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, Report informs, citing Greek media.

The project will contribute to the security and diversification of energy supplies in Greece and, more generally, in Southeast 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 achieving 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 minimized.”

Greece notified the Commission of its plans to support the construction of a new LNG terminal in Alexandroupolis, consisting of 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 the security of supply not only for Greece but also for Bulgaria and 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 aid beneficiary is Gastrade SA, a company in which the Greek gas incumbent (DEPA) and the Bulgarian gas Transmission System Operator (Bulgartransgaz EAD) hold participation. Gastrade will be the promoter and operator of the new terminal.

The Commission found that the aid is appropriate and necessary, as the project would not be carried out without 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.

The pipeline between Greece and Bulgaria was expected to be completed by the end of 2020. Thus, the IGB pipeline, which will transport 1 billion cubic meters of natural gas a year to Bulgaria as part of the Shah Deniz 2 field, will be connected to the TAP project. Bulgargaz has signed a 25-year contract with the Shah Deniz consortium. As a result, 25-30% of Bulgaria’s natural gas needs will be met.