- New EU regulations will limit methane emissions on oil and gas imports starting in 2030, impacting global suppliers.
- Equinor executive warns that ensuring precise methane monitoring will be difficult, especially for crucial crude benchmarks like WTI.
- Oil companies must adapt quickly, investing in technology to meet standards or risk losing access to the EU market.
According to an Equinor executive, the European Union’s upcoming legislation on methane emissions will create monitoring difficulties for oil and gas suppliers. Speaking at the Asia Pacific Petroleum Conference (APPEC) on Tuesday, September 10, Simon James, vice president of crude trading at Equinor, said the new rules would impact global suppliers.
The law, approved by the EU in May 2024, aims to limit methane emissions from oil and gas imports starting in 2030. It is part of the bloc’s broader effort to reduce the impact of this potent greenhouse gas. James stressed that the regulations will pressure suppliers to cut leaks and provide precise emissions data. “You need detailed and exact monitoring of methane emissions throughout the value chain,” he said.
The new standards will affect how international oil producers do business with Europe. Suppliers will have to prove their monitoring systems meet EU standards. James explained that this could change how specific crude grades are traded. “What’s that going to do to markets? You have to report your methane monitoring meets the EU standards,” he said.
James emphasised that these changes will affect key oil benchmarks, including West Texas Intermediate (WTI), part of the Brent complex. “Ensuring compliance with the EU’s methane standards will impact trading and benchmarks,” he noted. He added that monitoring methane emissions will be difficult for some global critical grades.
The executive also questioned how the industry would respond to the new requirements. He pointed out that many companies must adapt quickly to the new methane limits. “It will be interesting to see how the industry responds and how companies adjust to changes in benchmark grades,” James said.
The EU’s decision to regulate methane emissions is part of a more significant effort to tackle climate change. Methane is a more potent greenhouse gas than carbon dioxide, though it has a shorter lifespan in the atmosphere. By reducing methane leaks from oil and gas operations, the EU hopes to reduce global emissions significantly.
James acknowledged the law’s environmental importance but warned that it would create practical difficulties. Monitoring methane leaks is complex, and ensuring accuracy across the entire supply chain is a big challenge,” he said.
Many oil companies are already taking steps to reduce methane emissions, but the EU’s new law will require more stringent reporting and verification. Failure to comply with the rules could mean losing access to the EU market. This has led to concerns among some oil producers about meeting the new standards while maintaining competitive pricing.
As the 2030 deadline approaches, oil companies must invest in better technology to detect and prevent methane leaks. The legislation could drive innovation in the field and increase suppliers’ costs. The question remains whether these costs will be passed on to consumers or absorbed by producers.
In the coming years, the global oil industry will be forced to navigate the EU’s methane limits while maintaining its position in one of the world’s largest energy markets.