Qatar is threatening to cut off vital gas supplies to the EU if its member states penalize companies that fail to meet set carbon emissions, human rights and labor rights criteria.
The Financial Times quoted Qatar’s energy minister Saad al-Kaabi as saying that if any EU country introduced fines for non-compliance with the requirements set out in the company due diligence directive, Doha would stop exporting its liquefied natural gas to the bloc.
The law requires EU countries to introduce powers to impose fines for non-compliance with the cap of at least 5% of a company’s annual global revenue.
If I lose 5% of my income, I won’t go to Europe… I’m not bluffing. 5% of QatarEnergy’s income means 5% of the state of Qatar’s income. This is the people’s money… Therefore, I cannot lose this kind of money, and no one will agree to lose this kind of money,” Kaabi said.
The EU adopted corporate verification rules in May this year. They are part of a wider set of reporting requirements aimed at bringing companies into line with the EU’s ambitious target of achieving net-zero emissions by 2050.
But the directive sparked widespread backlash from companies both inside and outside the EU, who complained the rules were too onerous and put them at a competitive disadvantage.
Cefic, the chemicals industry body, said due diligence rules “will create significant litigation risks” and should be carefully analyzed “to identify and address issues of simplification and burden reduction to limit the risk of liability.”
Companies from non-EU countries will be liable under the directive if their net turnover in the bloc exceeds €450 million.
Qatar is one of the world’s largest LNG exporters and has become an increasingly important supplier of gas to Europe following the turmoil in energy markets caused by Russia’s invasion of Ukraine. As European countries try to wean themselves off their dependence on Russian gas, QatarEnergy has signed long-term agreements to supply LNG to Germany, France, Italy and the Netherlands.
Kaabi suggested that in its current form the legislation, due to come into force in 2027, would not work for companies such as state-owned QatarEnergy.
He said this would require the company to carry out due diligence on the labor practices of all suppliers in the group, which has a global supply chain of 100,000 companies.
I’d probably need a thousand people with my size and the billions we spend, or [доведеться] spend millions on a service… to go and audit every supplier,” said the CEO of Qatar Energy.
Kaabi said an energy producer like QatarEnergy would also be unable to achieve net-zero emissions as required by the EU directive due to the amount of hydrocarbons produced.
Kaabi said the legislation would affect all Qatari exports to Europe, including fertilizers and petroleum products, and could also affect investment decisions by the Qatar Investment Authority, the sovereign wealth fund.
He said QatarEnergy would not terminate its LNG supply contracts but would consider legal avenues for settlement and would stop supplying gas if faced with large penalties.
However, Kaabi suggested there might be the possibility of a compromise if penalties were targeted only at income generated in Europe rather than overall global income.
Source: Racurs
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.