EU waives penalties for oil and gas firms that breach methane law

BRUSSELS, July 20 (Reuters) - The European Commission instructed EU governments to waive penalties for three years for oil and gas companies that breach its methane emissions law, following pressure from the U.S. government to roll back the rules.

The U.S., Qatar, oil and gas industry groups, and most EU member states have demanded changes to the law in recent months, warning that it could hamper Europe's ability to secure fuel supplies, when from January 2027, it was due to require imported gas to meet emissions monitoring rules equivalent to Europe's.

The Commission said on Monday EU countries should not ​apply penalties to companies that breach the methane law in 2027, 2028 and 2029, in order "to avoid supply disruptions".

The law had been designed so that companies failing ​to comply could ​face fines up to ⁠20% of their annual turnover.

The Commission said the changes were justified "in a context of global energy markets tightness caused by the ongoing blockade of the Strait of Hormuz", which has disrupted the transit route for a fifth of the world's oil and liquefied natural gas supply.

The change would weaken the world-first ​EU climate policy, which was designed to clamp down on leaks of methane, ​a potent greenhouse gas and the second-biggest cause of climate change after ⁠CO2 emissions.

However, it does not go as far critics of the law would want - since it does not amend the law, but just temporarily waives penalties for breaching it. A group of 17 of the EU's 27 member states, including Germany and the Czech Republic, have asked the EU to delay the law.

Analysts have given conflicting assessments of whether the rules would restrict the amount of oil and gas the EU can secure on global markets.

The Commission "recommendation" on waiving penalties instructs countries to apply EU law in a certain way, but is not binding.

However, a Commission official on Monday said national courts are obliged to take into account the recommendation - which would help companies fend off any claims they should face penalties for breaching the law.

(Reporting by Kate Abnett; Editing by Toby Chopra)