Both entities of Bosnia and Herzegovina — the Republic of Srpska (RS) and the Federation of Bosnia and Herzegovina (FBiH) — are still waiting for a renewed natural gas supply contract with Russia’s Gazprom Export. The previous agreement was extended by an annex for only one month, while expectations remain that a new deal will follow Serbia’s current supply model and could be finalized by the end of the year.
Natural gas has traditionally been considered both cleaner and more cost-effective than alternatives such as fuel oil. In Istočno Novo Sarajevo, the local district heating company switched from heavy fuel oil to natural gas two years ago, a move praised for improving energy efficiency, reducing maintenance costs, and lowering environmental impact.
However, since the start of the war in Ukraine, natural gas has taken on a geopolitical dimension. European buyers now face different prices depending on whether they buy at market rates or under preferential, long-term contracts. Bosnia and Herzegovina, like Serbia, benefits from the latter arrangement, but both are still awaiting confirmation of longer-term supply terms.
Gas-Res, the main supplier in RS, notes that previous contracts with Gazprom Export were typically annual. Given ongoing geopolitical uncertainties, the latest extension was limited to just one month. Any developments in Serbia’s negotiations with Gazprom, particularly those connected to the ownership structure of NIS (Naftna Industrija Srbije), could influence Bosnia and Herzegovina’s position as well.
Both RS and FBiH are expected to maintain favorable pricing based on the oil-indexed formula, in which gas prices track international oil benchmarks adjusted for production and transport costs. Transportation fees, negotiated separately with each country, significantly affect the final price, which is then subject to VAT.
Bosnia and Herzegovina’s total annual gas consumption slightly exceeds 300 million cubic meters. Of this, around 250 million cubic meters are used in FBiH, where the gas network is more developed, while RS consumes approximately 60 million cubic meters — a relatively small volume compared to Serbia’s annual demand of about 2.5 billion cubic meters.
For now, gas deliveries remain stable, and supply disruptions are not anticipated. Nevertheless, both Bosnia and Herzegovina and Serbia had hoped to secure multi-year contracts with Russia. With no current agreements extending beyond December 31, 2025, it appears that new negotiations will need to take place in the coming year.
