EU refiners and fossil fuel importers called for the application of the bloc's methane emissions regulation to be paused pending amendments.
With no changes, the EU risks a self-inflicted supply shock equivalent to 2022 disruptions, with up to 43pc, or 114bn m³, of the bloc's 2024 gas imports and 87pc of its crude oil imports, or some 9.8mn b/d based on 2024 volumes, at risk of being non-compliant in 2027–2029, oil and gas producer body IOGP said.
The EU cannot afford a regulatory supply shock in the current geopolitical context, said refiners body FuelsEurope and IOGP. The EU methane regulation entered into force in 2024 but has requirements for importers of crude oil, natural gas and coal on reporting methane emissions from 2027, for contracts concluded or renewed after 4 August 2024. Presenting a study commissioned from Wood Mackenzie, FuelsEurope and IOGP warned that no exporting country has been recognised as equivalent with EU monitoring, reporting and verification (MRV) standards, required from January 2027. Only some 7pc of global oil and gas production meets the reporting standards required by the methane regulation.
Additionally, the study points to the lack of a recognized third-party verification protocol and accredited verifiers. Wood Mackenzie finds that EU refinery throughput could fall by some 50pc, or 4.6mn b/d in 2027–2030 as a result of insufficient compliant crude, equivalent to closing 40 EU refineries.
Impacts would be less severe under an adaptive scenario, with greater flexibility in granting country-level MRV equivalence, according to Wood Mackenzie. But 20pc, 53bn m³, of natural gas imports and 38pc, 4.3mn b/d, of crude oil imports into the EU, in 2024 volumes, could still be excluded.
EU energy ministers discussed their implementation concerns in December last year. The European Commission then noted that the methane regulation requires member states not to "endanger" security of supply when applying penalties. The commission said the methane regulation is open to different compliance solutions. Importers can show compliance through contractual evidence as well as methane MRV information, the commission told energy ministers.
The study indicated that Europe's fuel import bill could rise by more than $17bn annually under the regulation. But it noted that while gas prices risk being over twice as high, they still fall "well short" of average prices in 2022 at the start of the Russia-Ukraine war.
"We're not asking for five or ten years," said IOGP Europe managing director Francois-Regis Mouton. The industry wants time for discussion and for the EU to vote an amended regulation that can be implemented. "We don't need tens of changes in the regulation," added Mouton.
