Commission approves Lithuanian state aid measure to compensate Litgas for operation of LNG terminal

The European Commission has approved, under EU state aid rules, the compensation granted by Lithuania to Litgas UAB for supplying a mandatory quantity of liquefied natural gas (LNG) to the LNG terminal in Klaipėda.

On 31 October 2018, the Commission approved a Lithuanian measure to compensate Litgas for the operation of the LNG terminal between 2016 and 2024. In September 2021, the General Court partially annulled the Commission decision, finding that the Commission should have opened an in-depth investigation to assess the compatibility of the compensation for the entirety of the boil-off and balancing costs incurred by Litgas between 2016 and 2018. Boil-off costs result from the natural loss of LNG, which occurs in the period from injection of LNG into tanks until its release to the natural gas system. Balancing costs are incurred in response to imbalances between supply and demand for natural gas, for instance under swap contracts.

Following the court ruling, the Commission opened an in-depth investigation in December 2022 to re-examine the compatibility of the compensation granted to Litgas between 2016 and 2018 under EU state aid rules, and especially the 2012 Service of General Economic Interest (‘SGEI') Framework. In particular, the Commission examined whether the compensation granted for the entirety of the boil-off and balancing costs incurred by Litgas was necessary, given that these costs were only partially compensated as of 2019.

The Commission's investigation confirmed that the compensation granted to Litgas complies with EU State aid rules, in particular with the SGEI Framework. Notably, the Commission found that the methodology used by Lithuania to calculate the amount of compensation for the period was appropriate and correctly applied and that the entirety of the boil-off and balancing costs incurred by Litgas between 2016 and 2018 could be compensated for.

The non-confidential version of the decision will be made available under the number SA.44678 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved.

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