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Making concrete Brussels' support for the efforts of Lithuania to break its dependence on Russian gas, the European Investment Bank (EIB) signed off on a deal to provide the "backbone" financing for Lithuania's project to build an LNG terminal on July 9.

The completion of the agreement on the €87m 20-year loan from the EU development bank comes just over a month after the funding to state-controlled Klaipedos Nafta was initially approved. It offers Lithuania 50% of the financing for the lease of a floating LNG platform, which is planned to launch operations in late 2014.

According to Reuters, Klaipedos Nafta has already signed off on the lease contract, as well as agreements for construction of the port and pipeline infrastructure that will directly surround the platform, and says it expects to wrap up talks on LNG import contracts in the third quarter. However, the company failed to attract the necessary funding from commercial banks in March. It had been seeking €73m in loans and $50m in guarantees, the newswire claims.

However, after a plan to force gas distributors to buy at least 25% of supplies from the terminal was scrapped under EU legislation, lenders became concerned that Russian gas export monopoly Gazprom could cut the price of its exports to Lithuania in a bid to scupper the LNG terminal. Lithuanian Minister of Energy Jaroslav Neverovic called the EIB loan "vitally important" to the project, while Klaipedos Nafta CEO Rokas Masiulis said it "will be the backbone of the LNG terminal's project financing and will ensure that the project will be completed in a timely fashion."

However, he had also told Baltic News Service in June that the EIB loan will be "the cheapest possible borrowing," while Nordea Bank Finland has already provided €34.8m. Klaipedos Nafta said the 20-year loan from the EIB will cover as much as 50% of infrastructure investment costs - estimated at LTL600m (€174m) - and that it still needs to raise up to LTL150m in additional loans. The EIB loan was conditional on Vilnius providing a guarantee for a similar amount.

Meanwhile, Lithuania - with strong support from the EU - has proved adept at fighting Gazprom's machinations to prevent it developing alternative sources of gas. The unbundling of national gas utility Lietvos dujos, which was completed last month despite the Russian company holding a significant stake, was a real coup. It was also key to gaining control of the country's pipelines in order to make the LNG terminal work.

A price cut from Russia meanwhile is the whole point for Vilnius. Cut off from European energy grids like its Baltic cousins Latvia and Estonia by its Soviet past, Lithuania imported all 3bn cubic metres or so of gas consumed last year from Russia. Neverovic said the country paid $500 per 1,000 cm of Russian gas, calling it "one of the highest, if not the highest in the EU". The LNG terminal will be a "game changer" he told EurActiv in an interview published on July 8.

Brussels clearly supports that view. "The EIB strongly promotes security and diversification of energy supply," EIB Vice-President Pim van Ballekom said at the signing ceremony for the loan the following day. "We therefore particularly welcome this agreement with Klaipedos Nafta, as the project will ensure the sustained supply of a key source of energy and will increase competition in Lithuania. We would obviously like to see this as the first of a series of energy projects that we could finance in Lithuania."