Qatar threatens to halt gas exports to EU What is the reason?

Qatari Energy Minister Saad Sherida al-Kaabi has warned that his country will stop vital liquefied natural gas (LNG) shipments to the European Union if member states enforce new legislation that penalizes companies failing to meet criteria on carbon emissions and human and labour rights.

Al-Kaabi stated that if any EU country imposed penalties for non-compliance in line with the corporate due diligence directive, Doha would halt LNG exports to the bloc, Caliber.Az reports via foreign news sources.

The directive mandates EU nations to introduce powers to fine companies up to 5% of their annual global revenue for non-compliance.

“If the case is that I lose 5 per cent of my generated revenue by going to Europe, I will not go to Europe,” Kaabi remarked. “I’m not bluffing. Five per cent of generated revenue of QatarEnergy means 5 per cent of generated revenue of the Qatar state. This is the people’s money... so I cannot lose that kind of money — and nobody would accept losing that kind of money.”

Adopted in May 2024, the EU’s corporate due diligence rules are part of a wider effort to align companies with the bloc’s goal of achieving net-zero emissions by 2050. However, the directive has faced significant opposition from businesses both within and outside the EU, who argue that the regulations are overly burdensome and put them at a competitive disadvantage.

The European Chemical Industry Council (Cefic) has expressed concerns that the due diligence rules could “create significant litigation risks” and should be carefully assessed to identify areas where simplification and burden reduction are needed.

Under the directive, non-EU companies with net turnover exceeding €450 million in the EU will be liable for penalties.

Qatar, one of the world’s largest LNG exporters, has become a key supplier to Europe, especially following the energy market disruption caused by Russia’s invasion of Ukraine. In response, QatarEnergy has signed long-term LNG supply agreements with Germany, France, Italy, and the Netherlands.

Kaabi argued that the legislation, which comes into effect in 2027, would be unworkable for companies like state-owned QatarEnergy, where he also serves as CEO. He said it would require extensive due diligence on the labor practices of all the company’s suppliers, a task complicated by the involvement of “100,000” companies across a global supply chain.

“I probably need a thousand people with the size that I have and the billions we spend, or [would need to] shed millions on a service... to go and do audits on every supplier,” Kaabi added.

He also noted that aligning QatarEnergy with the EU’s net-zero target would be impossible due to the volume of hydrocarbons the company produces. The directive requires large companies to adopt transition plans for climate change mitigation, aligned with the Paris Agreement’s 2050 climate neutrality goal, as well as intermediate targets under the European Climate Law.

The new legislation would affect all Qatari exports to Europe, including fertilizers and petrochemicals, and could influence the investment decisions of the Qatar Investment Authority, the country's sovereign wealth fund.

While Kaabi confirmed that QatarEnergy would honor its existing LNG contracts, he emphasized that the company would seek legal recourse if faced with hefty penalties. “I will not accept that we get penalised,” Kaabi stated. “I will stop sending gas to Europe.”

Kaabi did express some willingness to compromise, suggesting that penalties targeting only income generated from European contracts, rather than global revenue, might be more acceptable. “If they said that the penalty is 5 per cent of your generated revenue from that contract that you sell to Europe, I say, ‘OK, I need to assess that. Does that make sense?’” he explained. “But if you want to come to my total generated revenue, come on, it doesn’t make any sense.”

In response to the backlash, European Commission President Ursula von der Leyen pledged to propose legislation to reduce reporting requirements across several of the EU’s green finance laws, including the due diligence directive.

By Khagan Isayev