AAFS Infrastructure and Energy LLC is identified as the investor and developer of the Southern Interconnection, a pipeline intended to link Bosnia and Herzegovina to Croatia’s gas network and the LNG 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. The project is described as a route that would connect Bosnia’s transmission system to Croatia’s.
Project scope and intended supply changes
Bosnia currently imports nearly all of its gas from Russia via routes crossing Serbia and Bulgaria. The planned interconnection would provide access to LNG arriving through Croatia. The LNG terminal at Krk is positioned in the plan as a southern entry point for non-Russian gas into Bosnia.
The dispute centres on how the pipeline was selected and structured in legislation. In April, the parliament of the Bosniak-Croat Federation amended the law governing the pipeline and named AAFS as the main investor and leader of the project. The same amendments removed BH Gas, a Sarajevo-based state company that had previously been attached to the scheme.
Dubrovnik signing, US company role, and investment figures
Reuters reported that the pipeline would be financed and led by AAFS. The company is described as being run by Jesse Binnall, a former Trump lawyer, and Joseph Flynn, brother of former US national security adviser Michael Flynn. AAFS has said it would invest about €1.5bn, or roughly $1.8bn, in the project.
In Brussels’ view, embedding a private US company directly in legislation has raised concerns. The EU ambassador to Sarajevo warned that a lex specialis approach could undermine Bosnia’s EU accession path. The warning also cited potential exposure of about €1bn in funding under the EU Growth Plan for the Western Balkans.
Earlier WBIF profile versus updated scale
The financing details cited from earlier planning differ from later figures associated with AAFS. A Western Balkans Investment Framework earlier project profile described a 236km bidirectional pipeline, including 162km in Bosnia and 74km in Croatia. That profile showed total financing just under €100mn, including an EBRD loan of €66.3mn.
The change in scale is presented as an indication that the newer AAFS-era investment figures may reflect additional components beyond an original interconnector concept. The source materials referenced broader infrastructure, power generation or concession economics as possible additions without specifying which elements are included.
Legislative process concerns and financing documentation gaps
Bankwatch said proposed amendments were submitted under an urgent procedure. It argued the changes would introduce fundamental modifications, increase project costs, and shift key decisions into non-transparent negotiations between the Federation government and AAFS. Bankwatch also said AAFS was founded only in November 2025 and had no energy or infrastructure track record.
The WBIF says 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. Public materials identify strategic routing, political sponsors, and headline investment values, but they do not yet show completed bank syndication, a final EPC contractor, binding gas supply agreements, transportation-capacity bookings, tariff methodology, or offtake contracts sufficient for bankability .
Lender risk items cited for bankability assessment
The financing structure is described as dependent on risk allocation rather than political support alone. Lenders are expected to seek clarity on who carries construction overruns and whether revenues are protected through regulated tariffs or ship-or-pay contracts . Additional requirements cited include confirmation that LNG capacity at Krk and Croatian transmission capacity are secured.
The documentation gap also extends to whether Bosnia’s institutions can guarantee legal stability for the concession . Without those elements, the project remains positioned between procurement and financing uncertainties despite identified sponsors and investment targets.
Tension between geopolitical aims and EU market rules
The project is framed as aligning with geopolitical objectives to replace Russian gas with US-linked LNG and provide Bosnia with a second supply route through Croatia. At the same time, it is described as raising institutional concerns because a candidate for EU membership would be expected not to award strategic infrastructure through opaque legislation that could conflict with EU market rules.
The remaining uncertainty is characterised as a risk premium tied to whether contracts are regularised through transparent arrangements aligned with EU-compatible rules . If those conditions are met with credible lenders and contract documentation, the Southern Interconnection could move forward; if not, it risks becoming another regional infrastructure effort affected by procurement disputes and unresolved financing .
