HomeNewsQatar threatens to stop EU gas sales if fined under due diligence law

Qatar threatens to stop EU gas sales if fined under due diligence law

12/23/2024
  • EU law requires companies to check supply chains for use of forced labor, environmental harm
  • Penalties include up to 5% of global turnover
  • Says Qatar will not break LNG contracts

Qatar would stop shipping gas to the European Union if member states strictly enforce a new law on forced labor and environmental damage, Energy Minister Saad al-Kaabi told the Financial Times in an interview published on Sunday.

Qatar is the world's third largest exporter of liquefied natural gas (LNG) after the United States and Australia. It has provided between 12% and 14% of Europe's LNG needs in the nearly three years since Russia's invasion of Ukraine, sending a total of 37.1 MM tonnes (t) of LNG during that time, out of 281.19 MMt total EU global imports, according to figures from data-provider Kpler.

The Corporate Sustainability Due Diligence Directive, approved this year, requires larger companies operating in the EU to check whether their supply chains use forced labor or cause environmental damage and to take action if they do. Penalties include fines of up to 5% of global turnover.

"If the case is that I lose 5% of my generated revenue by going to Europe, I will not go to Europe. I’m not bluffing," Kaabi told the newspaper. "Five percent of generated revenue of QatarEnergy means 5% 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," he said.

Kaabi, who is also the chief executive of QatarEnergy, has said the EU should thoroughly review the due diligence law.

Qatar's revenues in 2023 were 188.5 B Qatari riyals ($51.64 B), and 5% of this is $2.5 B.

He said Qatar would not break its existing LNG contracts, but it would look at legal avenues if it faced hefty penalties and would not agree to shipping new supplies. "I will not accept that we get penalized," he said. "I will stop sending gas to Europe."

Qatar Energy gas has long-term supply contracts with major European companies including Shell, TotalEnergies and ENI.

Qatar is seeking to play a larger role in Asia and Europe as competition from the world's biggest supplier the United Sates increases. It plans to expand its liquefaction capacity to 142 MMtpy by 2027 from 77 MMtpy.

Business groups have complained that the law introduces multiple new layers of regulatory burden, with potentially harsh sanctions, places European companies at a disadvantage compared to competitors and discourages investment in Europe.

 

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