President Donald Trump's administration is pressing European countries to offer flexibility on standards for methane emissions as a way to ease the pathway for them to sign long-term purchase agreements for US LNG.
Trump has pushed for countries to commit to buying more US LNG as a way to avoid steep tariffs he has threatened to impose on countries that have trade imbalances with the US. But a looming requirement for European importers to show "equivalence" to EU methane monitoring requirements for newly signed gas supply contracts could pose an obstacle for US LNG, based on differences in how methane emissions are tracked.
The administration's "ask" is for the EU to ensure that its methane-related measurement, reporting and verification (MRV) methodologies do not pose a barrier to US LNG, US acting assistant secretary of state for energy resources Laura Lochman said today. US LNG terminals have struggled to show equivalency to the MRV rules because, unlike many global LNG projects, they source their gas from pipelines connected to multiple fields.
"Give time for industry to work through some of those traceability issues as well, because it would take a few years to be able to get to that point and work out the equivalency methodology," Lochman said at an event with European officials organized by the industry group LNG Allies.
European officials indicated they are receptive to finding a solution, as they work to end purchases of Russian gas by the end of 2027. But they say they want to continue to see reductions in emissions of methane, which is a potent greenhouse gas. Trump has already started rolling back restrictions on methane emissions.
"We understand you've got a different supply chain, as opposed to us, and that it's important to have it worked out so that any difficulties are taken away from American companies with those regulations," Netherlands ambassador to the US Birgitta Tazelaar said at the event. "Of course it's very important for the Netherlands and Europe that methane be reduced."
US LNG developers are likewise pushing Europe to consider pushing back a goal to largely phase out natural gas consumption by 2040. That deadline could complicate the traditional financing model for new LNG terminals typically premised on signing 20-year supply deals, said Kimmeridge managing partner Ben Dell, whose company is building the proposed 9.5mn metric tonne/yr Commonwealth LNG project in Louisiana.
"The one thing I would ask is for European members in this room to think beyond 2040," Dell said. "Ultimately extending that runway allows a lower-cost project financing and ultimately a lower cost delivery into the European market."
A potential trade deal between the US and the EU could create an opportunity to grant equivalency to US LNG exports to avoid barriers from the EU methane regulation, LNG Allies president Fred Hutchison said today. The US in turn could reclassify the EU as having a free trade agreement for gas, which would expedite US LNG export licensing, Hutchison said.
The Trump administration sees the potential for European contracts to lead proposed US LNG export terminals to reach final investment decisions (FIDs). The administration has already been "very clear" about its goal to increase LNG exports and cut regulations facing the natural gas sector, the State Department's Lochman said.
"When you put together the push from the US side to support, and then the demand signals on the European side, you can get more projects making it to FID," Lochman said.
