The Financial Times reported that Qatar has issued a strong warning that it will stop exporting liquefied natural gas (LNG) to the European Union (EU) if member states strictly apply new laws on business appraisal, including heavy fines for violations of carbon emissions, human rights and labor.
Qatari Energy Minister Saad al-Kaabi emphasized: If any EU country applies a penalty equivalent to 5% of the companys global revenue as in the new law, Qatar will no longer export LNG to Europe. I'm not joking.
The EU's Business Assessment Law, passed in May 2023, requires member states to impose fines of up to 5% of total global revenue on companies that violate the law. This is part of the EU's ambitious efforts to achieve net zero emissions by 2050.
However, this law is facing fierce opposition from businesses inside and outside the EU, saying that the regulation is too strict and reduces 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 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, also CEO of QatarEnergy, said that the EU's corporate appraisal law will create a huge burden for energy companies like Qatarenergy, especially in testing the global supply chain.
We have about 100,000 suppliers in the 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 requirements for a transition plan in line with the EU's net zero emissions target, due to the hydrocarbon production nature of the energy sector.
Mr. al-Kaabi warned that this law not only affects Qatar's LNG exports but also its fertilizer and petrochemical exports to the EU. Even investment decisions by the Qatar Investment Authority (QIA) could be affected.
However, he stressed that Qatarenergy will not violate current LNG contracts, but will seek legal remedies if it faces 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 trade-off if the penalty was only applied to revenue in Europe instead of globally. If they say the penalty is 5% of the revenue from contracts in Europe, I can consider it. But if it is applied to all global revenue, it is completely unreasonable.
Meanwhile, European Commission President Ursula von der Leyen recently pledged to propose a omnibus law to ease reporting requirements from EU green finance laws, including corporate appraisal laws.
The threat from Qatar comes as Europe is trying to find ways to ensure a stable energy supply and reduce its dependence on Russia. If Qatar does indeed stop supplying LNG, the EU could face a new energy crisis, especially this winter.