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Qatar has threatened to stop vital gas shipments to the EU if member states strictly enforce a new law that will punish companies that fail to meet set criteria on carbon emissions, rights to people and labor.

Qatar’s energy minister Saad al-Kaabi told the Financial Times that if any EU state imposes sanctions for non-compliance with a measure aimed at the corporate due diligence directive that Doha will stop -export its liquid natural gas to the bloc.

The law requires EU countries to introduce powers to impose fines for non-compliance with an upper limit of at least 5 percent of annual worldwide income.

“If the case is that I lose 5 percent of my generated income by going to Europe, I will not go to Europe. . . I am not bluffing,” said Kaabi. “Five percent of the generated revenue of QatarEnergy means 5 percent of the generated revenue of the state of Qatar. This is the people’s money . . . so I will not lose that kind of money – and no one will accept that lose that kind of money.

The EU adopted corporate due diligence rules in May of this year. They are part of a wider set of reporting requirements aimed at aligning companies with the EU’s ambitious goal of reaching net zero emissions by 2050.

But the directive has prompted a widespread backlash from companies, both inside and outside the EU, which complain that the rules are too onerous and put them at a competitive disadvantage.

Cefic, the chemical industry body, said due diligence rules “create significant litigation risks” and should be fully explored “to identify and address areas for simplification and burden reduction in order to . . . limit exposure to liability.”

Non-EU companies will be liable for penalties under the directive if they earn more than €450 million in net turnover in the bloc.

Qatar is one of the world’s leading LNG exporters and has become an increasingly important supplier of gas to Europe following the turmoil in energy markets caused by Russia’s invasion of Ukraine.

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

Kaabi suggested that in its current form the legislation – which will be implemented from 2027 – would not work for companies such as state-owned QatarEnergy, of which he is also the chief executive.

He said that this requires the company to do due diligence on the labor practices of all suppliers in the group, with a global supply chain that includes “100,000” companies.

“Perhaps I need a thousand people of my size and the billions we have spent, or (should) drop millions in a service . . . to go and audit every supplier,” he added.

Kaabi said it would also be impossible for an energy producer like QatarEnergy to comply with the EU’s net zero target as set by the directive due to the large amount of hydrocarbons it produces.

The EU directive includes an obligation for large companies to adopt a transition plan for mitigating climate change in line with the 2050 objective of climate neutrality in the Paris Agreement, as well as intermediate target under the European Climate Law.

Kaabi said the legislation would affect all of Qatar’s exports to Europe, including fertilizers and petrochemicals, and could also affect investment decisions by the Qatar Investment Authority, the sovereign wealth fund.

He said that QatarEnergy will not violate its LNG contracts, but it will look into legal ways if it faces heavy penalties.

“I do not accept that we will be punished,” he said. “I will stop sending gas to Europe.”

However, Kaabi suggested that there might be room for compromise if the sanctions were targeted only at European-generated income rather than global total income.

“If they say the penalty is 5 percent of your revenue from that contract you sold in Europe, I say, ‘OK, I have to check that. Does that make sense?'” he said. “But if you want to come up with my total earnings, come on, it doesn’t make any sense.”

European Commission president Ursula von der Leyen promised last month to propose an “omnibus” legislation that would reduce reporting requirements from several of the bloc’s green finance laws, including the directive on due hard work