The European Commission (EC) has endorsed a financial compensation scheme granted by the Lithuanian government to LNG domestic supplier Litgas for supplying a mandatory quantity of LNG to the 4.1 bcm/year Klaipeda regasification terminal in Lithuania under the EU State aid rules. This decision comes in the wake of regulatory changes that occurred in June 2018, when Lithuania notified the EC of certain changes to the aid scheme approved in 2013. The EC assessed all the changes and found that they will not threaten competition on the Lithuanian gas market, approving both the schemes currently in force for 2016-2018 and the modified scheme for the 2019-2024 period.
Under the 2018 changes, Litgas has a public service obligation to ensure the proper delivery of the shipments and receives in exchange a compensation from the government to cover the costs incurred for performing this public service obligation. This compensation is an additional fee paid by all gas transmission system users. The Klaipeda LNG terminal is viewed as vital for Lithuania's security of supply and is required to be kept operational, which means that it must provide continuous deliveries of LNG and its constant regasification. Besides, Lithuania will also abolish as of January 2019 the purchasing obligation that forced domestic heat and power generation companies to purchase a certain amount of LNG from Litgas.