efficiency target, maintaining our highest-ever level

of efficiency; established 2006 goal. � Continued development of a long-term emissions forecast as the basis for

emissions management.

� Complete GHG emissions forecast.� Begin operation of the 110-megawatt Darajat Unit 3 geothermal

project in Indonesia; startup is scheduled for late 2006. � Continue to install energy efficiency improvements and

alternative energy technologies at U.S. institutions andbusinesses through Chevron Energy Solutions Company.

WHAT WE PLAN TO DO NEXT

� Consulted with stakeholders at the local level and on global issues such as HIV/AIDS. � Drafted and tested a stakeholder engagement guide.� Launched willyoujoinus.com to engage the public in a dialogue on the development

and supply of energy. � Integrated stakeholder engagement into our new international upstream ESHIA process.� Participated in the International Advisory Group (IAG), to promote the Extractive

Industries Transparency Initiative (EITI), and supported the governments ofKazakhstan and Nigeria on their efforts.

� Published 2004 CR report.

� Directed nearly 65 percent of our support toward creating economic growththrough human and institutional capacity building.

� Provided relief and recovery assistance and support to communities affectedby the tsunami disaster in South Asia; hurricanes along the U.S. Gulf Coast and in Central America and the Caribbean; and the earthquake in Pakistan.

� Established Regional Development Councils in the Niger Delta.

� Updated The Chevron Way and printed it in 14 languages to make it easier for our employees to apply our vision and values to their work.

� Revised CR training and conducted peer review in early 2006.� Continued Operational Excellence Management System (OEMS) training

and certification.� Adopted a standard process for Environmental, Social and Health Impact

Assessment (ESHIA) for major, proposed international upstream projects.

212363A4_K 20/4/06 7:18 pm Page 11

12

The values described in The Chevron Way,which include conducting our business “in a socially responsible and ethicalmanner,” are essential to our thriving as abusiness. We must be the partner of choicefor governments, communities and otherbusinesses. We must attract and retainpeople with the ingenuity and insight totackle the tough issues we encounter. Wemust protect people and the environment,on which we all depend. These are amongthe reasons corporate responsibility isintegrated into our business.

At Chevron, corporate responsibility isdefined as:

� Consistently applying our core values, set out in The Chevron Way.

� Maximizing the positive impact of our operations on current and future generations.

� Integrating social, environmental and economic considerations into our core practices.

� Engaging with and balancing the needs of our key stakeholders.

As populations increase and living standards rise, more energy is needed. Our role as a companyis to provide the clean, affordable energy needed to fuel economic growth around the world. At the same time, we recognize that supplying the energy for economic growth must take placein a manner that is sustainable from an environmental and socioeconomic perspective.

In 2005, we took a number of steps,described below, to do this. In the balance ofthis report, you will find additional examplesof how we are integrating corporateresponsibility into our business throughexisting business systems and processes.

Enhancing OEMSThe Operational Excellence ManagementSystem (OEMS) is our standard approach tosystematic management of safety, health,the environment, reliability and efficiency in order to achieve world-class performance.OEMS is comprised of three major parts:

� Leadership Accountability� Management Systems Process� Operational Excellence Expectations

In 2005, Lloyd’s Register Quality Assurancereviewed OEMS. It concluded that thedesign of OEMS meets and in some cases goes beyond the requirements of leading international environmental,health and safety management standards.The environmental management systemstandard is ISO (International Organizationfor Standardization) 14001. The health andsafety management system standard is

OHSAS (Occupational Health and SafetyAssessment Series) 18001. As such, thesestandards provide a benchmark forexcellence in managing performance inthese areas (see page 22).

By the end of 2005, more than 7,000employees, including management and key operations personnel, had completed anOEMS leadership training course designedto help leaders better understand their rolesand responsibilities regarding operationalexcellence. In addition, more than 2,200managers and employees had completedcertification requirements for OEMS. Wealso conducted corporate reviews of 24units worldwide – about 30 percent of allunits – to assess the design and effectivenessof OEMS implementation.

In 2006, we will deploy a self-assessmentprocess that business unit leaders will use annually to supplement the corporatereviews by assessing their OEMSimplementation against expectations.

Integrating Corporate Responsibility Into Our Business

Integration

Business EthicsThe Chevron Business Conduct and EthicsCode (BC&E Code) outlines our policies on how we conduct ourselves and operatearound the world. In 2005, we completed a routine update of our BC&E Code toensure that it clearly conveys our principlesto our global workforce. The revised BC&ECode was translated from English into 11other languages and deployed throughoutthe company on July 1, 2005. All Chevrondirectors and employees are required toread and acknowledge that they will abideby, or be trained on, the code every twoyears. We also review the code every twoyears, updating it as necessary in responseto new laws and regulations.

Ensuring Compliance With Our Ethics CodeChevron has an effective compliance programwith a structure of shared responsibility in which each business unit is responsiblefor compliance. The Compliance PolicyCommittee, which reports to the ExecutiveCommittee, governs the companywidecompliance program. The chief complianceofficer reports to the company’s vicechairman and is responsible for theworldwide deployment and overall operation of the compliance program.

Reporting Violations Any director, employeeor contractor who believes another director,employee or contractor has violated ourpolicies or local laws is obligated to reportthe violation to management, legal counsel,the appropriate operating organization’scompliance committee or the ChevronHotline. We uphold our policy of protecting

whistle-blowers from retaliation. Anymatter submitted to the Chevron Hotlinemay be made anonymously if the caller sochooses. The hotline is operated offsite byGlobal Compliance Services (AlertLine®),an independent agent. In 2005, AlertLine®

received 275 hotline calls, including callsreceived following the Unocal acquisition in August, compared with 185 calls in 2004.The increase is largely attributable to thedeployment of the revised BusinessConduct and Ethics Code, which created a heightened awareness of the hotline’sexistence. While the calls covered a widevariety of concerns, the largest percentagepertained to three classifications:

� Employee issues (55 percent)� Legal and Regulatory (12 percent)� Environment, Health and Safety (10 percent)

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Standardized AssessmentsWe have been conducting environmentaland social impact assessments for selectprojects for several years. In 2005, ourinternational upstream organizationadopted a standard process – theEnvironmental, Social and Health ImpactAssessment (ESHIA) – for evaluatingproposed projects. ESHIA will help usunderstand and reduce or eliminate aproject’s potential negative impacts as well as enhance positive ones.

The process requires that major capitalprojects greater than $25 million, includingjoint ventures in which Chevron hasoperational control and an interest worthmore than $25 million, conduct an initialscreening for potentially significant impacts early in project development,followed by more extensive scoping andimpact assessment steps if needed.

The end result of the process is an ESHIAmanagement plan approved by project and business unit management thatassures commitments made in the ESHIAare carried into project construction andoperations. Our international upstreamorganization is responsible for most of our significant new project growth, and the majority of our projects areimplementing the standard in 2006.

The ESHIA process draws on best practicesin the field, including guidance developed

by industry associations and the WorldBank. It also builds on our extensiveknowledge, our existing practices andleading industry practices in this area.

Key features of the ESHIA process include:

� Performing an integrated analysis ofenvironmental, social and health impact,allowing evaluation of tradeoffs in projectalternatives and mitigation strategies.

� Standardizing the role of the ESHIAprocess in project decision making andevaluation and selection of projectalternatives.

� Engaging stakeholders throughout theassessment and the life of the project.

The ESHIA process is designed to supportcontinual learning and improvement, as are all processes in OEMS. This includes the formation of an ESHIA “community of practice” in which practitioners shareexperiences and lessons learned fromacross our businesses, functions and regions.

Management of Corporate ResponsibilityTo further integrate corporate responsibilityobjectives into our existing systems,processes and decision making, we continuedour work on developing a set of CorporateResponsibility (CR) Expectations. The CRExpectations, which are based on andsupport our Operational ExcellenceExpectations, articulate our vision of

corporate responsibility and provideoperational guidance. During 2005, werevised training materials that will be used tocontinue to build awareness and a commonunderstanding of corporate responsibility.These materials were peer reviewed in early2006. We will make the training available tobusiness units later in the year.

Corporate GovernanceOur Corporate Governance Guidelinesprovide the foundation for how we operateour company to ensure that it is responsiveand accountable to our stockholders. For example, we have a lead independentdirector, we rotate committee membershipsand chair positions every four to six years,and only independent directors serve onboard committees. All directors are electedannually. Our Corporate GovernanceGuidelines and structures are described indetail on our Web site [1].

In 2005, the board adopted a “majorityvote” policy for electing directors to theboard. Under the policy, when a nominee for director receives a greater number of“withheld” votes than “for” votes, he or she must submit an offer of resignation for consideration by the board’s Nominating and Governance Committee.The committee then considers the facts and circumstances regarding the vote andmakes a recommendation to the boardregarding the offer of resignation. A numberof companies with strong governancepractices have adopted majority votepolicies, which have become an importantissue to many investors.

We continue to implement globally therequirements of the Sarbanes-Oxley Act. For more information, see our 2005 AnnualReport, available online [2].

For More on IntegrationPlease visit our Web site [3] for moreinformation on:

� Our Management Systems Approach� OE Operating Elements� Business Ethics� Corporate Governance

Also available are diagrams that provide anoverview of the socioeconomic contributionsand challenges as well as the environmentalissues of our core business activities.

“Chevron is a company that is up and coming relative to its oil and gas peers on a combination of environmental, social and corporate governance performance;exposure to the industry’s Top 100 legacy assets; and cash returns on investment, in our opinion.* We see potential for improvement on a sustainable investing basis.

Chevron is in the top quartile of the Goldman Sachs Energy ESG Index and ranks in the middle of the majors. We have seen improvement in environmental and socialreporting and policies and performance in the areas of employee safety, human rights and business ethics from 2002 to 2004.

We believe environmental performance is the area where Chevron has the mostpotential for development, such as resource use intensity, waste and emissionsintensity, and carbon impact. Along with a continued focus on employee safety and compensation, human rights and local communities, together with clear andconsistent reporting, this would allow Chevron to access and operate the industry’sbest new legacy assets.”

Sarah Forrest, Head of the ESG Research TeamGoldman Sachs Group, Inc.

Left Mohamed Al-Marri is manager of assetdevelopment in the Partitioned Neutral Zone(between Saudi Arabia and Kuwait) for Saudi Arabian Texaco Inc.

[ 1 ] www.chevron.com/corporate_governance/[2] www.chevron.com/investor/annual/2005/[3] www.chevron.com/cr_report/2005/integration/

* From “Global Energy – Integrating ESG,” a report byGoldman Sachs analysts Anthony Ling, Sarah Forrestand others, published in August 2005.

Right Chevron’s revised Business Conduct and EthicsCode was deployed to employees companywide. From left are Matt Dodson, Kate Edwards andChristina Orluck.

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Stakeholder Consultation

We are committed to building productive, collaborative and trusting relationships with thecompany’s stakeholders, defined as those who affect, are affected by, or have a legitimateinterest in Chevron’s performance. Stakeholder consultation is an established practice in manyareas of our business.

We took a number of steps in 2005 tofurther our stakeholder consultation andengagement efforts, including the following:

willyoujoinus.com We launched an onlineforum designed to engage the public inopen and honest dialogue about theimportant and complex issues surroundingthe development and supply of energy.During the last six months of 2005, severalhundred thousand people from 170 countriesvisited willyoujoinus.com, and more than1,500 postings were made that offereddifferent viewpoints. Visit the Web site for more information [ 1].

ESHIA We made stakeholder engagement an integral and systematic component ofour international upstream organization’sEnvironmental, Social and Health ImpactAssessment (ESHIA) (see page 13).

Stakeholder Engagement Guide We createda stakeholder engagement guide andfacilitator training materials. The guideoutlines the process involved in conductingsuccessful stakeholder engagement andemphasizes several overarching principles:inclusiveness, respect, transparency,openness and clarity. We provide trainingand tools that support these principles,including participatory needs assessmentsand project planning and execution tools for social programs. In October 2005, weheld an internal stakeholder engagementworkshop to test these tools. Ongoingefforts to promote the use of these materialsacross the company will continue in 2006.

Stockholder Proposals We engaged withvarious parties who filed stockholderproposals. Following discussions on progressbeing made to implement Chevron’scompanywide HIV/AIDS policy, filers agreed

to withdraw their proposal. Other issues we engaged in, but were not successful inreaching agreement on, included proposalson human rights and the ongoing litigation inEcuador (see page 23). These proposals willbe put to stockholder vote on April 26, 2006.

Revenue TransparencyThroughout the world, countries rich innatural resources have negotiated a range of contractual agreements with energycompanies, the terms of which have oftenbeen subject to confidentiality clausesinsisted upon by host governments. Greaterdisclosure has been advocated by multiplestakeholders, including governments,industry and nongovernmentalorganizations. We support transparency and believe it is a necessary component –though not the only answer – to goodgovernance. We believe that disclosure of all payments to a host-country government

14

Stakeholder

Stockholders

Employees

Business partners

Host governments

Customers

Local communities

Civil societyorganizations

Profile

Registered and beneficial stockholders of record

53,440 Chevron employees (as of Dec. 31, 2005)

Spent approximately $20 billion globally on goodsand services in 2005 with a network of suppliersthat range from multinational companies to small,locally owned businesses

Governments in approximately 180 countries wherewe conduct business

Commodity markets, wholesale and retail customers

Numerous communities around the world whereChevron’s facilities are located

Business forums, multilateral institutions,philanthropic foundations, academic institutions,think tanks, faith-based groups, andnongovernmental and development organizations

How we engaged in 2005

� Annual Meeting of Stockholders � Stockholder proposals

� Employee Pulse Survey� Ethics hotline� Chevron ombudsperson� Worldwide employee teleconference with senior management� Monthly chairman’s letter� Employee networks

� U.S. and non-U.S. small business, supplier diversity and local-content programs (see chart on page 15)

� Supplier development forums� Participation in supplier-oriented organizations

� Negotiating production contracts� Collaborating on global initiatives (see page 15)

� Centralized trading center� Regional and in-country customer service support offices� U.S. Retail Marketing Center and U.S. Consumer Connection Center

� Community engagement programs and outreach � Employee volunteerism� Involving communities before and during new major capital projects

� Participation in multistakeholder forums and initiatives� Attendance at conferences and meetings � Partnerships � Direct dialogue

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Lobbying for Energy EfficiencyIn August 2005, President George Bushsigned into law the Energy Policy Actcovering a range of issues significant to our business. Chevron supported many of the conservation and technologyprovisions in the bill that, in our view, will help address future energy supplies,reduce greenhouse gas emissions, and promote energy efficiency andconservation. We dedicated substantialtime and effort lobbying on a provision toextend the Energy Savings PerformanceContracting (ESPC) program, described inour 2004 Corporate Responsibility Report.The program, which saves energy andtaxpayer dollars, was set to expire in 2006.

ESPC allows the U.S. federal government –the largest energy consumer in the United

Chevron Australia Pty. Ltd.’s Jo Newland works atthe Perth office, which supports the company’s fieldoperations on Barrow Island – a Class A naturereserve offshore Western Australia and theproposed site of the Gorgon Gas Project. Chevronhas been acknowledged for its 40-plus years ofexcellence in environmental management whileproducing on the island.

States – to install energy-efficient equipment,with no upfront funds, in governmentbuildings and military facilities. Using thecost savings generated by more energy-efficient operations, the government thenrepays private contractors after installation.

A unique coalition of environmental, labor,business, good-government and energyefficiency groups succeeded in gainingsupport for the program, including a 10-yearauthorization. Chevron was the only major oil and gas company to participate, reflectingour commitment to conservation and toChevron Energy Solutions Company (CES), aleader in energy efficiency and performancecontracting. For more information, pleasevisit the CES Web site [4].

by any business has to be done with theagreement of that government and resultsin higher levels of accountability to citizensfor the effective use of these revenues.

EITI As an advocate for greatertransparency, Chevron actively supports theExtractive Industries Transparency Initiative(EITI). Originally launched by U.K. PrimeMinister Tony Blair in 2002, EITI is now aglobal coalition of governments, companies,international financial institutions, assetmanagers and nongovernmentalorganizations (NGOs). EITI’s goal is toincrease the transparency of payments by the extractive industry to governmentsof resource-rich nations that have agreed to implement EITI. Through increasedtransparency, EITI aims to help countriesimprove their governance, therebypromoting and strengthening development.

In 2005, we worked closely with authoritiesin Kazakhstan on their endorsement of EITIand applaud their efforts. We continued to work closely with the government inNigeria, a country that has exhibited strong leadership in its commitment totransparency. We commend the decision of the Angolan government to publish theBlock 0 signature and social bonuses. Wealso support the inclusion of a transparencyclause in the Production Sharing Contractfor Block 1 of the Nigeria–São Tomé ePríncipe Joint Development Zone.

We believe that advancing the goals of EITIwill best be realized through an inclusive,multistakeholder process. In 2005, webegan participating in the newly establishedInternational Advisory Group (IAG), a panelof representatives from across sectors whoare working to internationalize the scopeand develop recommendations for achievingwider acceptance of EITI among resource-rich countries. The IAG plans to present its recommendations at a global EITIconference in 2006. The recommendationswill address key issues related to thefollowing three areas:

� Incentives for Implementation: Identifythe economic, social and political driversthat encourage resource-rich countries to participate in the initiative.

� Verifying Implementation: Outline clearrules for transparency that can beuniversally applied and develop practicaland effective criteria for measuringcompliance by producer countries andcompanies.

� Future Governance: Determine the futuregovernance structure of EITI, identifyingthe appropriate organizations and definingspecific roles, ensure the managementstructure does not become overlybureaucratic, outline key functions thatrequire a multistakeholder approach, andidentify sources of future funding for EITI.

More information is available on EITI’s Web site [2].

The recommendations are focused ondeveloping incentives for implementing EITI and mechanisms for verifying itsimplementation and guiding futuregovernance.

Political ContributionsPolitical contributions are only made wherepermitted by law and are subject to strictinternal approval processes and procedures.In 2005, Chevron made nearly $1.53 millionin corporate political contributions, of which46 percent went to politically affiliatedcandidates and organizations and theremaining 54 percent went to ballotinitiatives or organizations not affiliatedwith a political party.

Also in 2005, the Chevron EmployeesPolitical Action Committee (CEPAC)contributed $165,000 to U.S. federal, stateand local candidates. A list of contributionsmade during 2005 can be viewed on theFederal Election Commission Web site.

Visit our Web site to read more aboutpolitical contributions and our approach to engaging in the political process [3].

[ 1 ] www.willyoujoinus.com/[2] www.eitransparency.org/[3] www.chevron.com/cr_report/2005/

stakeholder/political_process/[4] www.chevronenergy.com/ 15

U.S. Small Business andSupplier Diversity SpendingUS$ million

Small business

Women-owned

Minority-owned

2005

1,800

258

310

2004

1,360

222

226

2003

1,310

223

202

2002

1,364

212

209

2001

1,015

178

229

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Community Engagement

Chevron conducts business in communities around the world where our employees, customers,suppliers and business partners live and work. Our ability to gain and maintain access to newand existing resources is critical for our long-term success and depends on the strength of ourrelationships with key stakeholders.

Thus, we are committed to contributing tothe social and economic development of the communities in which we operate. Webelieve that doing so is fundamental to thebroader success we seek to achieve as abusiness. Most of our community initiativesand investments are focused on buildinghuman and institutional capacity in waysthat help stimulate economic growth andenable communities to prosper.

We have identified three areas we considercritical to economic development:

� Basic human needs� Education and career training� Small- and medium-size business

development, including access to credit

In 2005, we invested $73.1 million incommunity initiatives, nearly 65 percent of which was directed toward long-term,sustainable, capacity building projects in communities around the world. Whilehaving a strong focus on economic growthinitiatives helps guide our ongoing efforts,we also remain flexible in our approach. This allows us to respond quickly in times of crisis or when circumstances change.

We continue to look for ways to measureand evaluate our initiatives as well as ourimpact on communities. In 2005, ourinternational upstream organization adopteda new integrated standard process designedto assess the environmental, social andhealth impact of our major capital projects(see page 13).

Being Responsive to Community NeedsGiven complex operating environments, beingresponsive to community needs sometimesrequires new approaches and the ability to respond quickly to unforeseen events. In Nigeria, this required us to re-examine ourcommunity engagement model. In Myanmar,where humanitarian needs are acute andhuman rights concerns exist, we will engagewith stakeholders on initiatives that benefitthe intended communities within the confinesof applicable U.S. laws and regulations.

In late 2004 and throughout 2005, naturaldisasters devastated communities in SouthAsia, in Pakistan and along the U.S. GulfCoast. Other communities in the UnitedStates, Honduras, Mexico, Guatemala andthe Caribbean also felt the impact of one ofthe most destructive hurricane seasons inyears. In each instance, we responded byhelping employees, their families and theircommunities with relief and recoveryefforts. The largest of these efforts focusedon the U.S. Gulf Coast, where the impact onour employees and operations was greatest(see page 27 for a detailed case study onChevron’s response and recovery efforts).

In response to these natural disasters, we contributed a total of $12 million forimmediate relief efforts and long-termrecovery projects in 2005.

Customizing Our Approach in NigeriaThe Niger Delta is a region with complexand deep-rooted issues that have eludedmany attempts at resolution over the years.Chevron Nigeria Limited (CNL) has investedmore than $130 million in communityinitiatives over the past 10 years and $143 million over the past five years to the Niger Delta Development Commission.These funds are in addition to the tax androyalty payments made to the government.CNL also provides more than 2,000 jobslocally, about 90 percent of which are filledby Nigerians. Against this backdrop, CNL,acting on the conviction that companies can play a constructive role in contributingto sustainable solutions, initiated a newcommunity engagement model thatpromotes accountability and participationby multiple stakeholders.

In 2005, Chevron worked with stategovernments and local communities toestablish Regional Development Councils(RDCs), each of which comprises membersfrom different communities in Niger Deltaareas where CNL has operations. Each RDC has a management board made up of stakeholder representatives from state

and local government, nongovernmentalorganizations, CNL and the RDC. The boards are to oversee the planning andimplementation of development programsand activities.

This participatory approach should helpdeliver sustainable projects that meet theneeds of individual communities. CNLprovided the initial funding, and plans areunder way to secure external support fromstate and federal agencies and other donors.Through this inclusive approach, CNL ishopeful that communities will becomeempowered to design and implement projectsthat ultimately strengthen their local capacityand begin to address the development needsthey face. CNL plans to support this processby continuing to invest funds and resourcesin ways that generate positive outcomes.

Funding Sustainable OutcomesChevron funded hundreds of programs andprojects in 2005. In doing so, we want to knowthat our investments lead to positive andsustainable outcomes, which are often difficultto measure. This is the impetus behind ourongoing efforts to develop measurement toolsthat will allow us to evaluate our communityengagement initiatives.

Global Community InvestmentsAmount spent in US$ million in 2005

North America 39.6

Africa 10.3

Asia-Pacific 9.1

Eurasia 7.6

Latin America 4.1

Middle East 1.6

Europe 0.8

Total $73.1

Includes Chevron’s share in Chevron Phillips ChemicalCompany, the Tengizchevroil joint venture, and theKarachaganak Petroleum Operating Consortium.

16

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Investing in CommunitiesBelow are some examples of projects wesupported in 2005.

New Homes in Kazakhstan Tengizchevroilprovided about $35 million for theconstruction of 430 new houses and a school for families originally fromSarykamys, Kazakhstan, a village south of the Tengiz oil field. The village wasdetermined by the government to be tooclose to the field, where future plans callfor an expansion of operations. Thefamilies are being relocated to new homesjust inside the city of Atyrau, where manyresidents work in the local oil industry. The relocation, which the government said is mandatory, is being conductedaccording to World Bank guidelines, whichinclude compensation, consultation and a grievance process. The first group offamilies moved in during the fall of 2005.The Atyrau development is part of a larger$73 million relocation project for residentsof Sarykamys, some of whom have chosento move to a more rural location, known as New Karaton. That project is expectedto be completed by the end of 2006.Tengizchevroil is a joint-venturepartnership in which Chevron holds a 50 percent interest.

Educating Youth in Aboriginal Communities In the Mackenzie Delta of Canada’sNorthwest Territories, Chevron’s Canadabusiness unit is a major supporter of a vocational training program for high school students living in several remotecommunities in the Inuvialuit SettlementRegion. The Youth Entry-Level SkillsProgram is aimed at keeping high schoolstudents in school and building their skillsto promote access to jobs with energycompanies. The program was developedthrough extensive consultations with thecommunity and in partnership with the localschool board and other energy companies.This five-year-old program has servedapproximately 230 students, placedstudents in jobs with the business unit’scontractors, and contributed to the numberof students completing high school andpursuing post-secondary education.

Niger Delta Clinic Resumes Operating The River Boat Clinic serves as a mobilehospital along the remote Benin and Escravosrivers in Nigeria’s Delta State, deliveringcritically needed free health care to thedoorsteps of many communities. After atwo-year suspension due to civil unrest, the clinic resumed operations in April 2005.

It currently serves about 40 rivercommunities and attends to an average of 2,500 patients every month, most ofwhom are women and children with noother access to health care facilities. CNLand its joint-venture partner, the NigerianNational Petroleum Corporation, providefunding for the clinic.

Caring for Alaska’s Kenai Peninsula Building on Unocal’s 15 consecutive yearsof support, Chevron in 2005 continued to support the publicly recognized Caringfor the Kenai competition. High schoolstudents on the Kenai Peninsula in Alaskacompete for cash awards by developingways to improve the environment in SouthCentral Alaska. In some cases, studentshave been able to implement their ideasby securing resources from a range ofnonprofit, community, and local and stategovernment sources.

To read additional examples of how weinvest in communities, please visit our Web site [1].

To help make the country’s 2005 National HealthWeek a success, on Aug. 30, PT. Chevron PacificIndonesia’s hospitals and clinics in Rumbaiadministered polio vaccines to 1,351 children under age 5.

To help build the technical capabilities of youngNigerians, Chevron Nigeria Limited sponsors trainingprograms at the Ogere Training Facility. Here, studentMetseaghbarum Toriseju Yotan participates in theOperator/Maintenance Technician program.

Chevron’s alliance with the Discovery Channel GlobalEducation Partnership has helped establish learningcenters in Venezuela and several provinces inAngola. Here, Discovery Channel’s MarithzaAldazabal trains a group of teachers in Maracaibo,Venezuela, in how to use the educational videos toachieve curricular objectives.

17

[ 1 ] www.chevron.com/cr_report/2005/ community_engagement/

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Human Rights

Chevron’s support for universal human rights is a core value in The Chevron Way. We believewe have a role to play in promoting human rights that is consistent with our role as a business.We engage with key stakeholders, including representatives of governments and civil society,to contribute to an environment in which human rights are respected. We are committed tosupporting human rights for our employees and in the many communities where we operate.

Early in 2006, we adopted a Human RightsStatement. Grounded in The Chevron Way,the statement provides guidance to ouremployees and acts as a framework forconstructive dialogue with stakeholders.The statement makes clear our support forhuman rights, consistent with the UniversalDeclaration of Human Rights. It alsorecognizes internationally accepted laborprinciples articulated in the InternationalLabor Organization’s Declaration onFundamental Principles and Rights at Work.These include prohibitions on child labor,forced labor and discriminatory behavior aswell as recognition of the rights of freedomof association and collective bargaining. The text of the statement can be found onour Web site [ 1]. Wherever we operate, wewill use the statement as a framework toguide our decision making and engagementin this issue.

An important part of developing thestatement included a series of in-country

consultations during 2005 with key upstreamand downstream operating organizations and business units around the globe.

The consultations provided an opportunity tocontinue building our employees’ awarenessregarding human rights.

TrainingPractical Training on human rights is beingdeveloped to support the statement'sdeployment. It will be designed to enhanceawareness of human rights and furtherexplain our support for universal humanrights and the Voluntary Principles onSecurity and Human Rights. Deployment will begin in 2006.

Continued EngagementIn addition to this work, we are participatingin initiatives that seek to support humanrights. We continue to support the VoluntaryPrinciples and actively participate in thedialogue process with other extractivecompanies, nongovernmental organizations

and governments. As is consistent with ourpast practice, we communicate our securityexpectations to key stakeholders and thesecurity providers with whom we work. Part of this process includes engaging theU.S. government on the importance ofpromoting human rights and the rule of law.

We also supported the relaunch of the GlobalSullivan Principles in 2005. The principlesretain their original objective of addressinga wide range of human rights issues. Two strategic objectives of the relaunch are to promote the principles in order toprovide a leading voice for responsibledevelopment and to advocate for strongnational governance. These two objectivesunderscore the Rev. Leon H. Sullivan’s visionof corporate responsibility.

Finally, as part of our ongoing dialogue and efforts on this issue, we will continue to engage with a wide range of stakeholdersand participate in events focused on human rights.

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HIV/AIDS

In January 2005, Chevron formally launched a companywide, global HIV/AIDS policy thatstrives to address the serious health risk this disease poses for our employees, their dependentsand the communities in which they live and work. Implementation of this policy will continuethroughout 2006 and beyond.

In brief, our global policy on HIV/AIDSaffirms that employees suffering fromHIV/AIDS are protected by the company’sexisting policies on discrimination andharassment. It also states that employeesand their dependents, where provided underthe terms of the employees’ respectivebenefit plans, will have access to treatmentand support. In addition, under the policy,we plan to offer workplace and community-based education, awareness, prevention and treatment programs reflective of localneeds and immediate priorities. The full textof our global policy on HIV/AIDS can beviewed online [2].

Our efforts in 2005 to implement our globalHIV/AIDS policy led to the following outcomes:

� Full-time employees were hired for thecompanywide implementation of the policy.

� Thirty-three regional coordinators wereappointed to help oversee implementationof the policy in areas where our employeesare concentrated.

� Regional coordinators conducted situationanalyses at the local level to assessinfection rates; available support andmedical benefits; and whether education,awareness, prevention and treatmentprograms already exist.

� A Web site was established to enablecoordinators to share best practices. This allows earlier successful initiativesconducted for more than a decade by ourbusiness units in South Africa, Angola,Nigeria and Southeast Asia to be sharedthroughout the company.

Developing Plans and Timelines in 2006Based on findings from each situationanalysis, coordinators are working withbusiness units to develop action plans and milestone timelines that will focus onthe HIV/AIDS-related needs of our localworkforces. In regions where high levels of malaria and tuberculosis exist, the needfor education, prevention and treatmentprograms will also be addressed.

We recognize that the success of any effortwill depend on the support of localmanagement. Therefore, we are workingwith Pangaea Global AIDS Foundation todevelop standardized training curriculaspecifically tailored to our management and employees. Our approach to offeringemployees and their dependents HIV/AIDStesting and treatment will be guided by aset of principles currently being developedby our global team in conjunction withHIV/AIDS treatment experts at Pangaea. A nonprofit consultancy, Pangaea helpscorporations, nongovernmental organizations,national health ministries and otherorganizations broaden access to HIV/AIDSantiretroviral treatment and care, withspecial emphasis on work in resource-limited settings.

During 2005, Chevron received a Programof Note award from the Global BusinessCoalition on HIV/AIDS (GBC), an upper-echelon distinction, due in large part towork we have done in Angola. This was thesecond award from the GBC, a nonprofitorganization that works with businesses toleverage their assets, skills and networks to tailor localized campaigns to prevent and control the spread of HIV/AIDS.

More information about some of ourlocalized efforts aimed at preventing thespread of HIV/AIDS can be found on our Web site [2].

“All of us at Pangaea have beentremendously impressed by thebusinesslike way Chevron has tackled the implementation of their globalHIV/AIDS policy and the strongcommitment the entire Chevron team has shown in developing a program that will be meaningful to employees and their managers around the world.Active participation in the process by the regional managers in Africa and otherparts of the world has definitely enrichedthe training programs under development.Chevron’s ongoing effort to incorporatebest practices in HIV/AIDS training, testing and treatment into their globaleffort is setting a high standard that othermultinational companies should follow.”

Eric Goosby, M.D., CEO and Chief Medical OfficerPangaea Global AIDS Foundation

Dr. Jose Van-Dunem, Angola’s vice minister of health,addressed a Chevron gathering in Luanda on WorldAIDS Day. Educational events were held in companylocations worldwide. World AIDS Day is one of manyHIV/AIDS-related education and prevention activitiesthat we support.

[ 1 ] www.chevron.com/social_responsibility/human_rights/[2] www.chevron.com/social_responsibility/hiv_aids/

19

212363A4_K 20/4/06 7:19 pm Page 19

Health and Safety

Safe OperationsAs measured by the Total RecordableIncident Rate (TRIR), 2005 was our safestyear on record and our seventh straightyear of improvement. Over a seven-yearperiod, our workforce TRIR improved morethan 70 percent.

To drive safety performance improvement,we set aggressive targets for key safetyindicators. In 2005, we met our target toreduce our workforce Days Away From WorkRate (DAFWR). The total on-the-job injuryrate improved 20 percent from 2004, andthe rate of injuries severe enough to requiredays away from work improved 30 percent.

Motor vehicle crashes have been a leadingcause of fatalities in our industry. We havedeveloped several programs and initiativesto improve road safety. In 2005, one fatalityresulted from a motor vehicle crash,compared with six fatalities in 2004.

These improvements also reflect ourcommitment to operational excellence (OE)and to the continued disciplined integrationof OE into everyday operations andactivities. For example, our downstream

Protecting the health and safety of our employees and all those who work on our behalf is ourhighest priority at Chevron. We have sharply cut our rate of incidents and injuries through anintense focus on improving health and safety performance. Regrettably, six people died in2005 while working on behalf of the company. Any fatality is unacceptable. We are committedto reducing fatalities – and all incidents – to zero.

operations have deployed standardprocesses addressing behavior-based safety, contractor safety management,motor vehicle safety, early incidentmanagement and incident investigation.

Promoting a Healthy Workforce We value the health and well-being of ouremployees as well as their safety. During2005, we enhanced the health-relatedcontent of our Operational ExcellenceManagement System (OEMS) by adopting a global standard for benzene exposure.

To assist employees with a range ofpersonal, family and work-related concernsand problems, our Employee Assistance andWorkLife Services (EAP/WorkLife) provideconfidential programs and consultingservices. These programs and services are being adapted to meet the needs ofemployees in communities and cultures asdiverse as South Africa, Singapore, theUnited Kingdom and the United States byusing local resources. Regardless of location,the programs are focused on the primarypurpose of EAP/WorkLife: to help employeessustain a safe workplace and stay healthy.

Avian FluThe recent appearance and spread of avianinfluenza has raised concerns that this virusmay mutate and become capable of human-to-human transmission. If that were to occur,avian influenza could pose a threat to ourworkforce and businesses around the globe.

To assess the risks and plan a coordinatedresponse, a cross-functional Chevron teamdeveloped a phased avian influenza plan. It builds on and updates existing crisismanagement capabilities to account for theunique aspects of an influenza pandemic.The plan includes three major strategies:

� Prevent exposure to and transmission ofthe virus by implementing education andhygiene programs.

� Contain the spread of the virus in theworkplace by taking measures to reduceworkplace exposure.

� Update business continuity plans toaddress pandemic influenza scenarios.

20

Total Recordable Incident RateRecordable incidents per 200,000 work hours

Days Away From Work RateDays away per 200,000 work hours

2001

0.34

0.22

0.26

0.21

2002

0.25

0.23

0.25

0.21

2003

0.25

0.22

0.18

0.17

2004

0.21

0.19

0.16

0.19

2005

0.16

N/A

0.10

N/A

Lost-Time Incident FrequencyIncidents per million work hours

2001

1.70

1.10

1.37

1.10

2002

1.26

1.20

1.30

1.10

2003

1.26

1.08

0.95

0.90

2004

1.07

0.95

0.87

0.95

2005

0.84

N/A

0.49

N/A

Employees

Benchmark

Contractors

Benchmark

Employees

Benchmark

Contractors

Benchmark

Employees

Benchmark

Contractors

Benchmark

2001

0.72

0.93

0.88

0.90

2002

0.68

0.90

0.74

0.84

2003

0.60

0.84

0.59

0.76

2004

0.46

0.66

0.53

0.73

2005

0.38

N/A

0.42

N/A

American Petroleum Institute data are used as the industry benchmarks.

212363A4_K 20/4/06 7:19 pm Page 20

Left PT. Chevron Pacific Indonesia employee Mela Erlania trains on a portable fire extinguisherduring a routine fire-fighting drill at Duri operations in April 2005. The company holds drills at such diverse settings as gas plants, medical buildings and the kindergarten at thecompany complex in Rumbai.

During the first quarter of 2006, we beganto deploy education and hygiene programs.Our business units will also assess and tailortheir business continuity and containmentstrategies. In preparing our plans, we havebeen working with other companies to helpbuild an informal coalition of businessesthat are planning to take similar actionsshould an outbreak occur.

Product Stewardship Chevron seeks to manage theenvironmental, health and safety impact of our products throughout their life cycle. This concept is known as “productstewardship” and is formally integrated into OEMS. As part of OEMS, business unitsare required to implement processes andsystems to identify, minimize, manage andcommunicate potential risks throughout the product life cycle.

Motor Vehicle Safety ClassificationsAs indicated in the chart below, our motorvehicle incident rate increased in 2005. To help understand the underlying cause,we participated in the development of newclassifications for industry motor vehicleincidents through the InternationalAssociation of Oil & Gas Producers, whoseclassifications are similar to the injuryclassifications we currently report. Thesenew metrics will help us understand thecauses of the most serious crashes and help us prevent them.

Promoting Road SafetySafe roads help preserve the health andsafety of our workforce and the reliabilityof our operations. They also benefit the communities in which we operate. We are promoting road safety through two unique programs.

Arrive Alive In several communities thathost our operations, we are developingcollaborative nonprofit entities to developand implement road safety action plansthough our Arrive Alive program. In 2005,we hosted stakeholder workshops inGuatemala, Nigeria, South Africa andUganda and pursued opportunities tocollaborate with others in the privatesector as well as with the appropriategovernment agencies in each country. The plans address such high-priority issuesas speeding, impaired driving, motorcycleand bicycle safety, and pedestrian safety.

Project Preserve The successful trucktransport safety program begun in Nigeriain 2004 is being implemented selectively inother countries in Africa and other regionsof the world where transportation safety

poses a high risk. Project Preserve seeks to eliminate serious truck crashes in all 22 countries of Chevron Global Marketing’sAfrica-Pakistan region by training contractdrivers in defensive driving and by settingand enforcing standards for truck safety.The accomplishments in the region at year-end 2005 include:

� 6,063 drivers trained in defensivedriving skills.

� 252,241 spot inspections conducted priorto loading trucks, with 2,687 trucksfailing inspection, thus not being loaded.

� 98 percent of drivers wearing seat beltsupon approaching the terminal gate fordeparture, compared with 48 percent atyear-end 2004.

The Project Preserve team has sharedpractices, tools and lessons learned fromthe program’s implementation throughoutthe company. Our Latin America Logisticsand Africa Global Lubricants operationshave adopted the approach and havebegun implementation.

21

Right GATOR (Generating Awareness ThroughObservation and Review) is an ongoing safetyprogram on offshore platforms in the U.S. Gulf ofMexico. Mike Richoux, a GATOR coordinator in 2005,says that 96 percent of the observations that yearwere of safe, rather than at-risk, behaviors.

Motor Vehicle SafetyEmployee motor vehicle incidents per million miles driven

Work-Related Fatalities

2001

2

21

23

2002

1

15

16

2003

0

12

12

2004

2

15

17

2005

2

4

6

2001

3.29

2002

2.94

2003

3.31

2004

3.01

2005

3.65Employees

Contractors

Total

Employees

Contractor mileage will be tracked in 2006, enabling reporting of contractor incident rates.

212363A4_K 20/4/06 7:19 pm Page 21

Progress on these priorities, describedbelow, reflects disciplined application of ourOperational Excellence Management System(OEMS), which also encompasses efficiency,natural resources conservation, productstewardship and emergency management.

OEMS Meets International StandardsTo confirm that OEMS is aligned withinternational standards, we asked Lloyd’sRegister Quality Assurance (LRQA) toreview OEMS. LRQA attested that OEMSdesign fully addresses, and in some respectsexceeds, the requirements of ISO 14001 andOHSAS 18001. The full text of the statementis available on the Web [ 1]. As part of thereview, in late 2005 we made our OperationalExcellence policy publicly available on ourWeb site [2].

At the operating organization level, ourinternational upstream organization, whichrepresents most of Chevron’s significantnew project growth, approved a significantnew standardized process for identifyingand addressing the environmental, socialand health impact of major capital projects(see page 13).

In 2005, we made measurable progress on each of the three strategic priorities for environmentalperformance established in 2004 and outlined in last year’s Corporate Responsibility Report. These priorities are: defining world-class standards, measuring and communicating performance, and demonstrating continual performance improvement.

Environmental Management

Measuring and Communicating PerformanceDuring 2005, we developed internal metricsfor companywide tracking of key water andwaste performance. We will begin gatheringand assessing companywide data in theseareas in 2006. These steps reflect ourcommitment to continual improvement inenvironmental performance and in measuringand communicating results. We also areworking to fully integrate data from formerUnocal operations and update our targets toreflect our changing portfolio of operations.

OEMS Leads to ImprovementIn 2005, we met our goals for energyefficiency and greenhouse gas emissions(see Climate Change, Energy Efficiency andRenewables section). We had no spills fromour operated fleet of tankers. Excludinghurricane-related spills, oil spill performancematched our 2004 performance. As discussedin our case study, beginning on page 27, we plan for emergencies such as hurricanes.We believe that our extensive emergencypreparedness and response efforts, as wellas prior investments in subsea well-shutoffcapabilities, significantly minimized

environmental releases during the 2005hurricane season. We continue to learnimportant lessons from such events andbuild those into future preparedness plans.

Our performance in air emissions andpetroleum spills is summarized in the datacharts below. Environmental fines andsettlements are described on page 26.Regarding chemical spills, we had 35 suchaccidental releases in 2005, with a totalvolume of 178,000 kilograms, less volumethan in 2004. A total of 70,200 kilograms of chemicals were recovered, and theremaining chemicals were contained anddisposed of properly. Chemical spillsencompass accidental releases of allnonpetroleum materials, which includedrilling fluids, contaminated water and otherchemicals, such as those used as catalysts.

To view a diagram that provides an overviewof our core business activities and the keyenvironmental issues we face, please visitour Web site [3].

22

Globally, NOx and VOC emissions increased, compared with 2004. This is attributable primarily to the acquisition of Unocal assets. In 2005, SOx emissions decreased over 2004 estimates. This decrease was primarily due to lower sulfur content in fuel and flared gas.

Nitrogen oxides

Sulfur oxides

Volatile organiccompounds

Global Air Emissions Metric tons

2005

97,829

87,455

445,049

2004

89,764

96,809

402,362

2003

100,046

111,050

N/A

U.S. Refining Air EmissionsMetric tons

2005

6,675

10,416

7,443

2004

7,303

11,637

7,153

2003

7,990

10,501

8,555

2002

8,213

11,356

8,535

2001

11,358

11,295

7,793

2005

15,837

23,986

23,442

2004

13,877

26,091

24,330

2003

13,109

29,010

N/A

2005

8,250

7,433

212

2004

10,656

10,499

80

2003

12,475

11,907

N/A

Upstream Downstream Other

NOx

SOx

VOCs

NOx

SOx

VOCs

212363A4_K 20/4/06 7:19 pm Page 22

NOx

SOx

VOCs

Left A coyote thrives at the Guadalupe Dunes on the California coast. Chevron is continuing the workUnocal began in 1994 to restore this site, once anactive oil field.

Biodiversity Working Group (BDWG) of two major industry associations: the International Petroleum IndustryEnvironmental Conservation Association and the International Association of Oil & GasProducers. We also sponsored the CentralAfrica Regional Workshop of the BDWG in Luanda, Angola, in September 2005. In collaboration with ConservationInternational and Wildlife ConservationSociety, the event attracted more than 50 regional participants from industry,government and nongovernmentalorganizations. The primary objective was to build trust among stakeholders involvedin biodiversity.

Biodiversity ConservationDuring 2005, we expanded our efforts tosupport biodiversity conservation througha threefold approach.

First, we continued to integratebiodiversity conservation into OEMS to bemore consistent across the company. Forexample, our ESHIA process (see page 13)incorporates the identification andevaluation of a wide range of biodiversityimpacts and mitigation activities.

Second, we continued to promote broaderunderstanding and sharing of best practicesacross the industry through participationin the multistakeholder Energy andBiodiversity Initiative [4] and the

Third, we continued to work with andprovide financial support to global andlocal organizations engaged in efforts toconserve sensitive ecosystems or species.The 2005 Unocal acquisition also broughtimportant new biodiversity conservationpartnerships to the company, including a multiyear Ridges to Reefs® project with The Nature Conservancy in Indonesia. This project involves building awarenessand promoting conservation and sustainablelivelihoods with local communities inthreatened marine and terrestrial areasnear Berau in the Indonesian province ofEast Kalimantan.

[ 1 ] www.chevron.com/about/docs/2005/attestation.pdf [2] www.chevron.com/about/operational_excellence/[3] www.chevron.com/cr_report/2005/

environment_mgmt/[4] www.theebi.org/[5] www.texaco.com/ecuador/

inspected sites clearly shows the areasremediated by TexPet pose no human health or environmental risks due toTexPet’s operations. In early 2006, a panelof court-appointed experts issued its firstsite inspection report, concluding thatTexPet’s remediation of the Sacha 53 sitewas effective and in accordance with legalstandards of the time. The panel also found that the remediated areas posed nosignificant risk to human health. The TexPetremediation program was approved by thegovernment of Ecuador, and TexPet was

fully released from any further claims bythe government. As such, TexPet met all ofits obligations and performed in accordancewith Ecuadorean government requirements.Furthermore, documents, witness testimonyand field observations have proved thatPetroecuador, the state-owned oil companythat has operated the fields for the past 15years, is responsible for numerous oil spillsthroughout the region. We continue to keep the public informed about this lawsuitthrough updates, in both English andSpanish, on our Web site [5].

Environmental LitigationChevron continues to vigorously defendagainst litigation alleging environmentaldamage from Texaco Petroleum Company’s(TexPet) former operations in Ecuador.TexPet was part of an oil producingconsortium from 1964 to 1992 with state-owned oil company Petroecuador. Thecompany is challenging the lawsuit on both scientific and legal grounds.

At the close of 2005, the court had completed35 of 122 scheduled field inspections. Theoverwhelming body of evidence from the

23

Petroleum SpillsVolume in barrels

2005

47,934

11,202

12,755

35,179

846

2004

15,514

9,905

12,414

3,100

986

2003

26,540

10,659

1,145

2002

54,696

27,805

1,502

2001

54,834

48,348

1,428

Total volume

Spills recovered

Nonhurricane related*

Hurricane related*

Number of spills

*Applies only to 2004 & 2005

U.S. Refining Air EmissionsMetric tons per million barrels processed

2005

22

35

25

2004

23

36

22

2003

24

31

25

2002

24

33

25

2001

33

32

22

Right Chevron has embarked on a seven-year, $1 billion program to evaluate and replace, if necessary,3,500 underground storage tanks at our sitesworldwide. This old, single-walled tank is being liftedfrom a service station in Nandaime, Nicaragua, andwill be replaced with a double-walled tank.

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Climate Change, Energy Efficiencyand Renewables

At Chevron, we recognize and share the concerns of governments and the public about climate change. The use of fossil fuels to meet the world’s energy needs has contributed to an increase in greenhouse gases (GHGs) – mainly carbon dioxide (CO2) and methane – in theearth’s atmosphere. There is a widespread view that this increase is leading to climate change,with adverse effects on the environment. We took early action to create a comprehensive planto reduce GHG emissions and increase energy efficiency.

We believe energy efficiency is the easiest,cheapest and most reliable source of “new energy” available today and one of the easiest, cheapest ways to reduce GHG emissions.

Our climate change fourfold action plan isnow in its fourth year of implementation.We are:

� Reducing emissions of GHGs andincreasing energy efficiency.

� Investing in research, development and improved technology.

� Pursuing business opportunities in promising, innovative energy technologies.

� Supporting flexible and economicallysound policies and mechanisms thatprotect the environment.

Each of these areas encompasses a range of activities. In this report, we focus on ourprogress and performance in reducingGHGs, flaring and venting and in increasingenergy efficiency and renewable energy.Additional information is available on ourWeb site [ 1].

Climate Change Performance and Progress In 2005, we met our goal of no net increasein GHG emissions from our operationscompared with 2004, despite the addition of new production capacity and exploring for and producing energy in more complex,remote and energy-intensive operatingenvironments. Our 2005 emissions were 59.7 million metric tons of CO2-equivalentemissions. In 2005, 90 percent of CO2-equivalent emissions were from CO2 andapproximately 10 percent from methane, withtrace amounts of nitrous oxide. Combustion,flaring and venting remain the largestcontributors to our GHG emissions.

For 2005, our products resulted in emissionsof 374 million metric tons of CO2 equivalent,or 1.5 percent of global emissions, based onInternational Energy Agency estimates.

We are continuing to develop a long-termemissions forecast as the basis for anemissions management plan that aligns withour fourfold climate change strategy. For2006, our preliminary goal is 68.5 millionmetric tons of CO2 equivalent, which

includes legacy Unocal assets. This numberis higher than that for 2005 because of twomajor factors: hurricane-related and othershutdowns in 2005 decreased emissions,which are expected to return to previouslevels in 2006, and Unocal assets will becounted for a full year. They were includedfor five months in 2005.

During the past year, Kyoto Protocolimplementation and other initiativesprompted increased activity in carbonmarkets, generally. To respond to thesedevelopments, we established a carbonmarkets team in 2004. This team, whichcoordinates Chevron’s carbon-relatedpolicies and activities throughout the world,assists our units in achieving cost-effectivecarbon regulatory compliance. The teamalso leads efforts to secure credits forvoluntary carbon emissions reduction underthe Kyoto Protocol’s Clean DevelopmentMechanism. For example, we are seeking torealize the value of avoided emissions atour Darajat, Indonesia, geothermal facilitythrough the Clean Development Mechanism.

24

GHG Emissions by SourceMillions of metric tons of CO2 equivalent

GHG Emissions by SectorMillions of metric tons of CO2 equivalent

Total GHG Emissions by TypeMillions of metric tons of CO2 equivalent

GHG emissions and targets have been restated to reflect an error in the equity share of one business unit.

Chevron’s GHG emissions data are reported on an equity-share basis in all businesses where we have an interest, with the exceptions listed here. Total 2005 emissions include the equityshare of assets operated by legacy Unocal for August through December. Totals generally exclude emissions from Chevron Phillips Chemical Company, Dynegy Inc., Caltex AustraliaLimited’s Lytton and Kurnell refineries, other refineries where we have an equity interest ranging from 4 percent to 16 percent, and entities over which we do not have full operationalcontrol and which do not follow our corporate GHG inventory protocol or a compatible protocol.

* Direct emissions come from sources within a facility. Indirect emissions come from electricity and steam Chevron imports, less the emissions credits from electricity and steam Chevronexports. Grid credits account for the electricity Chevron exports that is produced more efficiently than electricity from the regional or national grid.

2005

37.4

14.8

7.5

2004

38.1

14.9

7.7

2003

38.9

16.2

7.0

2002

38.8

15.8

7.1

Upstream

Downstream

Other

2005

34.4

22.6

2.7

2004

33.4

24.0

3.2

2003

35.2

23.7

3.2

2002

34.8

24.3

2.6

Direct*

Indirect*

Grid Credits*

2005

61.7

-1.3

-0.7

2004

61.8

-0.2

-0.9

2003

62.6

0.3

-0.9

2002

62.8

-0.2

-0.9

Combustion

Flaring/venting

Other

212363A4_K 20/4/06 7:19 pm Page 24

We require proposed projects over $5 millionto analyze the financial impact of carbonemissions within a range of costs per metricton of CO2 equivalent. By doing so, planningfor our capital projects accounts for thecosts associated with GHG emissionsreduction policies and for the potentialeligibility for emissions reduction credits.

Energy Efficiency PerformanceOur exploration, production and refiningoperations require significant amounts ofenergy to supply products to the customer– whether natural gas, propane, gasoline, jetfuel, diesel or home heating oil. Maturingcrude oil and natural gas fields, morechallenging production environments – for example, deepwater and enhanced oilrecovery – and demand for cleaner fuelsalso increase the amount of energy neededto run our operations. The cost of thisenergy is substantial, averaging $2.7 billionannually from 2001 to 2004. With theescalation of energy prices, our 2005energy costs totaled $4.4 billion.

In 2005, we met our companywide ChevronEnergy Index (CEI) goal of 76. CEI, establishedin 1992, measures energy use at each facilityand for each business activity. CEI measuresthe energy required today to produce ourproducts compared with the energy thatwould have been required to produce thesame products in the base year. As an index,CEI factors out many variables that affecttotal energy consumption.

Instead, it focuses on the efficiency of each type of activity, from production andshipping to refining and marketing. Througha consistent focus on energy efficiency, wehave reduced our energy consumption perunit of output by 24 percent since 1992. For further details on our CEI performance,see our Web site [2].

To meet our energy efficiency goals, weimplemented many improvements andcompleted planned maintenance at keyfacilities. Hurricanes Katrina and Rita forced the shutdown and startup of U.S. Gulf of Mexico production facilities and the Pascagoula Refinery. This requiredsignificant additional energy use and alsocut production. Nevertheless, we met ouryear-end CEI target of 76 because otherparts of the business exceeded expectationsfor efficiency improvement. Our total energyconsumption in 2005 was 853 trillion Btu(excludes non-U.S. Unocal assets).

Through our subsidiary Chevron EnergySolutions Company (CES), we also provideengineering and project managementexpertise to businesses, institutions andgovernment entities to help them conserveenergy. CES is the fourth-largest U.S.company of its kind and unique amongglobal energy companies. In 2005, it savedits customers 177 million kilowatt hours of electricity and 1.2 billion cubic feet ofnatural gas. For more information, visit the CES Web site [3].

Flaring and VentingWhen crude oil is brought to the earth’ssurface, natural gas associated with the oil also comes to the surface. The lack ofinfrastructure and nearby gas markets in many parts of the world where oil isproduced means that associated natural gas is released into the atmosphere ignited(flared) or unignited (vented). In the UnitedStates, through voluntary efforts such as participation in the EnvironmentalProtection Agency’s Natural Gas STARprogram, we have reduced natural gasemissions by more than 20 billion cubic feet since 1991.

At the same time, the reduction of flaringand venting in overseas operations offers a significant opportunity to cut GHGemissions and utilize the gas resources.Flaring and venting totaled approximately25 percent of our total GHG emissions in2005, accounting for 14.8 million tons ofCO2-equivalent emissions.

Flaring and venting reduction is an importantpart of our climate change strategy. During 2005, our international upstreamorganization established an environmentalperformance standard to drive operationalexcellence in the management of flaring and venting in our operations. The standardis aligned with the objectives of the GlobalGas Flaring Reduction Public-PrivatePartnership coordinated by the World Bank.The standard requires that all new capitalprojects be developed without continuousassociated gas flaring and venting unless it is infeasible to do so.

[ 1 ] www.chevron.com/social_responsibility/environment/ www.chevron.com/social_responsibility/energy_conservation/ www.chevron.com/technology/new_energy_technologies/ renewable_energy.asp

[2] www.chevron.com/social_responsibility/energy_conservation/[3] www.chevronenergy.com/

The Sanha Condensate Project in Angolabecame operational in 2005. This projectaddresses the largest single source offlaring from our operations and will bedelivering a 10 percent to 20 percentreduction in companywide flaring andventing while reducing GHG emissions by more than 2 million tons per year. Theproject will increase crude oil productionby approximately 100,000 barrels per daywithout additional flaring.

At full production, it will also significantlyreduce routine flaring from existingneighboring operations by capturing andinjecting produced gas underground forfuture use. In addition, a Chevron-ledconsortium is working to utilize associatedgas and further reduce flaring fromproduction operations in Angola (theAngola Liquefied Natural Gas Project).Other projects that will reduce flaring and venting include the West African Gas Pipeline (from Nigeria to Benin, Togo and Ghana) and various projectsbeing developed in Kazakhstan, Venezuelaand Indonesia.

25

Chevron Energy Index1992 = base 100

92 93 94 95 96 97 98 99 00 01 02 03 04 05

9592 91 87 87 84 82 83 79 79 78 76 76

100

Design engineer Edward Shelton is seen here at theEl Segundo, California, refinery’s No. 6 H2S plant.When fully operational, the plant is expected toenable the refinery’s fuel-gas system to meet the 40-part-per-million total sulfur limit set by the South Coast Air Quality Management District.

212363A4_K 20/4/06 7:19 pm Page 25

Renewable Energy and Clean EnergyTechnologiesIn order to meet the world’s growing needfor energy, we believe all potential sourcesmust be considered. New technologies andnew energy sources, including conservation-related technology, must be able to competein the marketplace. As part of our portfolio,we have been making targeted investmentsin renewable and clean-energy projects. We committed more than $300 million a year to renewable and clean energy in 2004 and 2005.

Geothermal Energy With the acquisition of Unocal, we now produce 1,152 megawattsof renewable energy, primarily geothermal,making us the largest renewable energyproducer of any global oil and gas company.It also makes us the largest producer ofgeothermal energy. For more than 30 years, we have been helping countriesharness their geothermal resources to meet sustainable development objectives.Compared with coal-fired systems, whichtend to be the lowest-cost option in manydeveloping countries, geothermal energyemits only about 10 percent of the GHGemissions, produces limited other emissionsand waste, and requires a significantlysmaller physical footprint. Chevron hasbeen a leader in developing the world’soperating geothermal fields, accounting for more than half of all privately developedcapacity (see chart below).

We currently are involved in four majorgeothermal energy projects that produceclean electricity for Indonesia and the Philippines.

In West Java, Indonesia, we are involved in two projects. The 377-megawatt GunungSalak project is among the largest in the world. The Darajat project produces 145 megawatts of geothermal energy. An additional 110-megawatt unit, DarajatUnit 3, is scheduled for startup by late 2006.

In the Philippines, we produce geothermalenergy at two fields that, together, supply 15 percent of the electricity required byLuzon, the most populous Philippine island.The Makiling-Banahaw (Mak-Ban) project in the Laguna and Batangas provinces,produces 422 megawatts. The Tiwi project, in Albay province, produces 206 megawattsof geothermal energy. These generating unitshave performed reliably for nearly 30 years.

Visit our Web site to learn more about howgeothermal energy works [1].

Ethanol In January 2006, we announced a collaboration with the state of California,General Motors and Pacific Ethanol toevaluate E85, a blend of 85 percent ethanoland 15 percent gasoline. The project willstudy performance, efficiency andenvironmental issues using reformulatedE85, a renewable fuel that Chevron will makeavailable at various demonstration stationsfor a fleet of 50 to 100 state vehicles.

Hydrogen Chevron operates the largest,most complex hydrogen infrastructure in the United States. In 2005, we added fuelingstations in Florida, New Mexico and Michigan.The fueling stations demonstrate the safe,practical application of hydrogen technology.For more information, visit our Web site [2].

To read about Chevron’s wind, solar andother renewable energy efforts, visit ourWeb site [3].

With the Unocal acquisition, including this Mak-Bangeothermal power plant in the Philippines, Chevronbecame the largest producer of renewable energy in the oil and gas industry and the world’s largestproducer of geothermal energy.

World Geothermal Energy Developed

Government 50%

Chevron 27%

Other private 23%

26

Chevron is the world’s largest geothermal energy producer.

[ 1 ] www.chevron.com/cr_report/2005/geothermal/[2] www.chevron.com/technologyventures/

commercialize_tech/hydrogen_infrastructure.asp[3] www.chevron.com/cr_report/2005/wind_solar/

Environmental ExpendituresUsing definitions and guidelines establishedby the American Petroleum Institute, weestimated our worldwide environmentalspending in 2005 at approximately $1.3 billion for our consolidated companies.Included in these expenditures were $341 million of environmental capitalexpenditures and $979 million in costs associated with the prevention,control, abatement or elimination ofhazardous substances and pollutants from operating, closed or divested sites,and the abandonment and restoration of sites, which includes $14 million and $66 million, respectively, for Unocalactivities for the last five months of 2005.

Fines and SettlementsAt times in 2005, some of our facilitiesmay not have met all governmentenvironmental, health and safetyrequirements, which resulted in fines and penalties. We remain committed to improving performance and learningfrom these instances. The number of fines and settlements increased to 577 in 2005 from 469 in 2004. The cost ofenvironmental health and safety fines and settlements dropped to $4.3 million in 2005 from $6.3 million in 2004. Health and safety accounted for 459 ofthe total, representing just over $142,000;the remaining 118 were for environmentalissues, representing most of the cost.

EPA New Source Review Consent DecreeIn 2003, as part the U.S. EnvironmentalProtection Agency’s (EPA) PetroleumRefinery Initiative to reduce air emissionsfrom the nation’s refineries, ChevronU.S.A. Inc. entered into a voluntaryagreement with the EPA and several stateagencies. This agreement, or ConsentDecree, was approved by a U.S. court in2005; Chevron then paid an associatedcivil penalty of $3.5 million.

Environmental, Health and Safety Finesand Settlements US$ million

2001

0.95

388

2002

4.28

278

2003

3.99

470

2004

6.33

469

2005

4.27

577

Total paid

Total number

212363A4_K 20/4/06 7:19 pm Page 26

27

Chevron’s Response to the U.S. Gulf Coast Hurricanes

Chevron Shipping Company regional marine superintendent Doug McCormick studies a map of thePascagoula Channel with members of the U.S. Coast Guard and Navy at a Jackson County Port Authoritymeeting on Sept. 6, 2005. Before electricity was returned to Pascagoula, the daily meetings were held in the Port Authority’s parking lot. With Chevron’s help, the port reopened for incoming ships just 10 days after Hurricane Katrina made landfall.

The U.S. Gulf Coast region is vital to our business and is where more than4,300 Chevron employees live and work. In 2005, communities along theGulf Coast endured one of the most destructive, unrelenting hurricaneseasons in history. More than 1,000 people died, hundreds of thousandswere displaced, and countless homes and businesses were destroyed.

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Left At the Jackson County Emergency Operations Center in Pascagoula, Mississippi, Chevron’s SteveRenfroe (far right) discusses Port of Pascagoula reopening plans with a member of the U.S. Coast Guard, as Jackson County Supervisor Tim Broussard greets Chevron Chairman and CEO Dave O’Reilly. Right Just 12 days after Hurricane Katrina slammed into the Mississippi Gulf Coast, construction wascompleted on family living units and dormitories, such as the men’s dormitory shown here, to hold up to 1,500 displaced employees and family members.

28

In the midst and aftermath of both storms, communicationsystems went down, which caused widespread confusion and havoc, especially following Katrina. The magnitude ofunfolding events made it difficult to initially assess how ouremployees, business operations and communities wereaffected by the storms.

As information was gathered, Chevron employees stepped upand immediately leveraged their organizational and technicalcapabilities, used company resources, and responded to eachcritical situation that emerged, of which there were many. Our first priority was locating employees and their families andbeing sure they were safe. While many employees have beensignificantly affected by one or both hurricanes, fortunatelythere were no fatalities.

The following pages summarize Chevron’s response to hurricanesKatrina and Rita and our efforts to support the immediaterelief and short-term recovery efforts. Also discussed are ourplans to contribute to the long-term rebuilding of the affectedcommunities, which will draw on our experiences of helpingcommunities recover after the 2004 tsunami in South Asia.

When Hurricane Katrina first made landfall on Aug. 29, 2005, it hit the Louisiana andMississippi coastlines with overwhelming force. Three weeks later, the Gulf Coast suffered asecond blow when Hurricane Rita struck. Prior to the hurricanes, we took precautions to safelyevacuate all offshore employees and contractors and to strongly encourage those workingonshore to evacuate to safe locations. We also safely shut down and secured all onshore andoffshore facilities within the hurricanes’ probable paths, including our largest U.S. refinery inPascagoula, Mississippi.

Immediate Response to the Hurricane Disasters

Taking Care of Employees In the event of a natural disaster, our first concern is to locate our employees and bring aid to them and their families. To help account for employeesaffected by Hurricane Katrina, we established a corporate toll-free line, used radio and Web communications, and tookout advertisements in newspapers across the Gulf Coast urgingemployees to contact the company. Employees in Pascagoulawent door to door in search of their co-workers who were stillmissing. By Sept. 16, the company had accounted for the safetyof all affected employees in the region.

By the time Hurricane Rita struck on Sept. 23, we had improved our toll-free telephone system and implemented a mandatorycommunications plan that required employees to contact the company with news of their whereabouts and safety.Consequently, it was only a matter of days before we were ableto locate and verify the safety of all evacuated employees.

Pascagoula, where our refinery employs 1,200 people, was in thedirect path of Katrina. Early reports indicated that up to 300 ofour refinery employees and contractors lost their homes in thehurricane. We responded by setting up a 12-acre (4.8-hectare)tent camp capable of housing nearly 1,500 employees andcontractors and their families. The air-conditioned tent facilityprovided a range of services such as catering, laundry, showersand a recreation area. Additional support came from acontingent of 30 employees from our California refineries who headed to Pascagoula and assisted in the relief.

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The extraordinary efforts of Bryan Thrailkill (above)and Jay Butts, two Chevron operators at the GalenaTerminal near Houston, Texas, were unseen by thepublic but felt by customers desperately in need of motor fuel. To read the account, please visit ourWeb site [2].

The Gautier Academy is one of 39 licensed day care facilities in Jackson County, Mississippi, thatPascagoula Refinery employees helped restore after the hurricanes.

[ 1 ] www.chevron.com/cr_report/2005/hurricanes/[2] www.chevron.com/cr_report/2005/galena/[3] www.chevron.com/cr_report/2005/hospital/

29

During Hurricane Katrina, Chevron’s Larry Kirchner,a manufacturing specialist, took refuge inMeadowcrest Hospital outside New Orleans,Louisiana, along with his son and wife, a hospital lab technician. He relied on his instincts and skills for four gut-wrenching days to help keep the hospital operational and patients secure. To read the account, please visit our Web site [3].

Minimizing Environmental Damage In anticipation of anysignificant storm, Chevron employees follow a series of pre-established steps to safely shut down crude oil and natural gas production, refineries, pipelines, other petroleumoperations, and office facilities. The majority of our siteswithstood the force of both storms, thereby avoidingwidespread environmental damage. Safety devices onnumerous types of facilities, including oil platforms andpipelines, also prevented or minimized environmental impact to equipment that did sustain major damage.

The overpowering force of Hurricane Katrina, however, caused two oil spills. The largest spill took place when a Chevronstorage tank in Empire, Louisiana, was ripped apart andreleased an estimated 33,900 barrels of crude oil. A smallerspill, approximately 1,300 barrels, involved a Chevron pipeline at Port Fourchon, Louisiana. With the approval of appropriatefederal and state environmental agencies, teams of speciallytrained emergency response personnel immediately went towork containing and cleaning up these spill areas.

Providing Relief to Our Communities Two days followingHurricane Katrina, we committed $5 million toward relief efforts,directing $3 million of these funds to the American Red Crossand earmarking $2 million for local organizations that servecommunities close to the company’s operations. This amountwas later supplemented with an additional $3 million pledge,bringing our total contribution to $8 million in support of localrecovery efforts. A complete list of all our hurricane-relatedcontributions is available on our Web site [ 1].

The company offered many forms of urgently needed assistance,such as transporting 79 pallets of blankets, more than 2,000cots and hundreds of comfort kits to a staging area in Alabama.Waivers were obtained from Mississippi authorities to allowChevron truck drivers through areas that bypassed impassibleroads in order to deliver water and ice to Pascagoula andnearby communities. Tetanus and hepatitis A shots also weredonated to these communities. After Hurricane Katrina, manyevacuees relocated initially to Houston. We worked with thelocal school district and other partners to provide shoes, socks,backpacks and school supplies for students enrolling in twoelementary schools that were reopened to accommodate themassive influx of children. In addition, we provided more than40,000 meals from our mobile barbeque in Houston and Port Arthur, Texas. The combined value of all donated goodsand services Chevron contributed was estimated at more than $500,000.

In Jackson County, Mississippi, where Pascagoula is located,Chevron’s day care recovery effort restored 39 licensed daycare facilities. Five of the centers had to be completelyreconstructed, requiring new furniture, appliances, books and developmental toys.

Our most critical role in the community is to reliably supplyenergy, and one of our first priorities was to supply fuel topolice, sheriff and fire departments, the Red Cross, andhospitals to help ensure their ability to support relief efforts.Fuel was also supplied to the Mississippi Power Company tohelp restore power to local communities.

“ I express the deepest appreciation and admiration forwhat the people of Chevron have done for this communityand for what you have enabled the Red Cross to do for our clients. Cell phones, a copier/fax machine, generators,shelter supplies – our needs were met with a simple phonecall. You are a stellar example of what ‘community’ trulymeans. It is an honor to call Chevron our partner.”

Paige Roberts, Director Jackson County, Mississippi, Chapter of the American Red Cross

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Managers Yanto Sianipar (front) and Fred Nelson in Indonesia participated in a routine emergencyresponse exercise, and any gaps found were closed. The training, which took place just a few weeksbefore the tsunami hit, allowed the managers to act quickly to locate employees after the devastation.

After the Asian Tsunami: Chevron’sCommitment to Recovery and RebuildingWe responded to the 2004 tsunami withimmediate disaster assistance as well as sustained support. We are investing $10 million over three years to be used forlong-term recovery and rebuilding efforts in South Asia and specifically targetingresources to areas that were hardest hit.Prior to being acquired by Chevron, Unocalinvested more than $3 million in long-termrecovery projects in Thailand and Indonesia.Following are two examples of long-termprojects initiated in 2005.

Managing Mangrove Resources (Thailand)We are supporting research on the benefitof mangroves, salt-tolerant trees and shrubsthat serve as a coastline buffer, becausetsunami-related damage was less wheremangrove conservation existed. TheThailand Environment Institute will initiallycreate three community demonstrationsaddressing mangrove rehabilitation andsustainable use. Best practices will then beused to expand the project to at least 10more village clusters. Our project fundingtotaled $430,000.

30

Assisting in Short-Term Recovery Efforts

Addressing Numerous Employee Needs To help meet theongoing short-term needs of employees facing hurricane-related hardships, several initiatives were launched. Theseincluded setting up additional temporary housing facilities near Chevron Oronite Company’s Oak Point plant just outside New Orleans; in Lafayette, Louisiana, where many New Orleans–based employees were stationed; and in Picayune, Mississippi, where company aircraft operations arelocated. At year-end 2005, we were still providing temporaryhousing for 756 employees and family members in sevenseparate locations.

Chevron also provided nearly $9 million in assistance toapproximately 3,100 employees in need of cash, which includedtax-free payments and loans through the company’s NaturalDisaster Assistance for Employees program. In addition, thecompany’s Employee Assistance and Work/Life Services wereexpanded to provide support and counseling services foremployees and their family members dealing with thepsychological impact of the disasters.

Throughout the company, there was an outpouring of concernamong employees wishing to help their fellow employees. The Chevron Humanitarian Relief Fund was activated, providingemployees and retirees an avenue to donate funds that woulddirectly benefit affected employees. Contributions made by Nov. 30, 2005, were matched dollar for dollar by Chevron.

Employees and retirees in at least 30 countries donated to thefund, which totaled more than $1.5 million after the company’sdonation. The funds were distributed to more than 300employees in grants of $5,000 each. We established anintranet site to facilitate offers of help from employees, which included rooming accommodations for displacedemployees. An online bulletin board also was launched so that employees could exchange information on colleagues’well-being and whereabouts.

Former Unocal employees also made contributions through theUnocal Foundation Worldplace Giving Program just as a deadlinefor post-acquisition donations approached. In just three days,these employees contributed nearly $47,000 to the AmericanRed Cross Disaster Relief Fund. The foundation matched thesecontributions, making the total contribution $94,000.

Resuming the Supply of Energy Ensuring our employees’ needswere being met was essential in order to support a criticalcommunity priority: the safe and incident-free resumption ofcrude oil and natural gas production and refinery operations,and the delivery of motor fuel and energy products to thecommunities needing them the most.

Following Hurricane Katrina, the oil industry experienced a 25 percent shutdown of all U.S. crude oil production and morethan 14 percent of natural gas production. In addition, U.S.gasoline supplies were reduced by approximately 10 percent.Notably, Hurricane Rita did greater harm to the nation’s energymarkets than Katrina, closing down virtually all Gulf of Mexicoproduction of crude oil and 80 percent of natural gas. Refineryproduction capacity in the Gulf Coast region was diminished asa result of both hurricanes.

A number of significant disruptions to the company’s operationsoccurred during and after both storms. One challenge wasrepairing damage done to the Pascagoula Refinery and itsmarine terminal. Six weeks of incident-free work resulted infully restoring operations ahead of schedule, enabling it toresume production of typically 5 million gallons of gasolinedaily, as well as other petroleum products. Operations at ourEmpire and Fourchon pipeline terminals in Louisiana wererestored after several weeks.

Following both hurricanes, we worked with federal and stategovernments to help them understand the impact of the stormson fuel supplies and infrastructure, and we recommended stepsthat would help restore supplies as quickly as possible. The U.S.Environmental Protection Agency and state agencies provided

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Vocational Training Alliance (Indonesia)We have pledged up to $5 million to apartnership with the U.S. Agency forInternational Development (USAID). We earmarked $1 million for a vocationaltraining program for more than 120students, aged 18 to 22, selected fromdozens of tsunami-affected villages inNanggroe Aceh Darussalam and on Nias.

In July 2005, students began arriving atPoliteknik Caltex Riau in Pekanbaru for the first session of a three-month trainingprogram in areas such as building

construction, electrical wiring, welding,bookkeeping and computer applications.These skills were identified as necessary for the reconstruction of tsunami-affectedareas. Upon completion of the program,students received a certificate that identified their skill level, tools andequipment for their line of business, and alist of references that potential employerscould contact. We provided participatingstudents with transportation, training, room and board, and clothing. By the end of2005, more than 120 students had graduated.

Young people from tsunami-devastated areas ofIndonesia learn computer and accounting skills at the Chevron-supported training program atPoliteknik Caltex Riau.

31

numerous emergency waivers of localized fuel specificationsthat made fuel supplies more fungible and significantlyreduced the severity of the supply disruptions.

Meanwhile, offshore employees on drilling platforms workedaround the clock to restore production. In three weeks, theyreached 56 percent of pre-Katrina levels while sustaining veryfew minor incidents. Hurricane Rita did further damage to anumber of production facilities, including the Typhoon tension-leg platform, which was severed from its mooring. The platformwas located and secured shortly after the storm. By the end of 2005, 70 percent of overall capacity had been restored inthe Gulf.

Prepaying Taxes to Support Local Municipalities As localgovernment agencies in Louisiana and Mississippi responded to the immediate and prolonged crisis, their cash reserves were quickly drained, and incoming tax revenues slowed to a trickle. To provide some funding stability, we elected toprepay more than $18.4 million toward the company’s localproperty taxes to the city of New Orleans and to Cameron,Vermilon and Plaquemines parishes in Louisiana, and toJackson County, Mississippi.

Impact on Our Business As a result of the hurricanes, weestimated that earnings were reduced by approximately $1.4 billion in 2005. About half of the impact occurred in thecompany’s fourth quarter. The hurricane effects included a reduction in crude oil and natural gas production, costs for repairs and maintenance of both offshore and onshorefacilities, asset write-offs, and expenses for other uninsuredstorm-related items.

Our Commitment to Long-Term Recovery

Helping Employees Rebuild Their Lives We established aHurricane Case Management Center to provide employees acentral resource for resolving long-term, complex issues beyond

what our current system could support. Employees who contactthe center are assigned a case manager who offers assistance on accessing resources – from pre-qualified home contractors to information about the Chevron Humanitarian Relief Fund. By providing a single point of contact, the center has helpedalleviate much of the frustration and confusion employees face as they work to rebuild their lives. By early 2006, more than 300employees had used the center.

Lending Support to Chevron and Texaco Retailers Many Chevronand Texaco fuel stations suffered hurricane-related damage,and some were declared a total loss. In response, the Chevronand Texaco Hurricane Recovery program was launched toprovide financial assistance to dealers so they could rebuildtheir stations and make necessary repairs. More than 320dealers received this assistance.

Rebuilding Local Communities We have begun exploring waysto support the long-term reconstruction of communities in the Gulf Coast region. Our efforts will align with our broadercommunity engagement approach and focus on critical areas,which may include community rebuilding efforts, education andeconomic redevelopment.

We have already begun consulting with key stakeholders – fromgovernment agencies to community representatives – in orderto identify potential partnerships and coordinate our effortswith other emerging reconstruction plans. Our approach willalso include conducting a needs assessment in the affectedcommunities where our employees live and work. This will helpdetermine the best ways for us to invest funds, resources,technical support and expertise. Metrics will be established toevaluate outcomes and successes. Lastly, we will openly sharethe results and lessons learned from our ongoing efforts withour employees, business colleagues and the local communitiesso they are informed of our firm commitment to help revitalizethis region.

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32

About ThisReport

This report covers 2005 data and activities. We also occasionally mention events that tookplace in early 2006 when they help provide aclearer picture of our performance. This reportcovers our owned or operated businesses anddoes not address the performance of oursuppliers, contractors or partners unlessotherwise noted. All financial information isreported in U.S. dollars. Our previous report was published in August 2005 and covered 2004 data and activities.

Information contained in this report has not beensubject to external assurance, with the exceptionof data included in the company’s consolidatedfinancial statements and our 2002 and 2003greenhouse gas emissions data.

We continue to be informed by reportingframeworks and guidelines that include theGlobal Reporting Initiative (GRI) and the Oil andGas Industry Guidance on Voluntary SustainabilityReporting, published in 2005 by the InternationalPetroleum Industry Environmental ConservationAssociation (IPIECA) and the American PetroleumInstitute (API). We have included an index to helpreaders find information corresponding to theGRI and API/IPIECA indicators (see facing page).

In August 2005, Chevron completed a majoracquisition of the energy company UnocalCorporation. We have integrated Unocal data asof Aug. 1, 2005, wherever parallel informationexisted for both companies, following Chevron’spractice for consolidated financial reporting.Where this was not possible, it is noted in thedata charts.

Cautionary Statement Relevant to Forward-Looking InformationThis Corporate Responsibility Report by ChevronCorporation contains forward-looking statementsrelating to the manner in which Chevron intendsto conduct certain of our activities, based onmanagement’s current plans and expectations.These statements are not promises or guaranteesof future conduct or policy and are subject to avariety of uncertainties and other factors, manyof which are beyond our control.

Therefore, the actual conduct of our activities,including the development, implementation or continuation of any program, policy or initiativediscussed or forecast in this report may differmaterially in the future. The reader should notplace any undue reliance upon such forward-looking statements, which speak only as of thedate of this report. Chevron undertakes noobligation to publicly update any statementscontained in this report.

Legal Notice As used in this report, the term “Chevron” andsuch terms as “the company,” “the corporation,”“their,” “our,” “its,” “we” and “us” may refer to one or more of Chevron’s consolidatedsubsidiaries or affiliates or to all of them takenas a whole. All of these terms are used forconvenience only and are not intended as aprecise description of any of the separateentities, each of which manages its own affairs.

Glossary

Barrels of oil-equivalent (boe) A unit of measureto quantify crude oil and natural gas amountsusing the same basis. Natural gas volumes areconverted to barrels on the basis of energycontent. See Production.

Biodiversity Refers to the diversity of life on earth. It encompasses genes, species, habitats andecosystems, and the processes that support them.

Business Conduct and Ethics Code Describesproper business conduct within Chevron andincludes an overview of several of the mostimportant laws and policies governing thatconduct. All employees and board membersmust understand and comply with the code.

Capacity building A key area of focus forChevron’s community engagement efforts, whichmeans targeting support toward programs thathelp individuals and institutions develop the skills,capabilities and expertise they need to succeed.

The Chevron Way Explains our values: who weare, what we do, what we believe and what weplan to accomplish.

Condensates Liquid hydrocarbons produced withnatural gas, separated by cooling and other means.

Downstream The industry term used to refer to all petroleum activities, from the process ofrefining crude oil into petroleum products to thedistribution, marketing and sales of the products.

Environmental, Social and Health ImpactAssessment (ESHIA) A process implemented by our international upstream organization to identify, evaluate and mitigate potential project-related environmental, social and health impacts; directly linked to our projectdevelopment process, the ESHIA processimproves life-cycle project decision making,incorporates stakeholder engagement, and helps make sure project impacts are eliminatedor mitigated and benefits enhanced.

Flaring and venting The burning or release ofnatural gas that is often produced in associationwith crude oil, a process that typically occurswhen there is no market or onsite use for the gas.

Gas-to-liquids (GTL) A process that convertsnatural gas into high-quality transportation fuels.

Geothermal energy A renewable source ofenergy that uses the heat energy of the earth toproduce electricity or to use directly for heating.

Global Reporting Initiative (GRI)A multistakeholder process and independentinstitution whose mission is to develop anddisseminate globally applicable sustainabilityreporting guidelines.

Greenhouse gases (GHGs) Gases that trap heat in the earth’s atmosphere; such gasesinclude carbon dioxide, methane, nitrous oxide,hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.

ISO 14001 Environmental management systemstandard developed by the InternationalStandards Organization.

Liquefied natural gas (LNG) Natural gas that isliquefied under extremely cold temperatures tofacilitate storage or transportation in speciallydesigned vessels.

Nongovernmental organization (NGO)An organization that is independent fromgovernment, generally a nonprofit organizationdevoted to providing assistance to or advancinga particular cause or issue.

Operating company A major Chevron companyorganized for a specific business purpose.

Operational Excellence Management System(OEMS) Chevron’s standard approach tosystematic management of safety, health, the environment, reliability and efficiency inorder to achieve world-class performance.

OHSAS 18001 An international OccupationalHealth and Safety Assessment Seriesmanagement system specification.

Operator Term used to describe a companyappointed by venture stakeholders to takeprimary responsibility for day-to-day operationsfor a specific plant or activity.

Partner In this report, partner is used in itsbroad sense to mean a person or organizationassociated with another in a common activity or one that shares a mutual interest. It does not imply a member of a contractual partnershipin which the partners jointly own and carry on a business and proportionally share in liabilities,profits or losses of the business.

Production Total production refers to all thecrude oil and natural gas produced from a property.Gross production is the company’s share of total production before deducting royalties. Net production is gross production minus royaltiespaid to landowners. See Barrels of oil-equivalent.

Renewable energy Energy resources that arenot depleted when consumed or converted into other forms of energy (for example, solar,geothermal, ocean and tide, and wind).

Reserves Crude oil or natural gas contained inunderground rock formations called reservoirs.Proved reserves are the estimated quantitiesthat geologic and engineering data demonstratecan be produced with reasonable certainty from known reservoirs under existing economicand operating conditions. Estimates change asadditional information becomes available.

Revenue transparency Refers to the practice ofdisclosing certain financial arrangements relatedto energy industry operations by industry andhost governments.

Stakeholder At Chevron, defined as those whoaffect, are affected by, or have a legitimateinterest in our company’s performance.

Transparency Making relevant and accurateinformation available to those with a legitimateinterest in the organization.

Upstream Industry term for crude oil andnatural gas exploration and production activities.

Voluntary Principles on Security and HumanRights Principles developed by extractive-sectorcompanies, human rights organizations, tradeunions and the U.S. and U.K. governments toguide companies in maintaining the safety andsecurity of their operations within a frameworkthat ensures respect for human rights andfundamental freedoms.

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GRI and API/IPIECA Index

VISION AND STRATEGY

PROFILE

GOVERNANCE STRUCTURE AND

MANAGEMENT SYSTEMS

ECONOMIC

ENVIRONMENTAL

SOCIAL

Labor Practices and Decent Work

Human Rights

Society

Product Responsibility

GRI

(Additional indicators in italics)

1.1 1.2

Organizational Profile 2.1 2.2 2.3 2.4 2.5–2.9

Report Scope 2.10 2.11–2.13 2.14 2.15 2.16

Report Profile 2.17 2.18 2.19 2.20 2.21 2.22

Structure and Governance 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8

Stakeholder Engagement 3.9–3.11 3.12

Overarching Policies and Management Systems 3.13 3.14

3.15 3.16 3.17 3.18 3.19 3.20

GRI Content Index 4.1

Customers EC1 EC2

Suppliers EC3 EC4

Employees EC5

Providers of Capital EC6 EC7

Public Sector EC8 EC9 EC10

Indirect Economic Impacts EC13

Materials EN1 EN2

Energy EN3 EN4 EN17

Water EN5

Biodiversity EN6 EN7 EN27

Emissions, Effluents and Waste EN8 EN9 EN10 EN11 EN12

EN13 EN30

Products and Services EN14 EN15

Compliance EN16

Transport EN34

Overall EN35

Employment LA1 LA2

Employee Satisfaction

Labor/Management Relations LA3 LA4

Health and Safety LA5 LA6 LA7 LA8

Training and Education LA9

Diversity and Opportunity LA10 LA11

Strategy and Management HR1 HR2 HR3

Nondiscrimination HR4

Freedom of Association and Collective Bargaining HR5

Child Labor HR6

Forced and Compulsory Labor HR7

Disciplinary Practices HR10

Security Practices

Indigenous Rights

Community SO1

Bribery and Corruption SO2

Political Contributions SO3 SO5

Competition and Pricing SO7

Customer Health and Safety PR1

Products and Services PR2

Respect for Privacy PR3

API/IPIECA

(Additional indicators in italics)

ENV-6 H&S-1

ECO-A2

ECO-2 ECO-3 ECO-A3

ECO-1 ECO-A1 SOC-A4

ENV-5 ENV-A8

ENV-A7

ENV-A9

ENV-1 ENV-A1 ENV-2 ENV-A2 ENV-3 ENV-A3

ENV-4 ENV-A4 ENV-A5 ENV-A6

SOC-A3

SOC-A2

H&S-2 H&S-3 H&S-4

SOC-5

SOC-1

SOC-4

SOC-7

SOC-6

SOC-9

SOC-A6

SOC-A4 SOC-A5 SOC-A7 SOC-8

SOC-2

SOC-3 SOC-A1

H&S-5

Where reported

2, 8, 10–14

1, 3

1, 2, 32

1, 32

8, 12, 13

4, 14, 15

5, 8, 10–14, 16–17

33

5

5

5

5

4–5, 16–17, 27–31

5, 16–17, 27–31

–

24–26

–

13, 23, 27–31

22–25, 29

13

23, 26

13

26

6

6–7

6

2, 19–21

6–7

6–7

18

18

18

18

18

6, 12

18

–

14, 16–17

12

15

12

21

21

–

This index refers to: � Global Reporting Initiative (GRI) core indicators and those additional GRI indicators on which we have fully or partially reported. � American Petroleum Institute/International Petroleum Industry Environmental Conservation Association (API/IPIECA) sustainability reporting indicators.

Some of the information responsive to these indicators appears in the Web version of this report [ 1] or on www.chevron.com.Specific references to those sites are included on the pages noted. For a more detailed indicator index, please visit our Web site.

Key to Indicators

Fully Reported in 2005

Partially Reported in 2005

Not Covered in 2005

Not Applicable

[ 1 ] www.chevron.com/cr_report/2005/

212363A4_CVR_K 20/4/06 7:23 pm Page 3

Chevron Corporation6001 Bollinger Canyon RoadSan Ramon, CA 94583-2324www.chevron.com

This report is printed on Forest Stewardship Council–certified Mohawk Options 100, made from 100 percentpost-consumer waste. It is processed elemental chlorine–free and produced using wind energy.

© 2006 Chevron Corporation. All rights reserved. 913-0386C 25M 4/06

Chevron’s Jackson County, Mississippi, Day Care Recovery Team, shown here, restored 39 licensed day care facilities in the months following Hurricane Katrina. Team members (from left) are Chevron retirees Don Hansford and Ray Dunnam and employees Amy Brandenstein and Steve Renfroe.

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