Methane Emissions

Methane is second only to carbon dioxide in its overall contribution to climate change. In 2020, the European Commission published the EU Methane Strategy, setting out measures to reduce methane emissions in the energy, agriculture and waste sectors.

A key pillar of the Strategy is the EU Methane Regulation, Regulation (EU) 2024/1787, which aims to minimise methane leaks from fossil energy companies operating in the EU and reduce emissions across the Union’s global fossil fuel supply chain.

The Regulation entered into force on 4 August 2024. It establishes rules for the measurement, quantification, monitoring, reporting and verification of methane emissions in the EU’s oil, gas and coal sectors. It also introduces measures to reduce emissions, including leak detection and repair surveys, repair obligations and restrictions on venting and flaring

The EU Methane Regulation also introduces increasingly strict requirements for crude oil, natural gas and coal imported into the EU.

Article 28 requires importers to demonstrate, from 2027, that imported products are subject to monitoring, reporting and verification measures equivalent to those established by the Regulation.

The Regulation does not formally ban products that do not meet these requirements. However, importers that fail to comply may be subject to penalties.

Most crude oil used by EU refineries is imported from non-EU countries through complex supply chains. This can make it difficult for importers to obtain the producer-level data required by the Regulation.

In July 2026, the European Commission adopted two recommendations concerning the implementation of the importer requirements under the EU Methane Regulation. These include guidance on penalties and optional model contractual clauses intended to provide practical flexibility and support implementation.

The recommendations do not amend the legal obligations established under the EU Methane Regulation. As a result, they provide insufficient legal certainty, fail to set out a practical implementation pathway, and leave importers without adequate tools to achieve compliance.

On 14 October 2026, the European Commission adopted a proposal to postpone by one-year certain importer obligations under Articles 28 and 29 of the EU Methane Regulation. It is now for the European Parliament and Council, as co-legislators, to agree on the final text on the basis of their respective positions. Trilogue negotiations are expected before the end of 2026. Until an amendment is formally adopted and enters into force, the existing legal deadlines remain unchanged.

Potential Impact on Crude Availability and European Refining

To substantiate the concerns raised by industry, Concawe and IOGP Europe commissioned Wood Mackenzie to study the potential impact of the Regulation’s importer requirements on crude oil and natural gas availability, prices and the EU refining sector.

The study  focuses on the implementation of Article 28 and the requirement for importers to demonstrate that imported products are subject to monitoring, reporting and verification measures equivalent to those established by the Regulation.

Based on 2024 EU import patterns, the Wood Mackenzie study concludes that, with a strict implementation of the Regulation, 87% of the EU’s crude oil supply could be considered non-compliant from 2027.

The study also finds that such an availability reduction of compliant crude oil could reduce EU refinery throughput by around 50%, or approximately 4.6 million barrels per day, between 2027 and 2030. According to the study, this would represent a capacity reduction equivalent to the closure of around 40 EU refineries.

The study identifies further potential consequences, including Europe becoming more dependent on imported refined products, annual fuel import costs increasing by more than $17 billion, and gasoline and diesel prices increasing by 24% and 16% respectively.

IEA Assessment

Published a few months after the Wood Mackenzie study, the International Energy Agency’s July 2026 Oil Market Report estimates that the pool of tradable crude oil available to EU refiners could shrink by more than 50% from January 2027, despite demand for refined products remaining unchanged. The policy contribution also states that traceability and verification requirements could reduce this pool further.

The IEA Oil Market Report for July 2026 was published on 10 July 2026. However, its publicly accessible overview does not contain this specific assessment.

FuelsEurope’s Position and Recommendations

FuelsEurope fully supports the environmental ambition of the EU Methane Regulation. FuelsEurope members have already committed to reducing methane emissions along the value chain, and some have joined the Oil and Gas Methane Partnership 2.0.

However, FuelsEurope considers that the Regulation does not provide the necessary compliance pathways for importer requirements or sufficient time for refineries to adapt their crude oil supply and contracting arrangements.

Most crude oil used by EU refineries is imported from non-EU countries through complex supply chains. According to FuelsEurope, this makes it difficult to obtain the producer-level data required under the Regulation and limits the incentives for producers to improve their methane performance to meet European standards.

Although the Regulation does not formally ban non-compliant products, FuelsEurope considers that the absence of sufficient compliance solutions, combined with the risk of penalties, could discourage importers from placing non-compliant crude oil on the EU market. FuelsEurope warns that this could have serious consequences for European security of supply.

FuelsEurope also considers that the Regulation’s environmental objectives could be put at risk through carbon leakage. Europe could become structurally more dependent on imported refined products, while crude oil that does not meet the EU requirements could continue to be processed in other regions. In FuelsEurope’s view, this could shift refining activity and associated emissions outside Europe without delivering the intended overall environmental benefits.

FuelsEurope recognises that the Commission’s July 2026 recommendations respond to concerns repeatedly raised by industry. However, FuelsEurope does not consider the package sufficient.

The recommendations are non-binding, while importers remain legally accountable under the EU Methane Regulation and critical compliance systems are not yet operational. In FuelsEurope’s view, guidance concerning penalties does not remove the underlying risks of non-compliance, legal exposure or fragmented implementation across Member States.

FuelsEurope, in line with several other industry stakeholders, therefore, calls for:

• A three-year postponement of the obligations under Articles 28 and 29(1) through targeted amendments to the EU Methane Regulation. This would provide sufficient time for compliance solutions to be deployed and for supply chains to adapt, while safeguarding the Regulation’s overall objective.
• Harmonised implementation across Member States to prevent fragmented national reporting guidelines and market distortions.
• Concrete and practical guidance from the European Commission that Member States can formalise at national level.
• Structured and continuous engagement with industry by the European Commission and the competent authorities of Member States.

FuelsEurope will continue to engage with the EU institutions and industry to develop workable solutions and raise awareness of the Regulation’s potential impact on the refining sector.

• EU Methane Emissions Regulation Study
• Press Release
• Factsheet
• FAQs