The Federal Trade Commission (FTC) has accused Scott Sheffield, the founder and former CEO of Pioneer Natural Resources, of attempting to collude with OPEC and its allies to inflate oil prices, according to a complaint filed on Thursday. The allegations come as the FTC approved Pioneer's $60 billion sale to ExxonMobil, but only under the condition that Sheffield be barred from serving on Exxon's board or acting as an adviser to the company.
In the complaint, federal regulators allege that Sheffield exchanged hundreds of text messages with officials from the Organization of the Petroleum Exporting Countries (OPEC), the oil cartel led by Saudi Arabia, discussing pricing, production, and oil market dynamics. The FTC claims that Sheffield used WhatsApp conversations, in-person meetings, and public statements in an effort 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 stated. Unlike OPEC nations, US oil production is supposed to be determined by the free market, not through coordination among major players.
Sheffield, who retired as CEO of Pioneer in December 2023, founded the company that has become the largest producer in the Permian Basin, a prolific oil field that has helped make the US the world's top producer of oil and gas. The FTC's decision to allow Pioneer's sale to Exxon was contingent upon 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," said Kyle Mach, deputy director of the FTC's Bureau of Competition. "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+. When asked about reports that the FTC was considering recommending criminal charges against Sheffield, 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, citing public comments he made urging US rivals to be "disciplined" about production. However, the FTC also noted that Sheffield held private conversations with high-ranking OPEC representatives, assuring them that Pioneer and its Permian Basin rivals were working to keep oil output artificially low.
The complaint also alleges that Sheffield lobbied the Railroad Commission of Texas at the outset of the Covid-19 pandemic in 2020 to impose output restrictions on Permian oil production, which the FTC claims would have increased crude oil prices above market levels. According to regulators, Sheffield 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," and added, "I was using the tactics of OPEC+ to get a bigger OPEC+ done."
Pioneer released a statement defending Sheffield, arguing that his communications were not intended to circumvent laws and principles protecting market competition. The company expressed surprise and disagreement with the FTC's complaint, stating that it reflects "a fundamental misunderstanding of the US and global oil markets and misreads the nature and intent of Mr. Sheffield's actions." However, Pioneer and Sheffield indicated that they will not fight the FTC's findings and are not taking steps to prevent the merger with Exxon from closing.
Exxon, which learned about the allegations from the FTC, stated that they are "entirely inconsistent with how we do business." The company noted that officials raised no concerns with their business practices after submitting more than 1.1 million documents in response to the FTC's requests. In response to the FTC's concerns, Exxon agreed not to add Sheffield to its board and expects the deal to acquire Pioneer to close on Friday.
