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ZAGREB (Croatia), July 31 (SeeNews) - The European Commission said on Wednesday it has found that Croatia's plans to support the development of a 233.6 million euro ($260.4 million) liquid natural gas (LNG) terminal at the Adriatic island of Krk are in line with the EU state aid rules.
"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 European commissioner for competition, Margrethe Vestager, said in a statement.
"We have approved the support measures to be granted by Croatia because they are limited to what is necessary to make the project happen and in line with our state aid rules," she added.
The Croatian government plans to allocate 100 million euro from the state budget for the project. The remaining financing will come from the shareholders of the project development company, LGN Croatia, (32.2 million euro in the form of a direct equity contribution), while the Connecting Europe Facility managed by the European Commission will contribute 101.4 million euro.
"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," the Commission said.
The beneficiary of the state aid is LNG Croatia. The project company is owned by Croatia's state-owned power utility firm Hrvatska Elektroprivreda (HEP) and national gas transmission system operator Plinacro, holding stakes of 85% and 15%, respectively.
The project comprises the construction and operation of a floating LNG terminal featuring a floating storage and regasification unit (FSRU) and its connections to the national gas transmission network. The terminal will have the capacity to transport 2.6 billion cubic meters of natural gas per year into the national grid as from 2021.
The Krk LNG terminal will deliver gas to the Croatian national transmission network, connected with EU member states Slovenia, Italy and Hungary, as well as with Serbia and Montenegro.
The terminal has been put on the lists of European Projects of Common Interest since 2013, given its strategic importance for the diversification of natural gas supplies into Central and Southeast Europe.