Exxon Mobil chief exec says no new refineries

David Koenig

Thursday, May 26, 2005 | 9:28 a.m.

DALLAS -- Despite high gasoline prices and a recent decline in production, Exxon Mobil Corp. doesn't plan to speed up investment in new exploration or build new U.S. refineries, Chairman and CEO Lee R. Raymond said Wednesday.

Raymond said Exxon, the world's largest publicly traded oil company, would continue its cautious approach to investment because new exploration is costly and long-term energy prices are uncertain. He said the Irving, Texas-based company's production would pick up later this year as new wells begin pumping oil and gas.

The CEO made the comments to reporters after Exxon's annual shareholder meeting. Investors sided with management and rejected eight shareholder resolutions dealing with social, environmental and corporate-governance issues.

Resolutions calling for an explicit ban on discriminating against gays and for a report on Exxon's plans to comply with limits on greenhouse gas emissions both drew nearly 30 percent support.

The emissions measure asked the company to describe how it would comply with greenhouse gas reduction targets set under the Kyoto Protocol treaty, which was ratified by about 140 countries but not the United States. The measure was helped by an endorsement from the advisory firm Institutional Shareholder Services Inc.

"The institutional investors are saying this is a critical issue and the company has not been forthcoming about it," said Michael Crosby, a Catholic priest whose Capuchin order in Milwaukee sponsored the resolution.

Crosby and other dissident shareholders accused Exxon of clouding debate on the issue of global warming by financing what one called "junk science" to dispute scientists who link climate change to fossil fuels. Raymond defended Exxon's environmental record.

"Frankly, I think the company is a leader in climate science," he said.

In contrast to recent years when the meeting attracted throngs of noisy demonstrators, Wednesday's event inside the Morton H. Meyerson Symphony Center drew only a sprinkling of protesters.

Exxon has a reputation for caution when it comes to investing in new energy production. Raymond said last year's record profit of $25.33 billion showed the wisdom of the company's approach.

Referring to today's high oil prices, Raymond said the last significant upswing started in 1979 and lasted five years -- adding, "We viewed that as a short-term aberration."

"Today's prices don't have much to do with it," Raymond said of the decision to invest in costly new projects. "What's the price five, 10, 15 years from now? That's what exploration and development in the upstream is all about."

Separately, Raymond said recent events in Russia had "put up a yellow flag" against investments in Russia, which has oil and gas deposits coveted by Exxon and other Western oil companies. He said significant Western investment was unlikely until the Russian government determines what role foreign companies will be allowed to play.

Exxon is leading an international group of companies, including two from Russia, on a $12 billion project off the coast of Russia's Sakhalin Island. Company officials expect to begin pumping oil and gas there late this year.