The U.S. Federal Trade Commission (FTC) is probing whether executives from major oil companies, including Hess Corp., Occidental Petroleum Corp., and Diamondback Energy Inc., engaged in improper communication with OPEC officials.
According to sources familiar with the investigation, who requested anonymity due to the sensitive nature of the information, the FTC is seeking evidence of potential collusion between these executives and OPEC on issues such as oil pricing and production. Such actions could potentially violate U.S. antitrust laws.
The FTC’s investigation comes amid a surge of mergers and acquisitions in the oil and gas sector, especially in North America’s Permian Basin, a leading oil-producing region. During the review of these deals, antitrust officials discovered possible communications between the oil companies and OPEC.
Hess Corp. has strongly denied the allegations, stating, “These allegations of improper communications are baseless and without merit.” OPEC has not responded to multiple requests for comment, and Occidental Petroleum and Diamondback Energy have also declined to comment.
Antitrust regulators often scrutinize executive communications during merger reviews. In recent cases, the FTC has searched executives’ texts and emails for terms like “OPEC” or “shale.” The FTC is searching for a “smoking gun” that could lead to a referral of a possible shale cartel case to the Justice Department. The FTC, which enforces antitrust and consumer protection laws, must refer any discovered criminal activity to the Justice Department.
While OPEC itself is not subject to U.S. antitrust laws as an international organization, U.S.-based companies are. The FTC accessed these communications after negotiating with company lawyers. The agency has emphasized that companies must provide communications from chats and messaging apps, including WhatsApp and Signal, during reviews.
The Biden administration has faced criticism from the oil and gas industry despite increasing domestic oil production. This investigation is one of the administration’s most assertive actions against the sector in the lead-up to the presidential election.
The FTC’s investigation relates to ongoing deals involving Hess, Occidental, and Diamondback. Occidental has announced plans to complete a significant acquisition next month following the conclusion of the formal 30-day government review period. The FTC retains the right to intervene until the deal is finalized, though such intervention is rare.
The Justice Department declined to comment on this matter.
This investigation follows an FTC claim from May that it discovered hundreds of texts between Pioneer Natural Resources Co. founder Scott Sheffield and OPEC officials during the review of Exxon Mobil Corp.’s $63 billion acquisition of Pioneer. The FTC allowed the Exxon-Pioneer deal to proceed on the condition that Sheffield would be excluded from the board. Sheffield has denied any wrongdoing and accused the FTC of unfairly targeting him.
OPEC representatives began informal meetings with U.S. shale executives in 2017, following years of intensified competition. The rise of the North American shale industry had challenged OPEC’s long-standing dominance in the global oil market, prompting OPEC to seek a strategy of engagement through private discussions at industry conferences in Houston.