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EU Methane Rules Risk 90% of Repsol's Crude Supply

Bloomberg Markets •
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Repsol SA anticipates about 90% of its crude oil supplies falling short of new European Union methane requirements due to take effect in January, the latest in a series of warnings from the industry that the rules could threaten the region’s energy supplies. The Spanish energy company is continuing to sign crude supply contracts even when suppliers won’t agree to provide the information required under the regulation, Deputy Chief Executive Officer Luis Cabra said in an interview on Thursday. The company is agreeing non-compliant contracts into next year, he said.

Repsol has been able to confirm methane compliance from January for only about 10% to 15% of its crude supplies, he said. The company is nevertheless having to sign contracts without those provisions in place because refusing to do so would leave its refineries without enough crude. “Yes, I’m doing that,” Cabra said. “I need to do that. Otherwise, I will shut down the refinery on the first of January, 2027.”

Cabra’s warning adds pressure to Brussels to soften the regulation as Europe grapples with tight energy supplies and soaring fuel prices. French President Emmanuel Macron this month wrote to European Commission President Ursula von der Leyen floating a possible postponement of the requirements by a year. More than a dozen EU member states have also sought a delay. The European Commission in July recommended that member states refrain from imposing financial penalties for breaching the regulation for three years, but the underlying requirements remain in place.