The Serbian government has approved the construction of a critical oil pipeline connecting Serbia to Hungary, aiming to secure the country’s energy future amid the looming threat of US sanctions on its national oil company, Naftna Industrija Srbije (NIS), eKapija reported on March 31.

The 113-kilometre pipeline, expected to cost around €157mn for the Serbian portion, will run from the Serbian-Hungarian border to Serbia's second city of Novi Sad. The project, slated for completion by 2028, represents a strategic effort by Serbia to diversify its crude oil supply routes in the face of increasing geopolitical challenges.

Serbia’s energy security is at risk due to its dependence on Russian oil and gas, with its sole oil company NIS now facing secondary US sanctions. Announced in January, the sanctions target NIS’s significant Russian ownership and demand that Gazprom and Gazprom Neft divest their stakes.

After two delays, the sanctions are now set to take effect at the end of April, potentially disrupting Serbia’s energy supply. The sanctions could lead to a halt in oil deliveries from the Croatian JANAF pipeline, a key transit route for Serbia’s oil imports.

In response, Serbia has fast-tracked the Hungary pipeline project as an alternative oil supply route. The pipeline will be connected to the Druzhba system, one of the world’s largest oil transport networks, which currently delivers Russian oil to several European countries. While Serbia plans to continue receiving oil through JANAF, the new Hungarian link will enhance flexibility and security in meeting long-term energy demands.

The project was formally approved with the adoption of the Decree on the Spatial Plan for the special-purpose infrastructure corridor, establishing the legal and logistical framework for its construction, eKapija reports.

The project also reflects the growing ties between Serbia and Hungary. Hungary has supported Serbia’s recent appeals to the US to delay sanctions on NIS, citing the threat posed to regional energy security. Serbian President Aleksandar Vucic and Hungarian Prime Minister Viktor Orban are like-minded allies, both of whom share a more nuanced stance on Russia compared to much of Europe.