Serbian-Hungarian pipeline for yesterday's geopolitics

Media in Serbia announced on May 25, 2026 that the tender for construction oil pipeline between Serbia and Hungary again fell into procedural difficulties. According to data from the Public Procurement Portal, a request was submitted for the protection of rights in the selection procedure of expert supervision. This project, controversial from the very beginning, was followed by non-transparent actions of decision-makers and criticism from the professional public.

It is necessary to understand the broader technical and political context in order to understand the motives and actions of the actors, in this case representatives of the authorities of Serbia and Hungary.

Society and the end of an energy era

The story begins with the construction of the Druzhba ("Friendship") oil pipeline, one of the largest oil pipeline systems in the world. Built during the Cold War in 1964, it is intended to transport crude oil from Russia to the countries of Eastern and Central Europe. The system is divided into two main branches: the northern one, which leads via Belarus to Poland and Germany, and the southern one, which supplies Slovakia, the Czech Republic and Hungary via Ukraine.

Geopolitical changes after the fall of the Berlin Wall did not significantly affect the functioning of this system or the economic cooperation based on it. The problems arise after the Russian invasion of Ukraine and the war, which is entering its fifth year. In response, the European Union initiated the process of gradual abandonment of Russian energy sources through the REPowerEU plan, with the aim of reducing energy dependence on Russia and limiting financial flows that support war operations.

Sanctions on Russian oil imports were introduced with the intention of putting economic pressure on Moscow. The member states of the European Union have committed to suspend the import of Russian oil by the end of 2027. Most of the member states did so during 2022, while Hungary and Slovakia received a temporary exception due to their dependence on the Druzhba oil pipeline.

Photo: JANAF

Serbia and Hungary in different energy positions

Hungary has one large oil refinery - the Danube refinery near Budapest, which is managed by the MOL group. For decades, this facility has relied on Russian oil supplies via the southern branch of the Druzhba and is a key point in the Hungarian energy system.

That is why Hungary strongly opposed the European Union's attempts to set deadlines for the complete cessation of Russian energy imports, warning of possible consequences for its economy and energy stability. As an alternative, the European Union offered to supply via the Croatian Adria pipeline, but Budapest expressed reservations citing the costs, capacity and reliability of that route.

The situation in Serbia is significantly different. In Serbia, only the Pancevo Oil Refinery, managed by NIS, is currently actively operating. As of December 2022, due to European sanctions, oil is no longer delivered to Serbia from Russia. Today, the Pancevac refinery processes exclusively non-Russian oil, which is imported from Iraq, Kazakhstan and other countries, and transported via the Adriatic pipeline.

Thanks to large investments from previous years, the Pancevac refinery has a high degree of technological flexibility and is capable of processing different types of crude oil. At the same time, the capacities of the Adriatic pipeline exceed the needs of Serbia many times over, enabling a stable and uninterrupted supply.

The project was created in the shadow of sanctions

Serbian President Aleksandar Vučić and Hungarian Prime Minister Viktor Orbán reached a political agreement on the construction of an oil pipeline between Serbia and Hungary in 2022. Vučić then openly announced that Serbia would be connected to the Russian Druzhba pipeline in this way. The two states signed a formal interstate agreement in June 2023.

The European Commission presented the REPowerEU plan in May 2022, while the legislative framework for its implementation entered into force at the beginning of 2023. The timing of these activities is obvious.

From all of the above, it can be concluded with high probability that the new oil pipeline between Serbia and Hungary was primarily conceived as a response to Western sanctions aimed at the Russian energy sector, while the diversification of supply routes was only a poorly disguised excuse.

It is obvious that the construction of a new oil pipeline is much more in the interest of "Gazprom Neft" than in the interest of Serbia and its energy development. While the authorities in Serbia and Hungary present the project as a matter of energy security and price stability, analysts and international observers warn that its implementation could further tie Serbia to Russian energy flows and bring it into collision with the long-term direction of European energy policy.

Photo: Freepik / Fanjianhua

Have circumstances changed?

The political circumstances in which the project was created are no longer the same today. In the elections held in Hungary in April 2026, the multi-year rule of Viktor Orbán came to an end, and the new government was formed by Peter the Hungarian. This leaves open the question of whether the new Hungarian administration shares the same energy priorities that were the basis of the original agreement.

At the same time, the process of changing the ownership structure of NIS is underway as a result of the US sanctions imposed on Russian energy companies. The request for the withdrawal of majority Russian capital from NIS is directly related to the future management of the Pancevo refinery and long-term strategic decisions in the oil sector of Serbia.

What would a responsible Government of Serbia do in such circumstances?

First of all, it would temporarily suspend the implementation of the project until the completion of the key political and ownership changes that are currently underway.

At the same time, it would wait for the completion of the process of changing the ownership structure of NIS and the definition of the future management model of the Pancevo Refinery, because it is difficult to make long-term infrastructure decisions without a clear answer to the question of who will manage the most important oil plant in the country in the future.

The new government would then open talks with the Hungarian side and determine whether this project, after the political changes in Budapest, still represents a common strategic interest and whether it is aligned with the future energy and security policies of the European Union.

If both countries concluded that the pipeline still has long-term economic and energy justification, they would jointly nominate it for the status of part of the European critical energy infrastructure. This would open up the possibility of using European funds and other financial instruments intended for projects of strategic importance for the continent's energy security.

Only after that, a final investment decision could be made, based on transparent analyzes and a complete understanding of the energy, economic and geopolitical consequences.

Serbia does not need infrastructure projects that serve to preserve outdated geopolitical concepts. It needs projects that strengthen energy security, increase the resilience of the energy system and contribute to the country's European integration.

The author is the chairman of the Departmental Committee for Energy Transition and Natural Resources of the Democratic Party

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