Exclusive-ExxonMobil warns EU law could force exit from Europe

By Maha El Dahan

ABU DHABI (Reuters) -U.S. energy giant ExxonMobil will not be able to continue doing business in the European Union if the bloc does not significantly loosen a sustainability law that could impose fines of 5% of global revenue, Chief Executive Darren Woods said on Monday.

Woods joins a growing number of energy producers urging European lawmakers to revise the Corporate Sustainability Due Diligence Directive, which requires companies doing business in the EU to identify and address human rights and environmental risks across their supply chains.

“If we can’t be a successful company in Europe, and more importantly, if they start to try to take their harmful legislation and enforce that all around the world where we do business, it becomes impossible to stay there,” Woods told Reuters on the sidelines of the ADIPEC meeting in Abu Dhabi.

The directive aims to give investors greater visibility into risks across the value chain and hold companies accountable for harm, even in operations outside Europe.

CONCERNS OVER REGULATORY OVERREACH

Woods said the legislation demands that large companies like ExxonMobil implement climate transition plans aligned with the Paris Agreement’s goal of limiting global warming to 1.5°C above pre-industrial levels – a requirement he described as technically unfeasible.

“What’s astounding to me is the overreach not only requires us to do that for the business that we’re doing in Europe, but it would require me to do that for all my business around the world, irrespective of whether it touches Europe or not,” he said.

Woods added that ExxonMobil is actively lobbying against the directive, warning of “disastrous consequences” if it is adopted in its current form.

“We’re going to continue to try to rally basically, business leaders around the world to push back against this legislation,” he said.

Although European lawmakers are listening to the opposition from energy producers, Woods said it has not led to any substantial changes.

“If anything, it’s muddling the language up, and in my mind, opening up the exposure even greater, because you’ve increased the room for interpretation,” he said.

The European Parliament agreed to negotiate further changes to the law last month and the EU aims to approve the final changes by year-end.

“Today, it’s already an overregulated economy, it is de-industrialising, suffocating economic growth. This is just going to put a further gag on that growth,” Woods said.

QATAR ECHOES OBJECTIONS

Major gas producer Qatar and the United States, last month, urged European heads of state to reconsider the law, which they said threatens Europe’s supply of reliable, affordable energy.

Speaking at ADIPEC on Monday, Qatar’s energy minister reissued a threat to halt supplying Europe with liquefied natural gas (LNG) and said it will not be able to continue doing business in Europe if the EU doesn’t change or cancel the law.

“We can’t reach net zero, and that’s one of the requirements, among other hosts of things,” said Saad al-Kaabi, who also serves as CEO of QatarEnergy.

“Europe needs to understand that, I think, they need the gas from Qatar. They need gas from the U.S.,” he said. “They need the gas from many places around the world … it’s very important that they look at this very seriously.”

Qatar supplies between 12% and 14% of Europe’s LNG since Russia’s 2022 invasion of Ukraine.

But companies, including ExxonMobil, have demanded the EU go further and fully withdraw the policy, arguing it would lead to businesses leaving Europe.

NEGOTIATING DETAILS OF IRAQ RETURN

ExxonMobil signed an agreement last month to help Iraq develop its giant Majnoon oilfield and expand oil exports, signalling the energy major’s return to the country after two years.

“We’ve got a long way to go to negotiate the final parameters associated with that development,” Woods said, especially over how Exxon would be paid.

The company expects to finalise a profit-sharing arrangement, which Woods said is in line with industry practice.

(Reporting by Maha El Dahan; Writing by Andrew Mills; Editing by Tom Hogue and Louise Heavens)