Qatar has warned it could halt crucial gas exports to the EU if member states enforce new legislation penalizing companies that fail to meet standards on carbon emissions, human rights, and labor practices. In an interview with the Financial Times, Qatari Energy Minister Saad al-Kaabi stated that if any EU nation imposes penalties based on the corporate due diligence directive, Qatar would cease its liquefied natural gas (LNG) shipments to the bloc. The directive mandates that EU countries establish penalties for non-compliance, with fines reaching up to 5% of a company's global annual revenue.

The EU adopted these corporate due diligence rules in May 2024, aiming to align businesses with the EU’s target of achieving net-zero emissions by 2050. However, the legislation has sparked significant criticism from companies both within and outside the EU, who argue that the rules are overly burdensome and disadvantageous in terms of competition. Under the directive, non-EU companies with revenues exceeding €450 million in the EU will be subject to penalties.

Qatar, one of the world's largest LNG exporters, has become an increasingly vital gas supplier to Europe, especially following the disruption of energy markets caused by Russia’s invasion of Ukraine. As European countries have sought to reduce dependence on Russian gas, QatarEnergy has secured long-term LNG supply contracts with Germany, France, Italy, and the Netherlands. However, Minister al-Kaabi criticized the legislation’s current form, noting that it would be impractical for state-owned QatarEnergy, of which he is CEO. The law would require the company to monitor the labor practices of all its suppliers, involving a global supply chain of approximately 100,000 companies. Furthermore, QatarEnergy, as an energy producer, would struggle to meet the EU's net-zero target outlined in the directive due to its hydrocarbon production.

The directive also requires large companies to adopt transition plans for mitigating climate change, aligning with the Paris Agreement's 2050 climate neutrality goal and the European Climate Law’s intermediate targets. The Financial Times reports that this legislation could extend to all Qatari exports to Europe, including fertilizers and petrochemicals, potentially influencing investment decisions by the Qatar Investment Authority, the country’s sovereign wealth fund.

While QatarEnergy has no intention of breaching its existing LNG contracts, it would explore legal options if it faced significant penalties. Last month, European Commission President Ursula von der Leyen promised to propose a revised "omnibus" law to ease reporting requirements under several green finance regulations, including the due diligence directive.