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

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Scott Sheffield, founder and longtime CEO of a major U.S. oil producer, tried to collude with OPEC and its allies to inflate prices, federal regulators alleged Thursday.

The Federal Trade Commission said Sheffield, then CEO of Pioneer Natural Resources, exchanged hundreds of text messages discussing oil prices, production and market dynamics with officials at the Organization of the Petroleum Exporting Countries, or OPEC, the oil cartel led by Saudi Arabia.

Regulators say Sheffield 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 group more broad which includes Russia.

“Mr. Sheffield’s communications were designed to improve Pioneer’s financial results – as well as those of OPEC and OPEC+ member state oil companies – to the detriment of American households and businesses,” the complaint states. of the FTC.

Contrary to An OPEC country, US oil production is supposed to be decided by the free market and not by coordination between major players.

Sheffield retired in December 2023 as CEO of Pioneer. The company he founded is the largest producer in the Permian Basin, an abundant oil field that helped make the United States the world’s largest producer of oil and gas.

The FTC on Thursday gave the green light to Pioneer’s sale to ExxonMobil for $60 billion — but only in a deal that bars Sheffield from serving on Exxon’s board or serving as an advisor.

“Mr. Sheffield’s past conduct makes it clear that he should not be anywhere near the Exxon boardroom,” Kyle Mach, deputy director of the FTC’s Bureau of Competition, said in a statement. a statement. “American consumers should not pay unfair prices at the pump just to pad a corporate executive’s wallet.”

The FTC alleges that Sheffield “campaigned to engineer coordinated, anticompetitive production cuts” between and among U.S. oil producers and OPEC and OPEC+.

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

Regulators acknowledged that Sheffield had made no secret of his efforts to “align” U.S. production with that of OPEC, pointing to public comments he made calling on his U.S. rivals to be “disciplined” on production.

“But Mr. Sheffield didn’t just report publicly to his U.S. counterparts — he also held repeated private conversations with high-ranking OPEC officials, assuring them that Pioneer and its Permian Basin rivals were working hard to keep oil production artificially low.” the FTC said.

The FTC said Sheffield lobbied the Texas Railroad Commission at the start of the Covid pandemic in 2020 to impose production restrictions on Permian oil production, reductions it said would have increased the crude oil price above market levels.

The FTC also said that while Sheffield was discussing efforts to coordinate production with other Texas producers, Pioneer’s CEO said, “If Texas leads the way, we may be able to get OPEC to reduce its production. Perhaps Saudi Arabia and Russia will follow. That was our plan.

Sheffield added, according to regulators: “I was using OPEC+ tactics to achieve a bigger OPEC+. »

Global oil prices plunged 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 saying it was “neither the intent nor the effect of its communications to circumvent the laws and principles protecting competition in the marketplace.”

“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 U.S. and global oil markets and a misinterpretation of the nature and intent of Mr. Sheffield’s actions.

But Pioneer and Sheffield indicated they would not challenge the FTC’s findings, saying they are “not taking any action to prevent the merger from being completed.”

Exxon said in a statement that it was aware of the FTC’s allegations.

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

Exxon said that in response to the FTC’s concerns, it would not add Sheffield to its board of directors. The company said it expects the agreement to acquire Pioneer to be finalized on Friday.

This story has been updated with additional information.