U.S. oil magnate faces allegations of working with OPEC to boost crude costs
The Federal Trade Commission has accused Scott Sheffield, former CEO of Pioneer Natural Resources, of coordinating with OPEC and OPEC+ officials to control oil production in the Permian Basin of Texas. This purposefully aligned the production levels between the US and the oil cartel, led by Saudi Arabia. The FTC claims that this meant higher prices and lower output for suppliers, hurting American households and businesses.
While in office, Sheffield engaged in hundreds of text messages with OPEC officials, and used in-person meetings as well as public statements to manipulate the market. US oil production is typically guided by the free market, but Sheffield's efforts were aimed at creating financial benefits for OPEC and Russia, not just his company, Pioneer Natural Resources.
In December 2023, Sheffield retired as the head of Pioneer. The company, which is located in the Permian Basin, is the biggest producer in the area, and has contributed to making the US the top oil and gas producer in the world.
Pioneer was recently given approval to sell to ExxonMobil for $60 billion. However, this was subject to an agreement that prevents Sheffield from serving on the board or as an advisor of Exxon. Kyle Mach, deputy director of the FTC’s Bureau of Competition, stated that Sheffield should not be in Exxon's boardroom, as he could potentially increase gas prices for consumers.
The FTC alleges that Sheffield wasn't just open about his attempts to align US production with OPEC, but he also had private conversations with high-ranking OPEC representatives assuring them of the effort to maintain low oil output in the Permian Basin. Sheffield's tactics mirrored those of OPEC+, and the FTC believes that he aimed to create a larger OPEC+ deal.
During the COVID-19 pandemic in 2020, Sheffield asked the Railroad Commission of Texas to impose output restrictions on Permian oil production. This was allegedly done to increase crude oil prices beyond market levels.
Around the same time, Sheffield told other Texas producers that they could potentially convince Saudi Arabia and Russia to cut production, thus emulating OPEC+ tactics.
The FTC believes that Sheffield's actions defied US antitrust laws, making it seem like the oil market was made to benefit a few select players, rather than being based on free market principles.
Pioneer has responded to the accusation, saying that they maintain that Sheffield's communications did not attempt to circumvent competition laws.
“We disagree and are surprised by the FTC’s complaint,” Pioneer stated in a press release. “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.”
Notably, Sheffield and Pioneer won't be contesting the FTC's allegations, and are allowing the sale to Exxon to go through.
Exxon has also responded, stating that they have no plans to add Sheffield to their board. The deal for the acquisition of Pioneer is expected to close on Friday.
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Source: edition.cnn.com
