Analysts also say that if the Iran war resolves, it could quickly tilt global markets into oversupply, undercutting the argument that Europe must pick from a narrowing pool of sellers.
But other industry executives insisted to POLITICO that no company would continue trading with Europe if there was any risk of being in breach, whether or not penalties are imposed. The Commission itself acknowledges in the draft text of its recommendation that the grace period “may result in a period of non-compliance.”
“The industry cannot send cargoes to the EU if the cargoes are not in compliance,” Charlie Riedl, executive director of the Center for Liquefied Natural Gas, told POLITICO, adding that he had conveyed this position to policymakers since the rules were first introduced.
Indeed, industry argues that the diversion of cargoes from European energy markets will be catastrophic for the bloc’s supply.
Earlier this month, the International Energy Agency, a Paris-based international body that coordinates energy supplies among wealthy countries, lent support to that view, warning that the rules could leave 50 percent of the bloc’s crude oil imports as non-compliant.
The EU executive never bought the conclusions of a previous, more dramatic report commissioned by Brussels’ top oil lobby, officials say, but the Commission told diplomats Wednesday it would “assess” the conclusions of the IEA report, according to a diplomat present. It has also acknowledged the impact on energy prices from the Iran war, which it says gives legal weight to the temporary suspension of penalties.
Industry lobbyists and executives also note that even though the Commission is refusing to reopen the rules, its proposal to suspend the relevant penalties implies it is not blind to the supply risks.