EU Clears Croatian LNG State Aid

Croatia’s support for an LNG import terminal on the island of Krk does not violate EU rules on state aid, the European Commission said on July 31.

By 2021, Croatia plans to install a floating storage and regasification unit (FSRU) capable of bringing ashore 2.6bn m³/year of gas.

“The new LNG terminal in Croatia will increase the security of energy supply and enhance competition, for the benefits of citizens in the region,” the EU commissioner for competition Margrethe Vestager said in her decision. “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.”

The LNG project will be built at a cost of €233.6mn ($260mn). Croatia will cover €100mn of this sum with funds from the state budget, while a further €32.2mn will be supplied by the project’s operator, state-owned LNG Croatia.

The remaining €101.4mn will come from the EU’s main infrastructure grant fund, the Connecting Europe Facility (CEF).

Croatia's plans at Krk took some time to get off the ground amid uncertainty about how much demand there would be for imported LNG. A final investment decision on the project was finally taken in February, after funding was finalised. In April Hungary – a potential recipient of the terminal's supplies – suggested it might take a stake in the venture.