European Commission approves public support for Croatian LNG terminal at Krk island

Brussels, August 2 - Neftegaz.RU. The European Commission has found Croatian plans to support the construction and operation of a LNG terminal at Krk island to be in line with EU State aid rules.

Commissioner Margrethe Vestager, in charge of competition policy, said: "The new LNG terminal in Croatia will increase the security of energy supply and enhance competition, for the benefit of citizens in the region."

The measures approved will support the construction and operation of a floating LNG terminal, consisting of a floating storage and regasification unit (FSRU) and the connections to the national gas transmission network.

The LNG terminal is designed to transport up to 2.6 billion cu m per year (bcm/y) of natural gas into Croatia national transmission network as from 2021.

The total investment costs to build the terminal amount to €233.6 million. This will be financed through:

• a direct equity contribution of €32.2 million from the LNG terminal company shareholders;
• a contribution of €101.4 million from the Connecting Europe Facility, which is centrally managed by the European Commission, through the Innovation and Networks Executive Agency (INEA);
• a direct financial contribution of €100 million from the Croatian State budget.

In addition, Croatia will grant a tariff compensation called ‘security of supply fee', which is financed by levies charged by the gas transmission system operator to gas users along with gas transmission tariffs, in case revenues from the terminal fees are not sufficient to cover operating expenses.

Croatia notified the Commission of the €100 million direct financial contribution, as well as of the security of supply fee. Both support measures involve State aid under EU rules.

The LNG terminal will deliver gas to the Croatian national transmission network, connected with Slovenia, Italy and Hungary, as well as with other EU countries via non-EU Member States such as Serbia and Montenegro.