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

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CNN
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Federal regulators alleged Thursday that Scott Sheffield, the founder and longtime CEO of a leading U.S. oil producer, tried to collude with OPEC and its allies to inflate prices.

The Federal Trade Commission said SheffieldThen CEO of Pioneer Natural Resources, Exchange hundreds of text messages Discuss pricing, production and oil market dynamics with officials at the Organization of the Petroleum Exporting Countries, or OPEC, the oil cartel led by Saudi Arabia.

Organizers say Sheffield has used WhatsApp chats, in-person meetings and public statements to try to “align oil production” in Texas’ Permian Basin with that of OPEC and OPEC+, the broader group that includes Russia.

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

Unlike with OPEC countries, US oil production is supposed to be determined by the free market, 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, the abundant oil field that has helped make the United States the world’s largest oil and gas producer.

The Federal Trade Commission gave the go-ahead on Thursday Pioneer sold to Exxon Mobil for $60 billion — but only under an agreement that prohibits Sheffield from sitting on Exxon’s board or serving as an advisor.

“Sheffield’s past behavior makes it abundantly clear that he should not be anywhere near Exxon’s board,” Kyle Mach, deputy director of the FTC’s Bureau of Competition, said in a statement. “American consumers should not pay unfair prices.” Fair at gas stations just to line the pockets of corporate executives.”

The FTC alleges that Sheffield “undertook a campaign to orchestrate uncompetitive, coordinated production cuts” among U.S. oil producers, OPEC and OPEC+.

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

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

“But Mr. Sheffield did not limit himself to public references to his American counterparts — he also held frequent private conversations with high-level OPEC representatives and assured them that Pioneer and its competitors in the Permian Basin were working hard to keep oil production artificially low.” The Federal Trade Commission said.

The FTC said Sheffield lobbied the Texas Railroad Commission at the beginning of the Covid pandemic in 2020 to impose production limits on oil production in the Permian Basin, cuts it said would have caused crude oil prices to rise 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, maybe we can convince OPEC to cut production.” Perhaps Saudi Arabia and Russia will follow suit. “That was our plan.”

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

Global oil prices fell by about 50% in early 2020, as pandemic lockdowns destroyed demand for gas and jet fuel. OPEC+ responded Reduce production.

Pioneer issued a statement defending Sheffield and saying it was “neither the intention nor the effect of his communications to circumvent the laws and principles that protect competition in the marketplace.”

“We disagree and are surprised by the FTC complaint,” Payoneer 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 misreads the nature and purpose of Mr. Sheffield’s actions.

But Pioneer and Sheffield indicated they would not dispute the FTC’s findings, saying they were “not taking any steps to prevent the merger from closing.”

Exxon said in a statement that it learned of the allegations from the Federal Trade Commission.

“It is completely inconsistent with the way we do business,” Exxon said, noting that officials had raised “no concerns about our business practices” after the company filed 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. The company said it expects the Pioneer acquisition deal to close on Friday.

This story has been updated with additional information.