European Commission approves €166.7 million Greek public support for construction of LNG terminal in Alexandroupolis
The European Commission has approved, under EU State aid rules, a €166.7 million Greek support measure for the construction of a new liquid natural gas (“LNG”) terminal in Alexandroupolis, Greece. The project will contribute to the security and diversification of energy supplies in Greece and, more generally, in the region of South East Europe, without unduly distorting competition.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The new LNG terminal in Alexandroupolis will improve gas supply and infrastructure not only in Greece, but in the whole South Eastern European region. This will contribute to achievement of the EU’s goals in terms of security and diversification of energy supply. The Greek support measure limits the aid to what is necessary to make the project happen and sufficient safeguards will be in place to ensure that potential competition distortions are minimised.”
Greece notified the Commission of its plans to support the construction of a new LNG terminal in Alexandroupolis, consisting a Floating Storage Regasification Unit (“FSRU”) for the reception, storage and regasification of LNG (complemented by permanent offshore installations, such as mooring system and risers), as well as a system of a sub-sea and an onshore gas transmission pipeline which will connect the FSRU to the National Natural Gas System of Greece (“NNGS”).
Given its strategic importance for the diversification of natural gas supplies into the South-Eastern European region, the LNG terminal in Alexandroupolis has been included in the lists of European Project of Common Interest in the energy sector, based on the EU TEN-E (“Trans-European Network for Energy”) rules since 2013.
The terminal is expected to improve security of supply not only for Greece, but also for Bulgaria and for the wider South Eastern European region, as it will constitute a new potential energy source to feed into the interconnector between Greece and Bulgaria (“IGB”). The Commission approved public support for the IGB project, which is currently under construction, under EU State aid rules in November 2018.
The Greek Authorities have confirmed that the LNG Terminal would be apt to use for hydrogen, and that the project would contribute to a cleaner energy mix through increased use of gas instead of coal.
The project will be financed by the Greek State using European Structural and Investment Funds (“ESIF”), notably funds directly controlled and managed by Greece under the 2014-2020 Partnership Agreement for the Development. The support will take the form of a direct grant amounting to €166.7 million. The beneficiary of the aid is Gastrade SA, a company in which the Greek gas incumbent (DEPA) and the Bulgarian gas Transmission System Operator (Bulgartransgaz EAD) hold a participation. Gastrade will be the promoter and operator of the new terminal.
The Commission assessed the measure under EU State aid rules, in particular under the 2014 Guidelines on State Aid for Environmental Protection and Energy.
The Commission found that the aid is appropriate and necessary, as the project would not be carried out without the public support. In this context, the Commission took into account the inclusion of the project in the list of Projects of Common Interest in the energy sector.
Furthermore, in order to ensure that there is no overcompensation, the project promoter will be obliged to give back to the State part of the revenues generated from the terminal, should they go beyond a set capped level over the project lifetime. In addition, the National Energy Regulator has put in place certain safeguards to prevent an increase in the market position of the largest gas operators involved in the project, such as a limitation of the share of LNG that can be booked in the terminal by such players.
This will ensure that the aid is proportionate and limited to the minimum necessary for triggering the investment and that potential distortions of competition and trade are minimised.
On this basis, the Commission concluded that the measure is in line with EU State aid rules, as it will further security and diversification of energy supply, notably in the South-Eastern European region, without unduly distorting competition.