Navigating New Horizons: The Strategic Impact of the Hungary-Serbia Oil Pipeline on Energy Security

In an era defined by energy independence and geopolitical maneuvering, the newly announced hungary-Serbia oil pipeline represents a notable strategic investment aimed at enhancing energy security for both nations. The project, announced last week, involves approximately 180 kilometers of pipeline in Hungary and 120 kilometers in Serbia, with a capacity of five million tons of oil annually. This enterprising undertaking promises to reshape the regional energy landscape, but also presents significant challenges.

The Hungarian section of the pipeline will run from Százhalombatta to Algyő and then to Röszke, necessitating the construction of a new international measuring station. Completion is slated for 2028, coinciding with plans to double the electricity transmission capacity between the two countries.

The importance of this project cannot be overstated.Foreign Minister Peter Szijjártó emphasized Serbia’s crucial role, stating, Today it is indeed no longer an exaggeration to say that there is no Hungarian energy security without Serbia and no Serbian energy security without Hungary. This sentiment was echoed by prime Minister Viktor Orbán, who, in a meeting with serbian President Aleksandar Vučić, similarly declared, No Hungarian energy security without Serbia and no Serbian energy security without hungary. Orbán also reiterated plans for a 300-kilometer oil pipeline and a doubling of electricity exchange volume between the two countries.

Hungary’s heavy reliance on the Turkish Stream pipeline for natural gas, receiving approximately 7.6 billion cubic meters last year—nearly its entire natural gas supply—through Serbia, underscores the strategic importance of this new pipeline. Szijjártó highlighted Serbia’s reliability as a transit country, a distinction he implied not all neighboring countries share, though he did not name specific countries.

Olivér Horny, head of Energy and Climate Policy at the End of Century, offered a positive assessment of the project. He noted, The events of recent periods have shown that it is indeed advisable to alleviate the risks caused by concentrated hydrocarbon sewers by diversification. Horny explained that geopolitical conflicts, sanctions, and commercial disputes have disrupted energy transport routes, increasing costs and undermining security. He added that, The increase in potential procurement routes and the number of suppliers expands the supply, increases competition, reducing prices and shipping costs.

Horny further emphasized the strategic importance of the pipeline, stating, the Hungarian-Serbian Petroleum pipeline fits into this diversification effort, improving our country’s security of supply, and can also contribute to Hungary to become a significant transit country not only in the gas but also in the oil market regional. The feasibility study is complete, political and market commitments are secured, and preparatory work is underway, with the pipeline expected to be operational within three years. The specific type of oil to be transported will be resolute through future contracts.

The increased importance of Hungary’s energy infrastructure is further highlighted by recent events. The disruption of Russian gas transit through Ukraine substantially increased the value of hungary’s gas system, transforming it into a regional distribution hub.This was further underscored by record-breaking Russian gas deliveries through the Turkish Stream pipeline in the second week of February 2025, exceeding 396 million cubic meters—a weekly record since the pipeline’s launch in january 2020.

MVM’s successful foreign transactions, such as the share of the Sah-Deniz gas field, have increased the international importance of Hungary. In the oil market, MOL has a defining foreign portfolio, but Hungary has a transit role of Hungary even smaller than the gas market. Though, with the new Hungarian-Serbian pipeline and similar potential improvements, Hungary’s transit role can also catch up with gas in oil transport.

However, Horny also pointed to significant challenges, including geopolitical and commercial conflicts and high European energy prices. He emphasized the interconnectedness of the European gas market, where price fluctuations in one country impact others. he stated, The European political elite continues to call for the extension of sanctions. The community does not show sufficient unity against Ukraine’s political pressure attempts, which causes uncertainty in supplying Central Europe.

In late January, Viktor Orbán issued a three-point ultimatum regarding Ukrainian gas transit: 1) Reopen the gas pipeline through Ukraine; 2) Cease attacks on the Turkish Stream; and 3) Guarantee the security of oil transit through Ukraine. following assurances from the European Commission regarding the protection of energy pipelines, the Hungarian goverment did not block new sanctions.

Horny noted that recent indications of peace talks have already led to a decrease in gas prices on the Dutch gas exchange, from 58 euros to 48 euros per unit. he concluded that,The complete displacement of Russian energy sources from the European Union,especially the central European region,is a political intention that cannot be justified by professional and economic arguments. Thus, the reality of the endeavor depends primarily on how strong and how much costs and damage the community is willing to endure to enforce it. He advocated for diversification of energy sources rather than a complete exclusion of Russian energy.

There is a consensus – which is professionally justified – that it is worth reducing the concentrated Russian dependence, but it is not the reasonable way of selecting selective purchase – that is, the exclusion of the “bad” suppliers, but the diversification. The appropriate regulatory ambition is not the one that is represented by the sanctions party, such as the Brussels Energy Commissioner, to sweep all Russian energy from the European market as soon as possible. But to make the presence of other suppliers as widely possible, thus promoting market players, which will automatically result in a reduction in Russian addiction.

Ultimately,the success of this endeavor hinges on political will and the willingness to prioritize diversification and competition in the European energy market.