Repsol says about 90% of its crude oil supplies are on track to miss new EU methane requirements taking effect in January. Deputy CEO Luis Cabra says the company keeps signing non-compliant contracts anyway, because refusing them would leave its refineries without enough crude oil.
Repsol flags a supply gap
Repsol said Thursday that roughly 90% of its crude supplies are expected to fall short of new European Union methane rules due to start in January. The Spanish energy company has confirmed compliance from January for only about 10% to 15% of its crude supplies.
Deputy Chief Executive Officer Luis Cabra said Repsol keeps signing supply contracts even when sellers refuse to share the data the regulation requires. Cabra said declining those contracts would leave the company's refineries short of crude, forcing a shutdown.
Rules take effect in January
Starting Jan. 1, importers must show that crude oil, natural gas, and coal entering the bloc were produced under monitoring, reporting, and verification standards meant to cut methane emissions. Methane traps roughly 80 times more heat than carbon dioxide over its first 20 years in the atmosphere.
French President Emmanuel Macron this month wrote to European Commission President Ursula von der Leyen suggesting a possible one-year postponement of the requirements, and more than a dozen EU member states have also asked for a delay. The European Commission in July recommended that member states avoid financial penalties for breaches for three years to protect security of supply, but the underlying requirements remain in place.
Legal risk still looms
Cabra said that avoiding penalties does not remove the compliance problem. According to Investing.com: "Not being imposed penalties still means that you are being un-compliant," he said, warning that someone could still take Repsol to court over non-compliant imports. Repsol has written to authorities reserving its legal rights in case it faces action, and Cabra said the company would be prepared to challenge regulators over requirements it argues are impossible to meet.
The difficulty stems partly from suppliers' reluctance to change standard contracts, with some sellers refusing to add clauses committing them to share the methane data Repsol needs. Repsol's five Spanish refineries are configured for heavier crude grades, including supplies from the Americas such as Venezuela, and switching to lighter grades would hurt margins and in some cases would not suit its plants. The bloc's energy ministers are scheduled to meet informally in Dublin next week, with energy affordability and security among the topics on the agenda.
Source: Investing.com
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