In a significant development for regional energy security, Bosnia and Herzegovina (BiH) is on the verge of finalizing an interstate agreement with Croatia to facilitate the construction of the Southern Gas Interconnection. This agreement, anticipated to be signed within the next two to three months, is essential for initiating a project aimed at linking the gas networks of both nations through a new pipeline that will traverse Posušje and Zagvozd, ultimately connecting to Croatia’s existing gas infrastructure.
The formal signing of this agreement is expected to occur in April in Dubrovnik, involving representatives from both the Bosnian Council of Ministers and the Croatian government. The urgency behind this project is underscored by the European Union’s impending ban on Russian fossil fuel imports, which has placed Bosnia and Herzegovina in a precarious position as it currently relies entirely on Russian gas supplies. The completion deadline for this interconnection project is set for the end of 2027, marking it as a strategic priority for both countries.
In parallel with these developments, amendments to the legislation governing the Southern Gas Interconnection are being prepared following their adoption by the Federation Parliament last year. Originally, project implementation was assigned to BH Gas, based in Sarajevo. However, this approach faced opposition from the HDZ BiH party. A political compromise facilitated by mediation from the US Embassy has led to a shift in control, entrusting the project to a private US company and thereby reducing domestic political influence over its execution.
The Southern Gas Interconnection is set to be developed under a concession model, aligning with existing legal frameworks in the Federation of Bosnia and Herzegovina (FBiH). To enhance financial viability and address concerns over potential cost burdens on households due to limited gas demand, authorities are also exploring plans for three gas-fired power plants. These include a new facility in Mostar and conversions of existing coal-fired plants in Kakanj and Tuzla, collectively aiming for an installed capacity of approximately 1,200 MW. Notably, US firms AAFS Infrastructure and Energy and Bechtel have shown direct interest in participating in these energy initiatives.
