The department for business and energy’s new minister spent six years as a director of a wildcat oil and gas firm that tried to cash in on fracking in Poland, company documents reveal.
Lord Prior sat on the board of Aurelian Oil and Gas from 2006 until early 2013, and only stepped down when the struggling company merged with one of its competitors. For the bulk of that time he was chairman or deputy chairman of the AIM-listed firm.
The life peer joined the Department for Business, Energy and Industrial Strategy just before Christmas, to replace Baroness Neville-Rolfe.
While fracking sits in the ministerial portfolio of his departmental colleague Jesse Norman MP, Lord Prior will be the lead on all BEIS issues in the House of Lords and will work with climate change minister Nick Hurd on the government’s industrial policy.
The biography of Lord Prior published by BEIS makes no mention of his previous experience in the fracking industry, instead highlighting past roles at British Steel, the failed investment bank Lehman Brothers, and NHS regulator the Care Quality Commission.
There is no suggestion that Lord Prior’s past involvement with a fracking company represents a conflict of interest. He is no longer a director of any energy firm. According to the register of Lords’ interests, all of his shareholdings have been placed in a discretionary account, and he has no knowledge of what that portfolio now contains.
But reports filed at Companies House make clear that he has extensive first-hand knowledge of the obstacles to making money from fracking in Europe.
Poland’s failed fracking boom
Six years ago, Poland – where Aurelian had its most high-profile oil and gas licences – was seen as the industry’s best hope for a fracking bonanza within the European Union.
The US Energy Information Administration had estimated Poland could have gas reserves of up to 5.3 trillion cubic metres, and the Polish government was enthusiastic about developing a shale gas industry.
But those hopes evaporated in the face of disappointing drilling results, falling oil prices, regulatory hassles, and environmental protests. The oil supermajors like Chevron and Exxon Mobil that had piled into the country pulled back again, and by late 2016 even the state-owned Polish firms effectively gave up on shale gas.
Aurelian Oil and Gas was an oil and gas start-up that moved into Eastern Europe early, starting to buy up concessions in Romania, Bulgaria and Poland in 2002.
After the company floated on the AIM – a sub-market of the London Stock exchange – in 2006 it quickly began to focus resources on its concessions on the Siekierki gas field near the Polish city of Poznan. Siekierki is a “tight gas” field that the company hoped would yield gas at commercial rates using multi-fracked horizontal wells.
“Major gas discovery”
Lord Prior, who took over as chairman of Aurelian in 2007, wrote in his first chairman’s statement that its vertical well drilled on Siekierki had confirmed a “major gas discovery” and it would be “some eighteen months before we will have our first gas sales”.
In fact, it was not until June 2010 – around the time Lord Prior stepped down as chairman – that Aurelian drilled the first multi-fracked horizontal well in Poland at its Siekierki site. Seven months later it began drilling another one.
But by the end of 2011, just as Polish enthusiasm for fracking was heating up, Aurelian was in trouble. Gas flow from the wells fracked at Siekierki was at less than half the rate targeted by the company, and – in the words of then-chairman John Conlin – the effect on its share price was “severe”.
In early 2012, having raised over €200m from investors in six years, it effectively put itself up for takeover. Less than a year later it was taken over by competitor firm San Leon Energy and Lord Prior, along with the rest of Aurelian’s board, resigned.
But there has still been no gas sold from the Siekierki gas field investments that Lord Prior lauded. Last November, San Leon sold its remaining stake in the Polish gas field for €1, plus a cut of any profits that are eventually extracted from Aurelian’s investments in Poznan.
Energydesk has approached the Department for Business, Energy and Industrial Strategy for comment, but is yet to receive a response.