Southern Gas Interconnection at a Dead End: While Kabiri Deceives Americans, HDZ Representatives Hamper Construction Process

(Patria) - The issue of constructing the Southern Gas Interconnection in the Federation of Bosnia and Herzegovina has become further complicated in recent days, writes Istraga.ba.

HDZ representatives have conditioned the adoption of the Agreement between BiH and the Republic of Croatia on the construction of the gas pipeline with a change in the decision-making process within the Government and Parliament of the Federation of BiH regarding the selection of a concessionaire for the construction of the Southern Gas Interconnection.

HDZ representatives demand that decisions on the concessionaire require a two-thirds majority vote, meaning a decision cannot be made without their votes. This proposal has no basis in the existing laws and the Constitution of the Federation of BiH.

If such blackmail were accepted, it would set a precedent and open the door for much larger concessions to this party on all other issues that the Government decides on, which would also jeopardize its very functioning in the long term.

After today's session of the Council of Ministers, the Minister of Foreign Trade and Economic Relations of BiH, Staša Košarac, stated that the Government of the Federation of BiH had submitted the agreement that BiH should sign with Croatia, but that this item was not included in the agenda, accusing the Chairperson Borjana Krišto of obstruction.

- Today, through current issues, Chairperson Krišto pushed this issue by stating that the Government of the Federation of BiH had abandoned the draft, but we do not have that position from the Government of the FBiH. Republika Srpska supported this draft agreement, and we had all positive opinions.

Suddenly, the thesis emerges that the draft submitted by the Government of the FBiH is not the correct one. We have not been informed of this by the Government of the FBiH. I think this is slowing down the pace - said Košarac.

There is nothing controversial in the draft Agreement itself, as all issues concerning the joint project between Croatia and BiH are yet to be regulated through joint work.

The competent authorities for the implementation of the Agreement are the Ministry of Foreign Trade and Economic Relations of BiH and the Ministry of Environment Protection and Energy of Croatia.

"The competent authorities referred to in paragraph 1 of this Article shall, within 30 days from the date of entry into force of this Agreement, establish a joint operational body composed of representatives of both contracting parties, for the purpose of realizing the activities from this Agreement," the Agreement states.

Abraham Group

Almost simultaneously, Abraham Group, owned by Israeli businessman Amir Gross Kabiri, announced that the company had signed a Memorandum of Understanding in Washington with the president of the Greek energy company Atlantic See LNG Trade, Alexandros Exarchou, for the supply of liquefied natural gas (LNG) for a period of 20 years.

They stated that this ensures a stable supply of American LNG for Aluminij Industry in Mostar, a subsidiary of Abraham Group.

According to them, the LNG will be supplied by Venture Global Commodities, via the Southern Gas Interconnection pipeline, and will be used in the planned combined gas and steam power plant (CCGT) of Aluminij Industry.

They claim that the combined gas and steam power plant will ensure a stable supply of electricity for the primary production of aluminum in the Aluminij smelter.

The Memorandum was signed as part of the Transatlantic Summit on Gas Supply Security, organized by the President of the National Council for Energy Dominance and Minister of Internal Affairs, Doug Burgum, and the Vice President of the Council and Minister of Energy, Chris Wright.

The most interesting part of the announcement is the claim that Abraham Group, allegedly with the approval of the US administration, has become the main importer of American LNG for BiH.

Shortly thereafter, the Minister of Foreign Affairs of BiH, Elmedin Konaković, who participated in the summit in Washington, reacted, stating that Kabiri had deceived the Americans.

- We consider the signing of the memorandum a form of deception towards our American partners because Abraham Group has committed to purchasing something in the future for which it has no legal basis or permit.

The Government of the Federation of BiH is solely responsible for determining by decree who can import and sell gas, and currently, that is Energoinvest. This will remain the case until a state law on gas is passed - said Konaković.

This issue is regulated by the Law on Energy and Energy Activities Regulation in the Federation of BiH and the Decree on the Organization and Regulation of the Gas Economy Sector, which was last amended in September 2022.

The Law and the Decree do not allow Abraham Group to independently procure gas in the Federation of BiH.

Although the Decree also provides for the possibility of opening the market to multiple suppliers in the long term, who would procure gas in addition to Energoinvest, the conditions specified in the Decree have not been met, and Energoinvest remains the sole buyer of gas for the Federation of BiH.

In practice, Abraham Group cannot independently procure gas through the Southern Gas Interconnection for the existing facility and the future power plant without a new decision from the Government of the FBiH.

More importantly, it cannot be the "main gas supplier for BiH" because the market is not yet open. When that happens, we will certainly have more gas suppliers, not just one.

The Decree stipulates the existence of a "privileged customer," defined as a "customer who has the right to freely choose a gas supplier." Article 34 of the Decree defines how a privileged customer is determined.

"A customer who consumes gas for electricity generation, regardless of the annual consumption amount and within the limits of the gas quantity intended for such use; an end customer who consumed more than 150 million m3 of gas in the previous calendar year," it states.



If Abraham Group were to build a power plant in Mostar, it would certainly exceed the consumption of 150 million cubic meters, and by generating electricity, it could meet these conditions.

However, Article 58 of the Decree states that the gas market will open after the establishment of an independent energy regulatory body, i.e., the Agency.



"The gas market will open gradually, with the provisions of Articles 34 and 37 applying after the establishment of the Agency... The procedure for selecting gas suppliers for the gas market opening process, and the determination of the public service provider for gas supply, will be defined by the establishment of the Agency and the adoption of relevant regulations," the Decree states.