Aaron M. Sprecher/Bloomberg/Getty Images/File
Scott Sheffield, CEO of Pioneer Natural Resources, will speak in Houston on March 7, 2023.
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Scott Sheffield, the founder and longtime CEO of a major American oil producer, conspired with OPEC and its allies to try to jack up prices, federal regulators alleged Thursday.
According to the U.S. Federal Trade Commission, Sheffield, then CEO of Pioneer Natural Resources Inc., was involved in discussions with officials from the Organization of the Petroleum Exporting Countries (OPEC), the Saudi-led oil cartel, to discuss prices. They reportedly exchanged hundreds of text messages discussing settings, production and oil market trends.
Regulators say Sheffield used WhatsApp conversations, in-person meetings and public statements to try to “align” oil production in Texas' Permian Basin with that of OPEC and OPEC+, a broader group that includes Russia. It states that
“Mr. Sheffield's communications were designed to inflate Pioneer's profits, as well as those of OPEC and OPEC+ oil companies, at the expense of American households and businesses,” the FTC complaint states. There is.
Unlike According to OPEC countries, U.S. oil production should be determined by the free market, not coordination among major powers.
Sheffield steps down as Pioneer's CEO in December 2023. The company he founded is the largest producer in the Permian Basin, a rich oil field that helped make the United States the world's largest oil and gas producer.
The FTC on Thursday gave the go-ahead to sell Pioneer to ExxonMobil for $60 billion under an agreement that bars Sheffield from serving on Exxon's board or serving as an advisor. was.
“Mr. Sheffield's past conduct makes it clear that he should not be anywhere near Exxon's boardroom,” Kyle Mach, deputy director of the FTC's Bureau of Competition, said in a statement. “American consumers should not pay unfair prices just to line the pockets of corporate executives.”
The FTC alleges that Sheffield engaged in a “campaign to orchestrate anticompetitive coordinated production cuts” between U.S. oil producers and OPEC and OPEC+.
Asked about reports that the FTC was considering recommending criminal charges against Sheffield, FTC spokesman Douglas Farrar told CNN, “The FTC has no responsibility to prosecute potential criminal activity. “We take that obligation very seriously.”
Regulators acknowledged that Mr. Sheffield did not hide efforts to “align” U.S. production with OPEC's output, and that Mr. Sheffield had publicly called on U.S. rivals to “remain disciplined” on production. I pointed out the comment.
“But Mr. Sheffield went beyond public signaling to his U.S. counterpart. He also had numerous private conversations with OPEC officials, saying that Pioneer and its Permian Basin rivals were trying to artificially reduce oil production. “We assured them that we are working hard to keep these rates low,” the FTC said.
According to the FTC, Sheffield lobbied the Texas Railroad Commission to impose production limits on Permian oil production early in the 2020 coronavirus pandemic, but the cuts pushed oil prices below market levels. There was also a possibility that the price would rise.
The FTC also said that while Sheffield was discussing efforts with other producers in Texas to adjust output, Pioneer's CEO said, “If Texas takes the lead, we may be able to get OPEC to cut production.” said. Saudi Arabia and Russia will probably follow suit. That was our plan. ”
“I was trying to use the OPEC+ strategy to bring about a larger OPEC+,” Sheffield added, according to the regulator.
Global oil prices fell by about 50% in early 2020 as pandemic lockdowns slashed demand for gas and aviation fuel. OPEC+ responded by drastically reducing production.
Pioneer issued a statement defending Mr. Sheffield, arguing that “the intent and effect of his communications was not to circumvent the laws and principles that protect market competition.”
“We disagree and are surprised by the FTC's allegations,” Pioneer said in a statement. “Mr. Sheffield and Pioneer believe that the FTC's allegations reflect a fundamental misunderstanding of the U.S. and global oil markets and misunderstand the nature and intent of Mr. Sheffield's actions.”
However, Pioneer and Sheffield said they did not dispute the FTC's findings, saying they had “taken no steps to prevent the completion of the merger.”
Exxon said in a statement that it learned of the allegations from the FTC.
After the company submitted more than 1.1 million documents in response to FTC requests, Exxon noted that officials “have not expressed concern about our business practices,” adding, “They are not consistent with the way we do business. It is completely contradictory.”
Exxon said it would not add Mr. Sheffield to its board of directors in response to the FTC's concerns. The company said it expects the deal to acquire Pioneer to close on Friday.
This story has been updated with additional information.
