New Russian gas pipeline may be built to Hungary
The Serbian government and the local gas company Srbijagas are working closely with Russia's Gazprom
to develop plans for a new gas pipeline that would transport Russian gas to Hungary and other destinations,
according to the Russian daily Izvestia, citing its own sources. The paper adds that "the final decision will only be made if Gazprom also needs this route."
Following the suspension of Ukrainian deliveries in January, Serbia and Hungary confirmed their role as transit countries for Russian gas to the European market. If implemented, the project could resemble the Balkan Stream, which transports gas from Russia to Hungary via Türkiye, Bulgaria and Serbia as a continuation of the Turkish Stream.
This would be a predictable move by the Serbian government, given that it has repeatedly and openly stated its intention to purchase as much Russian gas as possible. In March this year, Serbia was ready to commit to a 30-year gas deal with Russia. Dusan Bajatovic, the head of Srbijagas, told Reuters in mid-June that Serbia was working on a new gas deal - to run from September with a duration of either three or ten years - with Russia and will get the best price in Europe. He also said Europe - just like Serbia - would have no other option but to go back to Russian gas to cover its energy needs at reasonable cost.
The news agency reminded that Serbia is one of the last remaining Russian gas buyers in Europe, receiving around three billion cubic metres last year. It is seeking membership of the European Union, which this week proposed a legally binding ban on imports of Russian gas and liquefied natural gas (LNG) by the end of 2027.
It is clear what Serbia would do with the additional gas supplied by the new pipeline. Since 93% of its gas imports already came from Russia in 2024, the project would have little impact on self-sufficiency unless the gas was intended for resale.
At the same time, according to those interviewed by the Serbian news site vreme, the details of the planned project remain uncertain. For instance, the head of the Serbian Gas Association said that they had not received any official information about constructing the new pipeline. He added that, in his opinion, it was more likely that the existing route would be upgraded than a new one being built from scratch.
The geopolitical risks are also significant:
According to the latest information, the EU will have completely phased out Russian natural gas from the EU market by 2028 at the latest. This raises the question of whether it would be worthwhile building such a pipeline, given that it is likely that Russian gas would arrive in the EU, considering the investors and the direction.
Hungary could play a key role in the project. As mentioned above, while Serbia is currently able to meet its own needs, if it wants to strengthen its role as a transit country, the easiest route to European markets is via Hungary.
Furthermore, Hungary would benefit from such a role, as natural gas would have to be transported through the country. However, this move would increase political tensions with Brussels further, as it would contradict EU energy policy.
According to one of our sources, even if there were the political will, it would be difficult to find anyone willing to finance the project on a commercial basis. Such an investment could easily provoke disapproval from the EU and the United States, which could manifest itself in sanctions against the financier, as well as at the national level. Furthermore, if sanctions against Russia remain in place or are tightened further, there is a real danger that the pipeline will remain unused, leaving the section without a function.
It's not just about natural gas
Although this issue dates back to 2022, it was not until October 2023 that Prime Minister Viktor Orbán and Serbian President Aleksandar Vučić finally agreed that the two countries would build a joint oil pipeline to diversify Serbia's oil supply. As stated at the time, the aim is to connect Serbia to the Druzhba II pipeline, through which Hungary also receives Russian oil, in order to supply Serbia.
Serbian Energy Minister Dubravka Djedović also suggested that obtaining crude oil from Hungary would be cheaper than through the Janaf-operated Croatian oil terminal in Omisalj.
Implementing the project would ensure the diversification of crude oil supplies, thereby increasing the security of supply for the Pančevo oil refinery.
Hungary's Minister of Foreign Affairs and Trade told a press conference in early April that the 4.5 million tonne per year pipeline would require an expansion of capacity at the Ukrainian-Hungarian border and the construction of an entirely new 190 kilometre section of the pipeline in Hungary, at a cost of HUF 130 billion.
However, the viability of the oil pipeline project between Algyő and Novi Sad is also being called into question, given that the EU is introducing a total ban on Russian crude oil and natural gas.
Cover photo: EU
