US, Qatar Warn EU LNG Rules Could Trigger Supply Squeeze

The United States and Qatar have jointly renewed their opposition to the European Union's tightening climate rules for the liquefied natural gas (LNG) sector, warning that the regulations could disrupt gas supplies and drive up prices across Europe.

In a joint letter, U.S. Energy Secretary Chris Wright and Qatar's Energy Minister Saad al-Kaabi said there was "no viable pathway" to comply with the EU's methane regulation. They argued that legal compliance remains the highest priority for market participants, adding that gas producers, exporters and buyers would be unwilling to sign contracts that risk violating EU rules. As a result, they warned that reduced supplies and higher prices would become unavoidable.

The letter was issued ahead of a meeting of EU energy ministers and was also signed by Algeria and Nigeria, two major suppliers of natural gas to the European Union.

EU Methane Rules Face Broad Resistance

The European Union adopted its Methane Regulation two years ago as part of efforts to curb methane emissions, a greenhouse gas that makes up nearly all of natural gas. Beginning this year, the regulation applies to all companies supplying gas to the EU, including foreign exporters.

Under the rules, natural gas producers must monitor and report methane emissions throughout the entire supply chain — from production wells and liquefaction facilities to LNG shipping vessels — while investing in emissions reduction measures. Companies that fail to comply could face financial penalties.

The regulation has triggered widespread opposition among major suppliers. Qatar previously warned that it could halt LNG exports to Europe if the bloc continued to impose strict methane-related requirements. Wright also argued that the regulation is not practically enforceable, describing it as a significant non-tariff trade barrier that would impose unreasonable costs on U.S. exporters and bilateral trade.

Limited EU Concessions Fail to Ease Industry Concerns

In response to mounting criticism, the European Union agreed not to enforce the regulation's penalty provisions before 2030. LNG exporters, however, continue to reject the compromise and have called for the regulation to be withdrawn entirely.

Wright and al-Kaabi said opposition extends beyond exporters, noting that several EU member states are also reluctant to bear the additional costs associated with purchasing low-methane LNG.

According to Wright, higher natural gas prices for European buyers are increasingly inevitable because the regulation cannot be implemented in the U.S. shale gas industry. He said the country's gas production system involves hundreds of independent producers whose output is combined through an extensive pipeline network before reaching liquefaction terminals along the U.S. Gulf Coast. Tracking every unit of gas throughout the production and transportation process to verify methane compliance is, he argued, physically impractical.

Industry Study Raises Questions Over Compliance

A study conducted by energy consultancy Rystad Energy on behalf of the Environmental Defense Fund reached a different conclusion, stating that global gas reserves meeting the EU's methane standards are roughly three times larger than the bloc's import demand, suggesting the regulation is technically achievable.

If that assessment is accurate, questions remain over why Qatar and the United States — two countries accounting for a significant share of global LNG production — maintain that compliance is not feasible. The contrasting positions highlight a gap between the study's findings and the operational concerns raised by major exporters, raising doubts about the actual availability of compliant gas supplies.

Energy Security Debate Intensifies

Despite the EU's firm stance, its position in global energy trade remains constrained.

Bloomberg Opinion columnist Javier Blas recently wrote that about 59% of the European Union's LNG imports originate from the United States, with the share rising to 64% in April. According to Blas, some EU officials have become increasingly concerned about the bloc's growing dependence on a single supplier for a critical energy commodity. Should political tensions escalate because of policy disputes, including the methane regulation, Europe would have few alternative sources of supply.

The Financial Times, citing the Environmental Defense Fund and other supporters of the regulation, reported that the primary objective of the Methane Regulation may not necessarily be to secure cleaner natural gas for Europe. Instead, supporters argue that raising market entry requirements and making natural gas trade less favorable could reduce overall gas consumption, which they believe would strengthen the European Union's energy security. European industrial gas consumers, however, hold the opposite view, and the outcome of this policy debate could become clearer in the near term.