Preliminary calculations indicate that liquefied natural gas delivered through Croatia could be materially cheaper than the Russian gas on which Bosnia and Herzegovina currently depends. The Southern Gas Interconnection is being positioned as strengthening both the commercial case and the geopolitical rationale for adding a second supply corridor. AAFS Infrastructure and Energy, a US company selected to develop the project, is central to the proposed development pathway.
Gazprom price changes and projected household impacts
The analysis links the renewed focus on alternative supply economics to rising Russian costs. Gazprom is preparing to raise prices for Bosnia and Herzegovina by more than 14% during the current quarter, with implications for households, industrial consumers and the Federation’s public finances.
Under an AAFS scenario, a Sarajevo household consuming approximately 1,200 cubic metres of gas annually could face a bill of around €460. The same household would pay roughly €860 under current Russian supply prices. The estimate is described as provisional because final transmission, distribution and capacity charges cannot be set until the pipeline configuration and operating framework are completed.
Krk LNG access and potential contract structures
AAFS estimates that LNG delivered through Croatia’s Krk terminal could cost about 38% less than existing Russian supplies. The proposed supply structure would connect Bosnia and Herzegovina to the Croatian transmission network and, through it, to Krk. This would provide access to seaborne cargoes.
The structure could also enable longer-term US supply contracts commonly priced against the Henry Hub benchmark. The analysis says such contracts may support more transparent pricing compared with exposure to bilateral supply decisions by a single dominant supplier.
Tariffs, capacity booking and utilisation constraints
The project’s economics are described as depending on more than LNG headline prices. Capacity booking at Krk, Croatian network tariffs, pipeline utilisation, financing costs and the relatively modest size of the Bosnian gas market are identified as key variables affecting whether savings translate into lower end-user tariffs. A pipeline with low initial utilisation would carry higher unit transportation costs, reducing part of the projected advantage.
The existing system leaves Bosnia and Herzegovina unusually exposed due to limited supply diversification. The country remains dependent on a single entry route for Russian gas, while the Southern Gas Interconnection would add a second corridor. It is also described as creating an alternative during contractual or physical disruptions.
Implementation steps after April intergovernmental agreement
The Federation authorities are preparing an implementation agreement with AAFS following an intergovernmental agreement signed by Croatia and Bosnia and Herzegovina in April. That April deal established a cross-border framework for construction and moved the project beyond its long period of political and administrative delay.
The commercial test is whether Bosnia and Herzegovina can secure sufficient anchor demand from district heating systems, industrial consumers and future gas-fired generation to support the pipeline’s fixed costs. While the 38% cost advantage is cited as a strong argument, bankability is said to depend on binding capacity commitments and a tariff structure able to withstand volatile LNG markets alongside changes in Russian pricing.
