EU Methane Regulation and its impact on LNG imports

Abstract

Abstract The EU Methane Regulation entered into force on 4 August 2024. It creates rules and obligations on measurement-based Monitoring, Reporting, and Verification of methane emissions of relevant activities, and on Leak Detection and Repair, and introduces limits on routine venting and flaring within the European Union (EU). In addition, and importantly for this article, it creates the first import-related requirements on methane emissions for imported fuels globally. This article will focus on the impact of the Methane Regulation on Liquified Natural Gas (LNG) imports into the EU. In this respect, the Methane Regulation creates far-reaching and difficult-to-implement obligations. The concerns for the LNG industry and imports into the EU are that (i) many of the central rules are not set out in the Methane Regulation and will be provided in the years to come and (ii) some of the key concepts and key provisions lack clarity and are open to various interpretations. As we will discuss in detail, the uncertainty created by the Methane Regulation will make contract negotiations more difficult and will negatively affect the security of gas supply within the EU.