Natural gas distributor Sarajevo Gas has signed a 1.03 billion marka ($619.4 million) contract with a Serbian-led consortium to construct the Sepak-Novi Grad pipeline, a massive infrastructure project designed to expand the energy network across the Serb Republic.

The project, known as the Eastern Interconnection, represents a major expansion of Bosnia and Herzegovina’s energy transit capabilities. 

Construction on the 500-kilometer (310-mile) pipeline is scheduled to begin in June, according to a statement released by the Serb Republic government.

Planned to be constructed in three phases, the pipeline will stretch 500km from the eastern border with Serbia to the western border with Croatia. 

• Phase I: Construction of the primary high-pressure section between Sepak and Banja Luka.
• Phase II: Development of secondary connecting pipelines to facilitate the gasification of 18 local municipalities along the route.
• Phase III: Final construction of the section extending from Banja Luka to Novi Grad.

The contract was awarded to a consortium led by the Serbian construction firm Konvar. The group also includes Serbian firms Gastec, Zavod za zavarivanje, and Jokic Invest, alongside the Bosnian company Radis.

The Eastern Interconnection arrives at a time of heightened focus on energy independence in the Balkans. Currently, Bosnia and Herzegovina produce no natural gas of its own and relies entirely on Russian imports delivered via the Turk Stream pipeline through Serbia.

While the Eastern Interconnection bolsters the Serb Republic’s infrastructure, the country’s other autonomous entity, the Federation, is pursuing the Southern Interconnection.

That project, backed by U.S. investor AAFS Infrastructure and Energy, aims to link Bosnia to Croatia's gas grid to diversify the nation’s energy sources and reduce its total dependence on Russian supply.

The 1.03 billion marka investment marks one of the largest energy infrastructure commitments in the region's recent history, highlighting the divergent energy strategies between Bosnia's two entities.