Mobil Cites Recession in Cutting Capital Spending Budget 10%

Mobil Corp. said Friday that it cut by 10% its capital spending budget--a blueprint of how much money the company intends to spend on major projects in coming years.

Mobil’s announcement comes amid expectations that the oil industry in general will curtail spending in 1992 because of poor economic conditions.

Mobil Chairman Allen E. Murray said the company will pare its capital budget by $500 million, mainly because the economy promises to remain sluggish.

“The economic recession, both in the United States and in key markets abroad, continues to have a significant impact on the demand for petroleum and chemical products around the world,” Murray said in a statement. “In addition, U.S. natural gas prices continue to be disappointing.”

The statement follows by a day Shell Oil Co.’s announcement that it would cut by $400 million, or about 13%, the amount of money it plans to spend in 1992 on capital projects. Capital and exploratory expenditures for that year will be about $2.7 billion, the company said.

Shell’s cuts will come in exploration and production, where spending will be slashed by $450 million. Spending in refining will actually increase by $100 million, to $850 million, in 1992, primarily to build new equipment to make cleaner burning gasoline mandated by the new federal Clean Air Act.

The company announced Thursday that it plans to build five new plants to make methyl tertiary butyl ether, a key ingredient in the new gasolines. Spending in Shell’s chemicals business will also increase.

Separately, Texaco Inc. said it would discuss its capital spending plans for the next five years at an analysts meeting next week at company headquarters in White Plains, N.Y. Chief Executive James W. Kinnear told Dow Jones that Texaco doesn’t expect to make cuts anything like Mobil’s.