The European Commission said on Wednesday it has found that Croatia’s plans to support the development of a 233.6 million euro ($260.4 million) liquid natural gas (LNG) terminal at the Adriatic island of Krk are in line with the EU state aid rules.

“The new LNG terminal in Croatia will increase the security of energy supply and enhance competition, for the benefit of citizens in the region,” the European commissioner for competition, Margrethe Vestager, said in a statement quoted by Seenews.

“We have approved the support measures to be granted by Croatia because they are limited to what is necessary to make the project happen and in line with our state aid rules,” she added.

The Croatian government plans to allocate 100 million euro from the state budget for the project. The remaining financing will come from the shareholders of the project development company, LGN Croatia, (32.2 million euro in the form of a direct equity contribution), while the Connecting Europe Facility managed by the European Commission will contribute 101.4 million euro.

“In addition, Croatia will grant a tariff compensation called ‘security of supply fee’, which is financed by levies charged by the gas transmission system operator to gas users along with gas transmission tariffs, in case revenues from the terminal fees are not sufficient to cover operating expenses,” the Commission said.