New York
CNN
—
Scott Sheffield, the founder and longtime CEO of a leading American oil producer, attempted to collude with OPEC and its allies to inflate prices, federal regulators alleged on Thursday.
The Federal Trade Commission said Sheffield exchanged hundreds of text messages discussing pricing, production and oil market dynamics with officials at the Organization of the Petroleum Exporting Countries, or OPEC, the cartel led by Saudi Arabia.
Regulators say Sheffield, then the CEO of Pioneer Natural Resources, attempted to “align oil production” in the Permian Basin in Texas with that of OPEC and OPEC+, the wider group that includes Russia.
Unlike withOPEC nations, US oil production is supposed to be decided by the free market, not by coordination among the major players.
Sheffield retired in December 2023 as CEO of Pioneer. The company he founded is the biggest producer in the Permian Basin, the abundant oilfield that has helped make the US the world’s top producer of oil and gas.
The FTC gave the green light on Thursday for Pioneer to be sold to ExxonMobil for $60 billion — but only under an agreement that prevents Sheffield from sitting on Exxon’s board or serving as an adviser.
“Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom,” Kyle Mach, deputy director of the FTC’s Bureau of Competition, said in a statement. “American consumers shouldn’t pay unfair prices at the pump simply to pad a corporate executive’s pocketbook.”
The FTC said that Sheffield lobbied the Railroad Commission of Texas at the outset of the Covid pandemic in 2020 to impose output restrictions on Permian oil production, cuts which it says would have increased crude oil prices above market levels.
Global oil prices plunged by about 50% in early 2020 as pandemic lockdowns decimated demand for gas and aviation fuel. OPEC+ responded by slashing production.
Pioneer released a statement defending Sheffield and arguing it was “neither the intent nor an effect of his communications to circumvent the laws and principles protecting market competition.”
“We disagree and are surprised by the FTC”s complaint,” Pioneer said in the statement. “Mr. Sheffield and Pioneer believe that the FTC’s complaint reflects a fundamental misunderstanding of the US and global oil markets and misreads the nature and intent of Mr. Sheffield’s actions.”
Pioneer and Sheffield signaled they won’t fight the FTC’s findings, saying they “are not taking any steps to prevent the merger from closing.”
