Qatar will ‘freeze’ EU gas sales if it is fined under the concession law

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Qatar has threatened to freeze the export of precious gas to the EU if member states enforce a new law that will punish companies that fail to meet standards on carbon emissions, human rights and of workers.

Qatari energy minister Saad al-Kaabi told the Financial Times that if any EU government were to impose unmanageable sanctions on the scale set out in the trade-measures order Doha would stop exporting its natural gas containing and liquid in the block.

The law requires EU countries to introduce the power to impose fines for non-compliance with an upper limit of at least 5 percent of a company’s annual revenue.

“If the issue is that I lose 5 percent of the money I earned by going to Europe, I will not go to Europe.” . . I’m not lying,” Kaabi said. “Five percent of QatarEnergy’s revenue means 5 percent of the revenue generated in the country of Qatar. This is people’s money . . . so I will not lose that kind of money – and no one can accept it.” to lose that kind of money.”

The EU adopted the federal competition rules in May this year. It is part of a wider list of reporting requirements aimed at aligning companies with the EU’s ambitious goal of achieving zero emissions by 2050.

But the order has drawn widespread criticism from companies, both inside and outside the EU, who have complained that the rules are too onerous and put them at a competitive disadvantage.

Cefic, the chemical industry association, said the rules of conduct “will cause significant risks of litigation” and should be thoroughly reviewed “to identify and address areas of simplification and reduction of the burden in order to .

Non-EU companies will be liable for fines under the directive if they receive more than 450 million euros in total for the bloc.

Qatar is one of the world’s top exporters of LNG and has become an important supplier of gas to Europe following energy market turmoil caused by Russia’s invasion of Ukraine.

As European countries seek to wean themselves off Russian gas, QatarEnergy has signed long-term deals to supply LNG to Germany, France, Italy and the Netherlands.

Kaabi suggested that in its current form the law – which should come into force from 2027 – will not apply to companies such as the state-owned QatarEnergy, of which he is also the main controller.

He said it would require the company to carefully monitor the staffing practices of all the group’s suppliers, with a global supply chain that includes “100,000” companies.

“Perhaps I need a thousand people the size I have and the billions we spend, or (it would be necessary) to take millions out of service.” . . to conduct inspections on every supplier,” he added.

Kaabi also said it would be impossible for an energy producer like QatarEnergy to comply with the EU’s net zero target as the directive states because of the amount of hydrocarbons it produces.

The EU directive includes an obligation for large companies to adopt a climate change mitigation strategy that is in line with the 2050 climate neutrality goal of the Paris Agreement, as well as intermediate targets. under the European Climate Law.

Kaabi said the law would affect all Qatari exports to Europe, including fertilizers and petrochemicals, and could affect investment decisions by the Qatar Investment Authority, a sovereign wealth fund.

He said QatarEnergy will not break its LNG contracts, but will look at legal options if it faces heavy penalties.

“I will not accept that we are punished,” he said. I will stop sending gas to Europe.

However, Kaabi suggested that there might be an opportunity for a compromise if the sanctions only targeted income generated in Europe instead of all global taxes.

“If they say the penalty is 5 percent of the proceeds from the contract you sell to Europe, I say, ‘Okay, I need to check that. Does that make sense?'” he said. But if you want to get all the money I got, come on, it’s unbelievable.

European Commission President Ursula von der Leyen promised last month to propose “omnibus” legislation that would reduce reporting requirements from many of the bloc’s green finance laws, including the self-sufficiency mandate.