Qatar warns it will halt gas exports to Europe if fined under EU due diligence law

Ahram Online , Monday 23 Dec 2024

Qatar warned that it would cease gas exports to the European Union (EU) if the bloc's countries imposed penalties on it under the recently adopted legislation on sustainability due diligence, Qatari Minister of State for Energy Affairs Saad Sherida Al-Kaabi told the Financial Times.

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Photo : AP

 

The EU's Corporate Sustainability Due Diligence Directive (CSDDD), which entered into force in July, allows for fines of up to 5 percent of a company’s annual global revenue if the management fails to address adverse human rights or environmental impacts.

“If I lose 5 percent of my revenue by supplying Europe, I won’t supply Europe,” Al-Kaabi told the newspaper in an interview published Sunday. “I’m not bluffing,” he added.

However, he suggested that there could be room for compromise if the penalties targeted just income generated in Europe rather than total global revenue.

“But if you want to come to my total generated revenue, come on, it doesn’t make any sense,” he said.

Minister Al-Kaabi added that QatarEnergy would not break its liquified natural gas (LNG) contracts but would consider legal options if it faced hefty penalties.

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

“Qatar is one of the world’s largest LNG exporters. The EU is increasingly reliant on its LNG due to reduced natural gas supplies from Russia. A disruption in Qatari LNG shipments would likely exacerbate supply constraints, especially during winter months when demand peaks,” said James Willn, partner at global law company Reed Smith's Energy and Natural Resources group.

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

“Qatar’s response could set a precedent for other energy-exporting nations to resist stringent EU sustainability and reporting regulations. The EU may then face pressure to balance sustainability goals with economic and energy security considerations,” Emirati newspaper The National reported.

The CSDDD has drawn criticism from within and outside the EU. Countries have to transpose the new rules into national law by 2026. One year later, in 2027, the rules will start to apply to companies, with a gradual phase-in between three and five years after entry into force, POLITICO reported.

The directive is part of the bloc’s broader strategy to align corporate practices with its goal of achieving net-zero emissions by 2050.

The European Commission stressed that the directive aligns with international law and that what constitutes adverse impacts under the measure is determined by globally recognized standards.

"Due diligence under the directive is risk-based," according to a commission statement.

"It only requires companies to take measures that are reasonably available and proportionate to the adverse impacts that have been identified," the statement added.

Germany had called for the law to be postponed by two years and for small and medium enterprises to be exempt from reporting duties as the bloc’s largest economy struggles with a downturn, Bloomberg reported in December.

Changes are needed “to avoid unnecessary burden for businesses,” it added.

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