EU approves aid for Finland's first LNG terminal

The European Union (EU) has approved Finland's plans to grant 23 million euros (about 25.66 U.S. dollars) to construct a small-scale Liquefied natural gas (LNG) terminal, the European Commission said in a statement on Tuesday.

"The European Commission has concluded that Finland's plans to grant 23 million euros of public funding for the construction of a small scale LNG terminal at Pori, in the Satakunta region on Finland's west coast, are compatible with EU state aid rules," it said in the statement.

The project, aiming to encourage the use of LNG as fuel for ships in place of fuel oils and liquefied petroleum gases, will contributes to environmental protection and to the security of gas supply in Finland, EU's executive body said after assessment.

"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 source," EU Commissioner in charge of competition policy Margrethe Vestager said.

The project is part of Finland's plans to create a network of small scale LNG terminals.

However, the Commission's assessment showed that the project could not have been carried out without public funding. Indeed, as Finland currently has no LNG infrastructure, 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 European Commission said the public funding of 23,441,500 euros would cover less than 30 percent of the total investment costs; the remainder would be funded by the developer and future owner of the terminal.

The Pori terminal has a storage capacity of 30,000 cubic meters. Endit