EU Okays Public Funding for First LNG Terminal in Finland

The European Commission has approved under EU state aid rules Finland’s plans to grant around EUR 23 million (USD 25.8m) to construct a small scale LNG terminal at Pori, in the Satakunta region on the country’s west coast.

EC has concluded that Finland’s plans to grant public funding for the construction of the Pori LNG terminal are compatible with EU state aid rules.

Once completed in autumn 2016, the terminal will have a capacity of 30,000 cubic meters. The public funding will cover less than 30% of the total investment costs, the remainder will be funded by the developer, Sweden’s Skangass, and future owner of the terminal.

Skangass is investing EUR 86 million (USD 90.2m) in the terminal which will consist of the LNG storage tank (height 35m, outer diameter 42m), loading docks, process units, flare torch, three loading docks for road tankers, a transformer building and a heat production unit.

EU Commissioner in charge of competition policy Margrethe Vestager said: “The LNG terminal in Pori is the first of its kind in Finland. It will provide a new source of cleaner fuel for the maritime industry and diversify Finland’s gas supply sources. It is a good example of how EU state aid rules can encourage sound public investment that helps the EU reach its goals on energy security and environmental protection.”

EC’s assessment showed that the project could not have been carried out without public funding as Finland currently has no LNG infrastructure, and potential customers are reluctant to carry out the long-term and costly investments for switching to LNG fuel. In turn, private investors have no incentive to build LNG infrastructure because there is no demand.

The project aims to encourage the use of LNG as fuel for ships, in place of fuel oils and liquefied petroleum gases. EC said that the project contributes to environmental protection and to the security of gas supply in Finland whilst maintaining competition in the Single Market.

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