The European Commission has approved, under EU State aid rules, a Cypriot measure to issue a state guarantee for securing loans to support the construction of a liquefied natural gas (‘LNG’) terminal at Vasilikos Bay, in Cyprus. Cyprus is an isolated energy market with no interconnected generation capacity from other countries and with a high dependency on liquid fuels for power generation. The Commission found that the construction of the LNG terminal will contribute to market integration, as it will enable Cyprus to connect with the Trans-European gas networks. The terminal will also improve Cyprus’ security of energy supply and diversification of imported energy sources and fuels by increasing energy reliability and flexibility and by giving the country access to the global LNG market. Furthermore, the project should reduce CO2, NOx, SOx and dust particles emissions associated with power generation in Cyprus, which is traditionally using heavy fuels. The importance of this project for the EU gas markets is recognised since the project was included twice in the EU list of Projects of Common Interest. The Commission also found that the State guarantee is necessary to obtain two loans amounting to €150 million from the European Investment Bank (EIB) and €80 million from the European Bank for Recovery and Development (EBRD). The Commission concluded that the measure is compatible with the internal market and, therefore, approved the State guarantee under EU State aid rules. More information will be available on the Commission’s competition website, in the State Aid Register under the case number SA.55388.