AAFS Infrastructure and Energy LLC is the US company designated as the investor and developer of the Southern Interconnection, a pipeline planned to connect Bosnia to Croatia’s gas network and the liquefied natural gas terminal on the island of Krk. Croatia and Bosnia signed an agreement for the project in Dubrovnik on April 28, with US energy secretary Chris Wright present.
Bosnia currently imports practically all of its gas from Russia via routes crossing Serbia and Bulgaria. The planned link would provide access to LNG arriving through Croatia, with Krk positioned as a route for non-Russian gas into Bosnia.
Federation law amendments name AAFS and remove BH Gas
The dispute centers on how the pipeline was awarded. In April, the parliament of Bosnia’s Bosniak-Croat Federation amended the law governing the pipeline and named AAFS as the main investor and leader of the project. The same changes removed BH Gas, a Sarajevo-based state company previously attached to the scheme.
For Washington, the project aligns with efforts to expand US energy influence in south-eastern Europe. Reuters reported that the pipeline would be financed and led by AAFS, which is run by Jesse Binnall, a former Trump lawyer, and Joseph Flynn, brother of former US national security adviser Michael Flynn. AAFS said it would invest about €1.5bn, or roughly $1.8bn, in the project.
EU concerns over private company designation in legislation
Brussels has raised alarms about naming a private US company directly in legislation. The EU ambassador to Sarajevo warned that a lex specialis approach could undermine Bosnia’s EU accession path and put at risk about €1bn in funding under the EU Growth Plan for the Western Balkans.
The scale of figures cited in earlier materials differs from later investment estimates. An earlier project profile under the Western Balkans Investment Framework described a 236km bidirectional pipeline, with 162km in Bosnia and 74km in Croatia, and total financing just under €100mn, including an EBRD loan of €66.3mn. That contrasts with newer AAFS-era investment figures, which could indicate changes beyond an original interconnector scope.
Bankwatch says amendments were rushed; WBIF cites supply needs
Environmental and governance groups have argued that the process is being rushed. Bankwatch said the proposed amendments were submitted under an urgent procedure and would introduce fundamental changes, increase project costs, and shift key decisions into non-transparent negotiations between the Federation government and AAFS. It also said AAFS was founded only in November 2025 and had no energy or infrastructure track record.
Supporters argue Bosnia cannot delay further because its existing gas system is small and exposed, while the current interconnector is ageing. The WBIF said the Southern Interconnection is intended to provide an alternative supply route and increase Bosnia’s gas capacity by linking its transmission system to Croatia’s.
Financing details still not published; risk allocation remains unclear
The financing structure remains a key unknown despite public materials identifying a strategic route, political sponsors, and headline investment values. Those materials do not yet show a completed bank syndicate, final EPC contractor, binding gas supply agreements, transportation-capacity bookings, tariff methodology, or offtake contracts sufficient to make the project bankable.
Lenders are expected to focus on risk allocation rather than political support for pipeline projects. They would seek clarity on who carries construction overruns, whether revenues are protected by regulated tariffs or ship-or-pay contracts, whether LNG capacity at Krk and Croatian transmission capacity are secured, and whether Bosnia’s institutions can guarantee legal stability of the concession.
Tension between geopolitical aims and EU market-rule concerns
The project is described as sitting between two logics: replacing Russian gas with US-linked LNG while deepening American influence in the Balkans through a second supply route for Bosnia. The other logic relates to institutional requirements for an EU membership candidate not to award strategic infrastructure through opaque legislation that may conflict with EU market rules.
The outcome depends on whether arrangements are regularised through transparent contracts, credible lenders, and EU-compatible rules versus continued uncertainty around procurement disputes and unresolved financing for the Southern Interconnection.
