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European Commission approves an additional state guarantee for Klaipėda LNG terminal in Lithuania

European Commission approves an additional state guarantee for Klaipėda LNG terminal in Lithuania

Vilnius, November 24 - Neftegaz.RU. The European Commission has approved, under EU State aid rules, a Lithuanian measure to issue a state guarantee for securing a loan for AB Klaipedos Nafta (KN). The state guarantee will serve to finance the purchase of the Floating Storage and Regasification Unit (FSRU) of the LNG terminal.

In November 2013, the Commission approved aid to support the construction and operation of the LNG terminal under EU State aid rules. In particular, the Commission found that the measure was necessary to ensure security of gas supply in Lithuania. Under the 2013 decision, the leasing costs connected to the construction and operation of the terminal were exclusively financed through a fee levied on Lithuanian gas consumers, the so-called ‘LNG Supplement’.

In order to reduce the financial burden on consumers, Lithuania replaced part of the LNG Supplement with a loan guaranteed by the Lithuanian State, which was approved by the Commission in September 2019. After conducting a study, Lithuania concluded that the most cost effective option for continuing the operation of the terminal while reducing the financial burden to gas consumers and guaranteeing secure gas supplies would be for KN to purchase the FSRU after the expiry of the original lease agreement in 2024.

To ensure that the most cost efficient option is selected, Lithuania intends to organise a public procurement process in the second half of 2021 for selecting the most advantageous offer. The State guarantee is necessary to obtain a loan which cannot exceed €160 million from a private financial institution as this amount should cover the costs of FSRU.

The Commission found that the measure remains compatible with the Internal Market and, therefore, approved the additional state guarantee, under EU State aid rules.