A planned European Union-backed gas pipeline intended to reduce Bosnia and Herzegovina’s dependence on Russian energy could instead worsen the country's deep political fractures, according to a report released on Monday by the Bloomsbury Intelligence and Security Institute (BISI).

The Southern Interconnection pipeline would link Bosnia's gas network to Croatia's liquefied natural gas (LNG) terminal on Krk island. The 236-kilometer project aims to diversify energy supplies for Bosnia, which currently relies on Russia for roughly 96% of its gas.

However, the London-based think tank warned that the critical infrastructure project is becoming a proxy for broader institutional fragmentation.

Competing geopolitical alignments between the country's two highly autonomous entities—the Federation of Bosnia and Herzegovina and the Serb-dominated Republika Srpska—threaten to split the national energy strategy.

"The domestic political polarization between the country's federal units is likely to translate into parallel fragmentation in BiH's energy policies," the BISI analysis stated, adding that the two entities might ultimately build separate, competing networks.

The report also raised flags over a March 2026 decision by Bosnia's parliament to award the construction contract to a newly formed, U.S.-based company, AAFS Infrastructure and Energy.

BISI noted the firm has no prior experience in large-scale infrastructure development and has links to individuals close to U.S. President Donald Trump.

Transparency International and EU representatives have questioned the fairness of the procurement process, citing a lack of competition. BISI warned that these transparency failures could derail Bosnia’s EU accession bids and jeopardize 374 million euros ($404 million) in conditional EU financial assistance.

While the Federation of BiH supports supply diversification, it remains divided over the choice of contractor. Meanwhile, leaders in Republika Srpska explicitly oppose U.S. involvement.

BISI concluded that while cutting ties with Russian gas is a strategic necessity, the current path risks deepening Bosnia's reliance on fossil fuels and leaving long-term energy security stalled without a rare domestic political consensus.