Exxon-Pioneer Merger Approved, But Ex-CEO Barred Over Alleged OPEC Collusion

Antitrust Regulators Approve Deal With Conditions, Raising Concerns About Industry Concentration

by Victor Adetimilehin

US regulators conditionally approved Exxon Mobil’s $60 billion acquisition of Pioneer Natural Resources on Thursday, May 2nd, 2024. However, the approval came with a surprising twist: former Pioneer CEO Scott Sheffield was barred from joining Exxon’s board due to allegations of colluding with OPEC to manipulate oil prices.

FTC Accuses Ex-CEO of Collusion

The Federal Trade Commission (FTC) alleges that Sheffield, a prominent figure in the US shale oil industry, coordinated efforts with other shale producers to limit production and inflate energy prices. The FTC claims Sheffield used his influence to align oil production in the Permian Basin with production levels set by OPEC, the Organization of the Petroleum Exporting Countries.

“Mr. Sheffield’s past conduct makes it clear he shouldn’t be on Exxon’s board,” said Kyle Mach, deputy director of the FTC’s Bureau of Competition. The FTC also indicated they may refer the case to the Department of Justice for further investigation.

Pioneer maintains that Sheffield’s communications with industry players did not violate any laws and were intended to address market conditions. However, the FTC’s decision has drawn criticism from some lawmakers who argue the merger further concentrates power within the oil industry. Senators Sheldon Whitehouse and Chuck Schumer expressed concerns about the deal’s impact on competition and consumer prices.

Deal to Close Despite Controversy

Despite the controversy surrounding Sheffield, Exxon expects to finalize the acquisition on Friday, May 3rd. The deal will solidify Exxon’s position as the leading oil producer in the Permian Basin, with a combined output exceeding 1.3 million barrels of oil equivalent per day.

The FTC’s allegations center on informal communications between US shale executives and OPEC members. Moreover, these private meetings, which began in the late 2010s, are said to have focused on oil market conditions and production strategies. The FTC argues these discussions aimed to restrict production and artificially inflate prices.

Source: Reuters

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