EU Okays Support for Klaipėda LNG Terminal in Lithuania

The European Commission has approved the financing granted by Lithuania to Litgas for supplying liquefied natural gas to the LNG terminal in Klaipėda.

In November 2013, the commission approved an aid scheme to support the construction and operation of the LNG terminal at the Klaipėda seaport in Lithuania. The LNG terminal has, since its construction, played a vital role in the diversification of gas supplies and security of supply in Lithuania.

In June 2018, Lithuania notified the commission of certain changes to the aid scheme approved in 2013 concerning public service obligation of Litgas and removal of purchasing obligation.

To ensure security of supply, the LNG terminal must be kept operational, which requires continuous deliveries of liquefied natural gas and its constant regasification. Therefore, in January 2016, Lithuania decided to modify the initial scheme and to entrust Litgas with a public service obligation to ensure the supply of a mandatory quantity of liquefied natural gas to the LNG terminal. In exchange, Litgas receives a compensation from the country to cover the costs incurred for performing this public service obligation.

What is more, when the LNG terminal started its operations, Lithuania introduced a purchase obligation whereby heat and electricity generators were obliged by law to purchase a certain quantity of gas from Litgas. However, taking into account the developments on the gas market, Lithuania considers that, as of January 2019, the purchase obligation will no longer be necessary and can be abolished. As a result, Litgas will sell its gas directly on the market.

After assessing the changes to the Lithuanian aid scheme, the commission found that the modifications to the initial scheme will contribute to enhancing competition on the Lithuanian gas market.

Therefore, the commission has approved both the scheme currently in force for the period from 2016 until the end of the year 2018 and the modified scheme for the period from 2019 until the end of 2024.

Moreover, the Klaipeda seaport is expected to contribute to the EU’s Energy Union objective to reduce energy import dependency by diversifying supply and creating a fully interconnected EU wide energy market.

In August 2018, Lithuania received through the Klaipeda seaport its first LNG shipment from the US, in line with the joint statement by President Juncker and President Trump in July to strengthen EU-US strategic cooperation with respect to energy.

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