Qatar has issued a strong warning that it will stop exporting liquefied natural gas (LNG) to the European Union (EU) if member states strictly implement new laws on corporate due diligence, including heavy fines for violations of carbon emissions, human rights and labor, the Financial Times reported.
“If any EU country imposes a fine equivalent to 5% of a company’s global turnover as stipulated in the new law, Qatar will no longer export LNG to Europe. I am not kidding,” Qatari Energy Minister Saad al-Kaabi stressed.
The EU’s corporate due diligence law, which was adopted in May 2023, gives member states the power to impose fines of up to 5% of global turnover on companies that violate the rules, part of the EU’s ambitious drive to achieve net zero emissions by 2050.
However, this law is facing fierce opposition from businesses inside and outside the EU, arguing that the regulations are too strict and reduce competitiveness.
Qatar, one of the world's top LNG exporters, has played a key role in securing energy supplies to Europe after Russia cut off gas supplies due to the conflict in Ukraine. QatarEnergy has signed a series of long-term contracts with Germany, France, Italy and the Netherlands to supply LNG.
Mr al-Kaabi, who is also CEO of QatarEnergy, said the EU's corporate due diligence laws would put too much of a burden on energy companies like QatarEnergy, especially when it comes to auditing global supply chains.
“We have about 100,000 suppliers in our global supply chain. That means I need thousands of people to do the checks or I have to spend millions of dollars on auditing services,” he explained.
In addition, QatarEnergy is unlikely to meet the transition planning requirements in line with the EU's net zero emissions target, given the hydrocarbon-producing nature of the energy sector.
The law would not only affect Qatar’s LNG exports, but also its fertilizer and petrochemical exports to the EU, Mr. al-Kaabi warned, and even investment decisions by the Qatar Investment Authority (QIA) could be affected.
However, he stressed that QatarEnergy would not breach existing LNG contracts, but would seek legal remedies if faced with large fines.
“I will not accept a fine. If that happens, I will stop supplying gas to Europe,” he said.
Mr al-Kaabi left open the possibility of a compromise if the fine applied only to European revenue rather than global. “If they say the fine is 5% of the revenue from the European contract, I can consider that. But if it applies to the entire global revenue, that is completely absurd.”
Meanwhile, European Commission President Ursula von der Leyen recently pledged to propose “omnibus” legislation to ease reporting requirements from EU green finance laws, including corporate due diligence laws.
Qatar’s threat comes as Europe struggles to secure stable energy supplies and reduce its dependence on Russia. If Qatar does indeed halt LNG supplies, the EU could face a new energy crisis, especially this winter.
