EU delays methane rules amid gas crunch, but prices remain high

Key facts

• The EU may delay its methane regulation by one year.
• The U.S. and Qatar have protested the regulation, citing implementation difficulties and trade burdens.
• Qatar had previously threatened to suspend LNG sales to the EU over the regulation.
• Gas prices on the spot market are at levels last seen in 2022-2023.
• EU gas storage levels are lower than the average for this time of year.

The European Commission is considering delaying the import component of its methane regulation by one year, a move aimed at easing concerns from major liquefied natural gas (LNG) suppliers like the United States and Qatar. Energy Commissioner Fan Jorgensen indicated that this postponement would provide market actors with more time to implement the new rules without negatively impacting the EU's security of supply or prices.

The methane regulation, which requires suppliers to provide information on the methane footprint of their gas from extraction to delivery, has faced significant opposition. The U.S. has described it as an "undue burden" and a "non-tariff trade barrier," demanding an exemption until 2035. Qatar had previously threatened to suspend its LNG sales to the EU if the regulation proceeded as planned, and has since extended its force majeure on Ras Laffan for another month, signaling continued disruptions to normal LNG flows.

While the potential delay addresses concerns from U.S. exporters and aims to ensure a steady flow of LNG, it is unlikely to resolve the EU's broader affordability problem. Gas prices on the spot market remain high, comparable to levels seen in 2022-2023, with thinner supply buffers than in previous years. The EU is increasingly reliant on U.S. LNG imports as Russian gas supplies are significantly reduced and other suppliers provide only a fraction of the bloc's needs. As winter approaches and heating demand rises, the question of affordable energy supply remains a pressing concern for European households and businesses.