The gulf nation’s energy minister said the EU’s due diligence laws would cause a loss to the government’s revenue.

Europe could face repercussions should it enforce due-diligence labour and environmental legislations on Qatar, Saad al-Kaabi, Qatar’s Minister of State for Energy Affairs and President of QatarEnergy has said.

Al-Kaabi, in an exclusive interview with Financial Times (FT), said that should any EU state impose the non-compliance fines of five percent of global turnover on Qatar, the gulf state would simply cease its liquefied natural gas (LNG) exports to the bloc.

“If the case is that I lose 5 per cent of my generated revenue by going to Europe, I will not go to Europe . . . I’m not bluffing,” al-Kaabi said to the newspaper.

“Five per cent of generated revenue of QatarEnergy means 5 per cent 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,” the Qatari energy chief said.

The European Union’s (EU) Corporate Sustainability Due Diligence Directive was officially approved in July.

Under this directive, large companies operating in the EU will have to report on forced labor or environmental damage caused by their supply chains.

Companies, which do so will need to take action on their own business practices, and those that fail to comply in meeting criteria on carbon emissions, human and labour rights, will see fines of an upper limit of five percent on their annual global revenue.

“The aim of this Directive is to foster sustainable and responsible corporate behaviour in companies’ operations and across their global value chains,” the EU had said.

The EU is aiming to reach net zero emissions by 2050, which al-Kaabi said would also be impossible for QatarEnergy in be in alignment with the target as part of the stipulations due of the amount of hydrocarbons the energy producer generates.

Under the directive, businesses will have to bear the costs of establishing and operating the due diligence process, as well as transition costs, including “expenditure and investments to adapt a company’s own operations and value chains to comply with the due diligence obligation.”

The rules apply to EU limited liability companies with over 1,000 employees and more than € 450 million ($469 million) net global turnover and non-EU companies with € 450 million ($469 million) net turnover in the bloc.

Micro companies and SMEs are not covered by the legislation.

With Russia’s war on Ukraine disrupting the global gas export market, Qatar has filled a void left with the EU moving away from Russian gas.

QatarEnergy has long term LNG supply contracts to Germany, France, Italy, and the Netherlands. Kaabi

Qatar plans to expand its liquefaction capacity from 77 million to 142 million tons per year by 2027.

The legislation is also set to come into force in 2027, and al-Kaabi told FT that it would be unworkable for companies such as QatarEnergy.

“I probably need a thousand people with the size that I have and the billions we spend, or [would need to] shed millions on a service . . . to go and do audits on every supplier,” he said.

Al-Kaabi noted QatarEnergy would need to to carry out due diligence on the labour practices of all it’s suppliers. It’s global supply chain involves “100,000” companies, according to it’s chief.

The legislation would affect Qatari exports to Europe such as fertiliser and petrochemicals. Al-Kaabi said this could impact the “investment decisions of the Qatar Investment Authority.”

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

“If they said that the penalty is 5 per cent of your generated revenue from that contract that you sell to Europe, I say, ‘OK, I need to assess that. Does that make sense?’”

“But if you want to come to my total generated revenue, come on, it doesn’t make any sense,” he added, suggested there could be room for compromise.

Al-Kaabi also criticised the EU’s ESG (Environmental, Social, and Governance) reporting standards during Doha Forum in December.