FTC looking for ‘clear evidence’ in US-OPEC collusion probe
The US Federal Trade Commission is investigating whether executives at major oil companies including Hess Company, Western Oil Group and Diamondback Energy Inc. had improper communication with OPEC officials.
FTC investigators are looking for evidence that executives tried to collude with OPEC officials on oil market dynamics, according to people familiar with the matter who asked not to be identified discussing nonpublic information. Such communications, especially about prices and production, could be illegal under U.S. antitrust laws.
The FTC has opened several in-depth merger reviews amid a surge in deals between oil and gas companies, particularly those in the Permian Basin, North America’s largest oilfield. As part of one of those reviews, which focused on whether a deal would harm competition, antitrust officials uncovered conversations with OPEC officials.
Neither Hess nor OPEC responded to multiple requests for comment. Occidental, Diamondback and the FTC declined to comment for this story.
Hess shares fell as much as 2.6% on the news. Occidental and Diamondback also fell as much as 2.2%.
Antitrust regulators often look at executive communications as part of their review of deals. In recent oil mergers, the agency has been allowed to search for specific keywords like “OPEC” or “shale,” one of the people said.
The agency is looking for so-called evidence that it could refer a shale cartel case to the Justice Department, the person said. The FTC enforces antitrust and consumer protection laws and must refer any potential criminal activity it uncovers to the Justice Department.
The Organization of the Petroleum Exporting Countries is not subject to US antitrust law as a sovereign entity, but US-based companies are.
The FTC obtained the communications after negotiations between the agency and the companies’ lawyers. Antitrust enforcers reiterated in January that the companies Request for transfer of contact information done through chat and messaging apps like Meta Platform WhatsApp and Inc.’s Signal are part of the regulator’s regular review process.
The oil industry has been sharply critical of the Biden administration’s policies even as the country is pumping more oil than ever before. But this is one of the most aggressive moves the administration has made against the industry just months before the presidential election.
The FTC’s interest in messages from executives at Hess, Occidental and Diamondback is related to the deals each company is pursuing.
Occidental said in a statement Thursday that it plans to close a major acquisition next month after the government’s formal 30-day review period ends. The FTC has the power to intervene until the deal is complete, although it rarely does.
The Justice Department declined to comment for this story.
Hundreds of documents
The searches come after the FTC alleged in May that it found hundreds of messages between Pioneering Natural Resources Co. founder Scott Sheffield and OPEC officials involved in the oil market. Those messages came to light as part of the agency’s review Exxon Mobil The Group’s acquisition of Pioneer for $63 billion.
The FTC allowed the Exxon deal to proceed on the condition that Sheffield be removed from the suitor’s board. Sheffield was denied any wrongdoing and accused the FTC of “publicly and unjustly defaming me.”
In recent years, OPEC officials and shale executives have gathered at annual dinners and industry events, a sign of closer ties.
OPEC representatives began sitting down with U.S. shale executives at informal dinners in early 2017 after years of increasingly intense competition. The emergence of the North American shale industry has upended the cartel’s decades-long dominance of the global oil market, prompting OPEC leaders to pursue a strategy of detente in closed-door meetings on the sidelines of industry conferences in Houston.
