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Qatar has threatened to halt vital gas shipments to the EU if member states strictly implement new legislation that will penalize companies that fail to meet set criteria on carbon emissions, human and labor rights.
Qatar’s Energy Minister Saad al-Kaabi told the Financial Times that if any EU state imposed non-compliance sanctions on the scale referred to in the corporate due diligence directive, Doha would stop exporting liquefied natural gas to the bloc.
The law requires EU countries to establish powers to impose fines for non-compliance capped at at least 5 percent of the company’s annual global revenue.
“If I’m losing 5 percent of my revenue going to Europe, I’m not going to Europe. . . I am not bluffing,” Kaabi said. “Five percent of the generated revenue of QatarEnergy means 5 percent of the generated revenue of the State of Qatar. This is the people’s money. . . so I can’t lose that kind of money – and no one would accept to lose that kind of money.”
The EU adopted corporate due diligence rules in May this year. They are part of a wider set of reporting requirements aimed at aligning companies with the EU’s ambitious goal of achieving net zero emissions by 2050.
However, the directive has sparked widespread backlash from companies both inside and outside the EU, which have complained that the rules are too burdensome and put them at a competitive disadvantage.
Cefic, the chemicals industry body, said the due diligence rules would “create significant litigation risks” and should be thoroughly assessed “to identify and address areas for simplification and burden reduction so that . . . limit the exposure of the liability.”
Non-EU companies will be penalized under the directive if they earn more than €450 million in net turnover in the bloc.
Qatar is one of the world’s top LNG exporters and has become an increasingly important supplier of natural gas to Europe in the wake of turmoil in energy markets caused by Russia’s invasion of Ukraine.
As European states have sought to wean themselves off Russian gas, QatarEnergy has signed long-term deals to supply LNG to Germany, France, Italy and the Netherlands.
Kaabi suggested that in its current form the legislation — which is due to take effect from 2027 — would not be applicable to companies such as state-owned QatarEnergy, of which he is also chief executive.
He said it would require the company to do due diligence on the labor practices of all suppliers in the group, with a global supply chain that includes “100,000” companies.
“I probably need a thousand people the size I am and the billions we spend, or [would need to] pour millions into a service. . . to go and check every supplier,” he added.
Kaabi also said it would be impossible for an energy producer like QatarEnergy to align with the EU’s net zero target as set out in the directive because of the amount of hydrocarbons it produces.
The EU directive includes an obligation for large companies to adopt a transitional climate change mitigation plan in line with the 2050 climate neutrality goal of the Paris Agreement, as well as intermediate targets under the European Climate Law.
Kaabi said the legislation would affect all of Qatar’s exports to Europe, including fertilizers and petrochemicals, and could also affect investment decisions by the Qatar Investment Authority, the sovereign wealth fund.
He said QatarEnergy would not terminate its LNG contracts but would consider legal avenues if it faced heavy sanctions.
“I will not accept that we are punished,” he said. “I will stop sending natural gas to Europe.”
However, Kaabi suggested that there could be room for compromise if the sanctions simply target income generated in Europe rather than total global income.
“If they said the penalty is 5 percent of the revenue you’ve generated from that contract you’re selling in Europe, I say, ‘OK, I’ve got to evaluate that. Does that make sense?’ he said. “But if you want to reach my total income, come on, there’s no point.”
European Commission President Ursula von der Leyen promised last month to propose “comprehensive” legislation that would reduce reporting requirements from several of the bloc’s green finance laws, including the due diligence directive.
