Former Pioneer CEO Accused by FTC of Attempting to Collude with OPEC

The former boss of the largest US shale oil producer, Scott Sheffield, has been accused by US regulators of attempting to collude with the Opec cartel to manipulate oil prices. The allegations were made by the US Federal Trade Commission against Sheffield, who was the chief executive of Pioneer Natural Resources until December.

ExxonMobil had agreed to purchase Pioneer in a $60 billion deal in October, which required approval from the FTC. While the regulator did not block the takeover, they did ban Sheffield from joining Exxon’s board due to concerns about potential collusive activities that could raise crude oil prices and harm American consumers and businesses.

The FTC’s allegations focus on Sheffield’s calls for lower production during the 2020 oil price crash caused by the Covid-19 pandemic. He had urged Opec and Russia to reduce supply to stabilize prices, leading to suspicions of coordination with the cartel to keep production artificially low.

Despite Pioneer’s disagreement with the FTC’s complaint, the acquisition by Exxon is set to be completed on Friday, giving the supermajor a dominant position in the Permian Basin. The FTC’s decision to accept the consent agreement on the deal was met with dissent from the agency’s Republican commissioners.

FTC chair Lina Khan emphasized the importance of taking corporate executives’ words and actions seriously when they suggest potential collusion. Sheffield, a key figure in the shale revolution, has been accused of threatening US shale producers who may not comply with coordinated output reduction schemes.

The allegations against Sheffield highlight the complexities and potential risks of collusion in the oil market, raising questions about the integrity of industry practices and regulatory oversight.