EU LNG – A Changing Landscape


Dec 07, 2023

EU LNG – A Changing Landscape

Europe’s new methane emissions regulations will transform the global energy market. Beginning in 2027, energy imports into the European Union (EU) will be subject to methane monitoring and production reporting. Tighter maximum methane intensity restrictions (not yet finalized) for imports will apply in 2030. The EU currently imports 80% to 90% of its oil and gas.

Coming Soon - Implementation Timelines

2025 – EU firms buying imported fuels must disclose supplier and methane mitigation measures.

2026 – Publication of the European Commission database, with national methane intensity profiles and super-emitter events.

2027 – New import contracts (oil, gas, coal) must ensure obligations are complied with by importers and EU producers. Oil, gas, and coal producers must measure, monitor, and verify their methane emissions, including an inventory of closed and inactive assets as well as plugged and abandoned wells and mines. Global monitoring tools to capture super-emitter events and a methane database for producers and importers will be used to ensure transparency and compliance, along with country and company performance profiles.

2028 – EU importers must provide methane intensity data for energy purchases.

2030 – Penalties assessed for European firms who continue to purchase energy that exceeds the new methane intensity regulations.

Approval through the European Parliament and the European Commission, along with specific measurements, inspections, and timelines, is expected in the next several months.

Reduction Goals – All Eyes on Methane

The EU, a 27-nation bloc, has set a goal of reducing its greenhouse gases by 55% (compared to 1990) by 2030, and is a participant in the United Nations (UN) Global Methane Pledge to cut world methane emissions 30% by 2030. The new regulations will require EU oil and gas producers to detect and repair methane leaks and will ban most venting and flaring. Wells must comply with plugging, mitigation planning, and methane leak detection requirements.

The EU negotiators did not place a specific value on the methane reduction sought in the energy sector. Methane emissions connected with imported fuel may be as much as eight times higher than some EU domestic fuel production. Methane is released through flaring/venting, equipment leaks and malfunctions, and transportation.

The EU anticipates that these European methane reduction efforts will push COP-28 attendees to consider and reduce their national emissions intensity.

U.S. to EU – A New Source of Power

The U.S. is currently the largest supplier of LNG, following the shutdown of Russian pipelines. U.S. exports of LNG to Europe totaled about $33 billion in 2022. European sales account for about two-thirds of American LNG export sales.

Methane Intensity – Not All LNG Created Equal

The U.S. ranks 10th in global energy production methane intensity, measured in kilotons per oil energy equivalent (ktoe), with intensity estimated at 8.18 tons of CH4/ktoe. For comparison, Russia’s intensity is 14 tons, Venezuela is at 53.35 tons, and Canada is at 5.17 tons CH4/ktoe. Norway, the largest supplier of pipeline natural gas to the EU, has one of the world’s lowest methane intensities. Many countries are failing to accurately capture and report methane release data.

With new EU methane restrictions on imported energy on the horizon, low intensity producers like the U.S. and Canada are uniquely positioned to play a vital role in providing clean and reliable energy both at home and abroad.

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