Reuters Gulf Currents Newsletter – Qatar threatens to halt gas to Europe

By Andrew Mills
Deputy Bureau Chief, Gulf

The ceasefire in Gaza was still holding at the end of the week, even as Israel and Hamas traded blame over violations of the truce. Mediators, including those from Qatar, fretted about a row over the return of bodies of hostages held by Hamas in Gaza, which is just one of the potential threats to the truce.

This week’s newsletter headlines, however, shift away from the Gaza diplomacy to focus on a different kind of row between major gas producer Qatar and Europe over a new sustainability law that requires companies to comply with global climate agreements or face staggering fines of 5% of global turnover.

Our focus will turn back to diplomacy and development next week as the inaugural #ReutersNEXTGulf summit kicks off in Abu Dhabi.

Register now to watch the live broadcast of the summit on October 22, featuring UAE political advisor Anwar Gargash, Assistant Minister for Political Affairs and Envoy of the Minister of Foreign Affairs Lana Nusseibeh, Nigerian Foreign Minister Yusuf Tuggar, Egypt's Planning, Economic Development and International Cooperation Minister Rania Al-Mashat and Environment Agency Abu Dhabi Managing Director Razan Al Mubarak.

News briefing:

Saudi Arabia’s Crown Prince launched a project this week to add 900,000 additional prayer spaces to Mecca’s Grand Mosque, Islam’s holiest and largest mosque. The 12-million-square-meter (4.6 square miles) mixed-use development called “King Salman’s Gate” will boost the current 4 million prayer capacity of the mosque, which is the focal point for the Umrah and annual Haj pilgrimages.

The Democratic Republic of Congo and the M23 rebel group, who have been participating in on-again-off-again talks mediated by Qatar, signed an agreement on Tuesday outlining a mechanism to monitor an eventual “permanent ceasefire” in eastern Congo. The agreement is the first major sign of progress in talks that failed to meet an August 18 deadline to finalise a peace deal.

Yemen’s Iran-backed Houthis said their Chief of Staff Muhammad Abd Al-Karim al-Ghamari was killed. Reports from Sanaa on Thursday didn’t make the circumstances of Ghamari’s death clear. One possibility is that he was fatally injured in an Israeli attack in August that killed the Houthi prime minister and several other ministers. Israel said the attack targeted Ghamari, among other officials.

Qatar threatens to halt LNG to EU over sustainability law

Qatar’s Energy Minister again threatened this week to stop selling gas and other products to the European Union over a new sustainability law that exposes non-EU companies to significant fines if they don’t comply with global climate agreements.

If he follows through on the threat, the 12-14% of Europe’s liquefied natural gas (LNG) that has come from Qatar since Russia’s 2022 invasion of Ukraine would be at risk.

Saad Al Kaabi, who is also CEO of state-owned gas producer QatarEnergy, is concerned because companies that don’t fix environmental issues in their supply chain – as defined by the EU – face fines of up to 5% of global revenue under the new law, known as the Corporate Sustainability Due Diligence Directive (CSDDD).

“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 said in December.

Qatar has two main issues with the law:

• It requires companies to have transition plans that align with the Paris Climate agreement, which means they must plan to reduce greenhouse gas emissions to help limit global warming to 1.5°C above pre-industrial levels.

• It requires companies to report on Scope 3 emissions, which are indirect emissions from a company’s value chain like drilling by third-party contractors or chemicals used in gas processing.

What’s curious is the silence from other major Gulf energy companies that export significant quantities to the European Union – namely Saudi Aramco, Abu Dhabi’s ADNOC and Kuwait Petroleum Company.

They too could run afoul of the new law. Perhaps they have decided to avoid a public showdown with the EU?

As my colleague Sharon Kimathi wrote in Reuters’ Sustainable Switch newsletter last week, the CSDDD “has become one of the most politically contested parts of Europe's green agenda.”

Kaabi complained that Europe is not listening to concerns raised by him or by U.S. energy giants – and QatarEnergy partners -- ExxonMobil and ConocoPhillips. Qatar’s letters to the European Commission and to several EU member states had gone unanswered, he told Reuters.

If further changes weren’t made to the law, Kaabi said that QatarEnergy would no longer be able to justify doing business in the EU because the risks it will be exposed to are just too great. The European Commission did not immediately respond to a Reuters request for comment.

The Last Wave:

Reuters’ Gulf financial correspondent Federico Maccioni spent many hours this week alongside tens of thousands of others who battled Dubai’s increasingly chaotic traffic to get to and from the Gitex Global tech and AI exhibition at the city’s World Trade Center.

Was the fuss worth it?

Maybe not. Newsworthy announcements were thin and even the event’s headliner -- a conversation between Abu Dhabi’s G42 and Sam Altman, the chief executive of ChatGPT maker OpenAI – was a virtual call. Altman, unsurprisingly, praised the UAE’s push to become a global AI powerhouse.

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