Qatar Balks at Potential EU Gas Fees and the Possibility of Reviving a Proposed Gas Pipeline from the Qatari Persian Gulf through Saudi Arabia, Jordan, Syria, Turkey, to the EU

     The small Persian Gulf country of Qatar hosts the world’s third-largest natural gas reserves behind Russia and Iran. These reserves, calculated at 896 trillion cubic feet (25.4 trillion cubic meters) in 2011 make up about 14% of global known natural gas reserves. Qatar’s North Field is an extension of Iran’s South Pars/North Dome Gas-Condensate field, the largest natural gas field in the world, containing an estimated 1346 TCF (38.4 trillion cubic meters), or 1.346 quadrillion cubic feet (QCF).

 

 

Qatar Exports the Second-Highest Volume LNG, After the U.S.

 

 

Leading exporting countries of liquefied natural gas worldwide in 2023 (in billion cubic meters). Source: Statista

 

The Qatar–Türkiye Pipeline

     The $10 billion, 1,500-kilometer Qatar–Türkiye pipeline was first proposed in 2009. Syria’s Bashar al-Asad rejected the deal. Now that he is gone, the pipeline is reportedly being reconsidered. Assad’s rejection of the pipeline was thought to be due to his deference to Russia, which was emerging at the time as a major supplier of natural gas to Europe. Currently, Europe is still in need of gas, both pipelined gas and LNG as it further weans off of Russian supplies. This pipeline could connect it to a major source of supply. Since pipelined gas has a much lower carbon intensity than LNG, this would be preferable to the EU’s decarbonization efforts. Turkiye is already emerging as a gas transportation hub. They already have a pipeline connection to Aleppo, Syria, that accesses the fields in Palmyra that produce about 250MMCFday of gas. Syria also has gas potential offshore in the Mediterranean. In 2011 they were planning to issue licenses but the civil war put that on hold.

 

The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and Qatar’s Objections

     The EU has been diversifying away from Russian gas since the advent of the Ukraine invasion and even before that. Qatari LNG is one source that had been increasing. Qatari LNG exports to the EU peaked in 2022 and now have dropped to pre-war levels as the 2nd graph below shows.

 

 Monthly imports of liquefied natural gas (LNG) from Qatar to the European Union (EU-27) from January 2022 to July 2024 (in million cubic meters). Source: Statista

 

 

According to Reuters:

“The rules, from 2028, will apply to companies that have more than 1,000 employees and a net worldwide turnover above 450 million euros ($480.8 million).”

“The law requires companies to prevent and end or mitigate potential or actual harm to human rights and the environment, such as child labour and biodiversity loss. It also requires remediation of actual adverse impact caused.”

“Financial companies will only have to consider upstream partners in their checks.”

“Companies will also have to prepare plans setting out how they will transition to a low carbon economy.”

    Qatar has objected to the rule if they are deemed in violation of it. Qatar has been accused of having an unfair migrant labor system of low-paid workers and has also been accused of human trafficking and slavery. The country’s legal system is based on Sharia law. I even recall some commentators calling Qatari gas, Sharia gas. The poor human rights record in Qatar was under scrutiny during the 2022 World Cup that was held there. My guess is the forced labor issues, rather than environmental impact issues, are the main concern of the EU regarding Qatar, but I could be wrong since the energy minister complained about emissions requirements.

"If the case is that I lose 5% of my generated revenue by going to Europe, I will not go to Europe. I’m not bluffing, Kaabi told the newspaper, adding that "5% of generated revenue of QatarEnergy means 5% 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."

“For us at QatarEnergy, and with all the expansions we are undertaking, I can assure you we can not meet net zero as a company,” Al-Kaabi said.

“We are also asked to be responsible for tier emissions 1, 2 and 3, and be liable for a penalty of up to 5% of our total generated revenue worldwide. This makes absolutely no sense.”

He suggests that the EU review the law and reconsider or otherwise not subject Qatar to fees. Qatar sells LNG to 20 countries, so they have some options.

References:

 

Erdogan's gas ambitions: Syrian regime change opens doors. PRC. Essa News. December 22, 2024. Erdogan's gas ambitions: Syrian regime change opens doors

Qatar vows to stop EU gas sales if fined under due diligence law, FT reports. Reuters. December 22, 2024. Qatar vows to stop EU gas sales if fined under due diligence law, FT reports | Reuters

EU parliament approves new business supply chain audit law. Reuters. April 24, 2024. EU parliament approves new business supply chain audit law | Reuters

Qatar Minister Calls Out EU for ESG Overreach, Compliance Costs. Bloomberg. December 8, 2024. Qatar Minister Calls Out EU for ESG Overreach, Compliance Costs

South Pars/North Dome Gas-Condensate field. Wikipedia. South Pars/North Dome Gas-Condensate field - Wikipedia

Natural gas in Qatar. Wikipedia Natural gas in Qatar - Wikipedia.

Qatar-Syria-Türkiye gas pipeline project: Is it possible after Assad’s fall? Turkiye Today. December 10, 2024. Qatar-Syria-Türkiye gas pipeline project: Is it possible after Assad's fall? - Türkiye Today

Where does the EU’s gas come from? European Council. 2024. Where does the EU’s gas come from? - Consilium

Human rights in Qatar. Wikipedia. Human rights in Qatar - Wikipedia