American oil tycoon accused of trying to conspire with OPEC to inflate prices

Scott Sheffield, chief executive officer of Pioneer Natural Resources Co., speaks during the 2023 CERAWeek by S&P Global conference in Houston, Texas, US, on Tuesday, March 7, 2023.

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, used WhatsApp conversations, in-person meetings and public statements to try to “align oil production” in the Permian Basin in Texas with that of OPEC and OPEC+, the wider group that includes Russia.

“Mr. Sheffield’s communications were designed to pad Pioneer’s bottom line — as well as those of oil companies in OPEC and OPEC+ member states — at the expense of US households and businesses,” the FTC complaint said.

Unlike with OPEC 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 alleges that Sheffield “campaigned to organize anticompetitive coordinated output reductions” between and among US oil producers and OPEC and OPEC+.

Asked about reports that the FTC was considering recommending Sheffield face criminal charges, FTC spokesperson Douglas Farrar told CNN: “The FTC has a responsibility to refer potentially criminal behavior and takes that obligation very seriously.”

Regulators acknowledged that Sheffield did not hide his efforts to “align” US production with that of OPEC, pointing to public comments he made urging US rivals to be “disciplined” about production.

“But Mr. Sheffield did not limit himself to public signaling to US counterparts — he has also held repeated, private conversations with high-ranking OPEC representatives assuring them that Pioneer and its Permian Basin rivals were working hard to keep oil output artificially low,” the FTC said.

Using the tactics of OPEC

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.

The FTC said that while Sheffield was discussing efforts to coordinate output with other Texas producers, the Pioneer CEO said: “If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi Arabia and Russia will follow. That was our plan.”

Sheffield added, according to regulators: “I was using the tactics of OPEC+ to get a bigger OPEC+ done.”

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.”

But 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.”

Exxon said in a statement that it had learned about the allegations from the FTC.

“They are entirely inconsistent with how we do business,” Exxon said, noting that officials raised “no concerns with our business practices” after the company submitted more than 1.1 million documents in response to the FTC’s requests.

Exxon said that in response to the FTC’s concerns, it will not add Sheffield to its board. The company said it expects the deal to acquire Pioneer will close on Friday.

This story has been updated with additional information.

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