EU Methane Regulation: Why Algeria Requests a Delay

The European Union has adopted a restrictive regulation (EU Regulation 2024/1787) on methane, one of the greenhouse gases, imposing strict obligations on fossil fuel producers, particularly natural gas producers, including Algeria. From January 1, 2027, European importers will be required to declare whether their suppliers comply with EU-equivalent methane emission standards at production sites. A regime of financial penalties is also foreseen for non-compliance.

Algeria, Qatar, Nigeria, and the United States have signed a joint letter requesting the EU to suspend the timeline and make targeted modifications to the methane regulation. Their main argument is that the requirements applicable to natural gas imports from 2027 risk disrupting European supplies because the measurement, verification, and traceability systems demanded by the EU are not yet operational in most producing countries. This comes at a time when the EU, having diversified its gas suppliers after the Russia-Ukraine war, is heavily dependent on imports from these countries.

The paradox is that the EU is imposing environmental requirements on suppliers it still needs. Since the cessation of Russian deliveries, the EU has had to rapidly diversify its suppliers, particularly towards the US, Nigeria, Algeria, and Qatar, especially for LNG purchases. This dependency theoretically reduces its ability to impose additional constraints on its suppliers. The EU is being asked to reconcile environmental sustainability with energy security imperatives to avoid rigid deadlines disrupting supply continuity.

Some EU member states are also requesting a delay of at least three years for certain provisions of the regulation, citing geopolitical uncertainties, the war in the Middle East, and risks to European energy security. For Algeria, the stakes are high because the European market is by far its main gas outlet. It seeks to prevent European technical requirements from becoming a barrier to entry.

Algeria's state-owned company Sonatrach has launched an ambitious investment program of $40 billion by 2030, aiming to reduce the flaring rate to less than 1%. It recently signed a memorandum of understanding with German company VNG AG to collaborate on methane emission reduction technologies and green hydrogen. Sonatrach will need to demonstrate its environmental performance to maintain competitiveness in the European market. Ultimately, Algeria expects a delay of a few years for the implementation of the methane regulation to allow more time to deploy the required measurement and emission reduction systems. It is clear that additional investments to monitor and reduce methane emissions will be reflected in gas prices.