Ample supply of LNG available to Europe under Methane Regulation – new analysis

European countries will likely have access to ample supplies of gas that can comply with the EU Methane Regulation in the coming years, reducing the risk of full implementation of the programme, according to a new analysis.

The EU Methane Regulation (EUMR) seeks to ensure that gas imported into Europe comes from producers with low levels of methane emissions at their production sites. The rule is being implemented in phases, with importers needing to demonstrate that their suppliers use adequate monitoring, reporting and verification standards beginning in 2027.

The gas industry has blasted the regulation for putting gas supplies at risk, suggesting there could be an energy crisis if large portions of gas imports are deemed to be in violation of the EUMR.

But the EU has already softened the rule by largely exempting contracts signed before August 2024. In addition, the European Commission issued recommendations in July to Member States for a three-year suspension of the penalties for non-compliance with the EUMR. The move came after an intense lobbying campaign by the gas industry in both the EU and the U.S., along with some European Member States.

A new analysis from the research group Data Desk finds that most of Europe will have access to large volumes of gas that will be compliant with the EUMR. Previous research from Data Desk found that only 13 billion cubic metres (bcm) of gas contracts signed after August 2024 would be affected by the rule, roughly equivalent to only 4 percent of the EU’s current gas consumption.

Difference in suppliers

The latest analysis digs into gas supplies that will be available at the country level. For instance, nearly 60 percent of Germany’s gas supply comes from Norway, which produces large quantities of gas that will be compliant with the EUMR in 2027. Another 22 percent of Germany’s gas supply comes from the U.S., which does not have a good track record on methane. But the European Commission’s recommendation to allow third party gas “certification,” an increasingly common programme used by U.S. gas producers, makes it highly likely that significant volumes of U.S. LNG will comply with the EUMR.

Only a sliver of German gas supply from Russia must be replaced next year – a requirement that is unrelated to the EUMR and results from separate European legislation aimed at breaking energy dependence on Russia.

Other countries in Western Europe are in similarly good shape. A few question marks remain, however. Italy and Spain source a large portion of their gas from Algeria. In the near-term, those contracts are exempt because they occurred before August 2024, but they will eventually expire and need to be renewed. Data Desk said it is “unclear” whether there will be sufficient Algerian gas supply that complies with EUMR standards in the years ahead.

Greece and Eastern Europe are most vulnerable to strained supplies of gas – but again, because of dependence on Russia, not because of the methane regulation. Hungary relies on Russia for more than half of its gas supply. That needs to be replaced in 2027 when the ban on Russian gas takes effect. Hungary will need to step up purchases from Romania, Austria, and through LNG terminals in Croatia, Data Desk said.

Overall, the data indicates that there is little risk in implementing the EUMR because there is already plenty of gas sloshing around that will meet European standards.

“The gas industry has spent months warning that Europe’s methane rules threaten its energy security. When we traced where Europe’s gas actually comes from, and how much of it the rules affect, that picture simply didn’t hold,” Sam Leon, head of strategy at Data Desk, told Gas Outlook.

An earlier study from Rystad Energy projects that around 600 billion cubic metres of gas that has achieved OGMP2.0 Level 5 standards – the reference standard for the EUMR – will be available in 2027, which is equivalent to twice as much gas as total current EU demand.

“We found no evidence that the Regulation is driving current price increases or have caused material supply pressures,” Andreas N. Skorpen, a partner at Rystad Energy, said in a June statement that analysed the EUMR impacts in light of the disruptions in the Strait of Hormuz. “Instead, market impacts are primarily linked to broader geopolitical developments, while OGMP Level 5 supply is expected to be available at levels well above current European import requirements.”

The outlook becomes even smoother in the years ahead, both due to the enormous buildup of global LNG capacity that will come online in the 2027-2030 period and declining gas demand in Europe.

European gas consumption has fallen from a recent peak of 400 billion cubic metres in 2021 to 335 bcm in 2025. Existing policies will ensure demand continues to decline, with forecasts for another drop of between 60 and 140 bcm by 2030, according to Data Desk. High prices along with extreme volatility and uncertainty from the disruption in the Strait of Hormuz will undoubtedly deepen the EU’s resolve to cut gas consumption.

“Demand is falling, a wave of new LNG is coming online, and the Commission has already given industry breathing room by recommending that penalties be held off until 2030,” Leon said.

Political headwinds

Despite the three-year recommended suspension in penalties, gas industry groups have dialed up the pressure on European policymakers to reopen the EUMR for revisions. They want new binding European legislation codifying the delay along with other amendments.

“The Recommendations, even if adopted urgently by all Member States in a harmonised manner – an unlikely scenario – would still require importers negotiating contracts today to put themselves into a position of non-compliance, with the only temporary relief that they would not be financially penalised,” industry groups, led by the International Association of Oil & Gas Producers and signed by the American Petroleum Institute, Eurogas, and other trade associations, wrote in a letter to European officials in late August.

Some European leaders have cited the current energy crisis linked to the disruptions in the Strait of Hormuz as a reason to push back the EUMR. French President Emmanuel Macron recently called for a delay in the EUMR by one year.

The European Commission appears poised to listen to Macron and follow that path, indicating support for a one-year delay.

“I have instructed my services to look into the possibilities of postponing the import part of the legislation with one year,” European Commissioner for Energy and Housing Dan Jørgensen told Bloomberg News in a recent interview. “And this would give the market actors time to make sure that they can indeed implement these new rules without it hurting our security of supply and prices.”

Proponents of the EUMR note that high LNG prices have nothing to do with the EUMR, and instead are the result of war in the Middle East and the blockade of the Strait of Hormuz.

“Meeting the new reporting rules is estimated to cost around EUR 0.05/MMBtu, far too little to be driving today’s energy price increases, so delaying them won’t ease the difficulties consumers are facing,” said Brandon Locke, Associate Director at Clean Air Task Force (CATF). “Delaying the rules another year does not resolve the remaining implementation challenges, it just kicks the can down the road.”

Moving forward with the EUMR could also capture about 20 billion cubic metres of gas that would otherwise be emitted and unused, and much of it can be done at no net cost, according to a policy brief from Climate Action Network (CAN) Europe.

“There is no supply crisis waiting to happen, only a test of whether Europe will ask producers to measure and cut their methane, at a fraction of a percent of what their gas is worth,” Leon said. “The real threat to Europe’s energy security is its dependence on imported fossil fuels.”