Bosnia and Herzegovina (BiH) and Croatia are close to finalizing an interstate agreement that will enable the construction of the Southern Gas Interconnection, with signing expected within the next two to three months. This agreement is a key prerequisite for launching the project, which aims to connect the gas networks of both countries through a new pipeline running via Posušje and Zagvozd to Croatia’s existing system.
The agreement is expected to be signed in April in Dubrovnik, at the level of the Bosnian Council of Ministers and the Croatian government. The project has a final completion deadline set for the end of 2027, driven by the European Union’s upcoming ban on Russian fossil fuel imports. Currently, Bosnia and Herzegovina relies entirely on Russian gas, making the interconnection strategically important.
Simultaneously, amendments to the law on the Southern Gas Interconnection, adopted by the Federation Parliament last year, are being prepared. The original law assigned project implementation to Sarajevo-based BH Gas, a solution opposed by HDZ BiH. Following mediation by the US Embassy, a political compromise was reached, entrusting the project to a private US company, thus removing domestic political control.
The project is planned to be developed under a concession model, supported by existing legislation in the Federation of Bosnia and Herzegovina (FBiH). To ensure financial viability, authorities are also considering the construction of three gas-fired power plants, arguing that pipeline costs would otherwise fall on households due to limited gas demand. Plans include a new plant in Mostar and the conversion of coal-fired facilities in Kakanj and Tuzla, with a total installed capacity of about 1,200 MW. US companies AAFS Infrastructure and Energy and Bechtel have expressed direct interest in these energy projects.
