Bosnia Picks U.S. Investor for Croatia Gas Pipeline to Cut Russian Supply
Bosnia has selected a U.S. investor to lead development of a new gas pipeline linking to Croatia’s LNG terminal, aiming to diversify supply away from Russian gas.
(Reuters) — A regional parliament in Bosnia and Herzegovina on April 15 named U.S. company AAFS Infrastructure and Energy LLC as the main investor and leader of a long-delayed project to build a natural gas pipeline with Croatia that is seen as an alternative to Russian gas.
Both houses of the Bosniak-Croat Federation's parliament agreed to amend a law regulating the Southern Interconnection gas pipeline project, which will bring U.S. natural gas to Bosnia from a liquefied natural gas terminal on the Croatian island of Krk.
The Federation is one of two autonomous regions making up postwar Bosnia. The other is the Serb Republic.
Sarajevo-based state company BH Gas, which had previously been appointed to lead the project, was removed from the legislation which Croatian deputies in parliament's upper house blocked for years, insisting on the establishment of a new transmission system operator in the Croat-dominated part of western and southern Bosnia, through which the pipeline will pass.
The Federation government previously said it was necessary to amend the legislation in order to diversify energy sources and avoid a possible energy crisis when the European Union halts Russian gas deliveries from 2028.
AAFS' director in Sarajevo, Amer Bekan, said the total value of the company's investment in Bosnia came to around $1.5 billion, with most of the amount accounted for by the pipeline, but with around $300 million for the modernization of the airports in Sarajevo and Mostar.
Natural gas accounts for up to 8% of Bosnia's energy requirement and is supplied solely by Russia via Serbia through the TurkStream pipeline as the country does not have any reserves of its own.
The government will now sign a direct agreement with AAFS. It is also expected to sign an agreement on the pipeline with Croatia at the end of April.
Observers have cautioned that Bosnia's complex and fragmented legal system may slow down procedures, especially those related to the expropriation of state-owned land on the pipeline's route.