In defence of their decision not to harmonize with the EU on sanctions against Moscow, Belgrade officials often cited Russia’s support in the UN Security Council on Kosovo and the almost complete reliance on Russian gas. Thus, on both issues, Brussels, Berlin, London and Washington pressed hard. On Kosovo, the West’s aim was to push Serbia towards accepting self-inflicting agreements, which would make Moscow’s support in the UNSC irrelevant, while the “energy diversification” mantra was elevated to the pedestal of every EU/US diplomatic visit to the Serbian capital, particularly since 2022 and Brussels’ decision to cut Russian supply.
The Hungarian stake in the Serbia-Russia energy cooperation is an important part of the equation. Serbia imports around 2.5 bcm of Russian gas per year, and has also developed
with Gazprom a 450 mcm underground gas storage facility in northern Serbia’s Banatski Dvor. But it is also a TurkStream transit country for Russian gas to Hungary, which is importing three times more—7.5 bcm in 2025. Under pressure from Brussels and Washington, both countries have recently signed agreements
with Azerbaijan to diversify gas imports, and various projects have been set up to link with Romania, Croatia, Bulgaria, North Macedonia and, ultimately, Greece’s Alexandroupolis port, as a major hub for US LNG exports. Yet, despite tight EU 2027 deadlines and bubbly alternatives, Magyar has argued following his victory that “no one can change geography. Russia and Hungary are here to stay”, and has set a tentative 2035 deadline cut-off date instead. Such posturing is likely to provide Belgrade with more incentive and manoeuvring space to resist pressure from Brussels to meet the 2027 deadline, despite a flurry of diversification activities planned for next year, such as the substantial increase of Azeri imports through the Bulgaria interconnector and the expected opening of gas interconnectors with Romania and Northern Macedonia. Belgrade knows the alternatives would be extremely costly for its industry, but Western expectations for concrete diversification moves are high. In the meantime, Serbia and Russia continue to extend short-term gas contracts at highly advantageous prices for Belgrade, saving hundreds of millions of euros, keeping the economy afloat and inflation at bay during the current energy crisis caused by the war in the Middle East.
If the gas dossier sounds to be “in limbo”, wait to hear about oil. While Serbia has stopped purchasing Russian oil following EU sanctions—and, paradoxically, could not obtain a Hungarian-style caveat since it is not an EU member—it was Washington which, during the last days of Joseph Biden’s administration, decided to strike a blow by imposing sanctions on the Serbian NIS petroleum company, targeting Russian ownership. Since then, for over a year, a never-ending drama has been unfolding, featuring the US Office of Foreign Assets Control as sanctions enforcer, Gazpromneft and the Serbian government as majority owners, and Hungary’s MOL as a potential buyer of Russian-owned stakes. While the agreement on the purchase seemed close before the Hungarian elections, in the last several weeks, stands appear to harden, with Belgrade more vocally expressing its dissatisfaction with MOL’s offer, particularly regarding the preservation of the NIS oil refinery in the city of Pančevo. It remains to be seen whether the complications are of a business or a political nature.
But Belgrade and Budapest have another oil project in the planning—the Serbia-Hungary oil pipeline, which was labelled by Serbian officials as a “necessary, politically and economically justified and timely project aimed at long-term energy security and diversification of the Republic of Serbia”. The projected 200-km pipeline, whose construction is due to begin this year, would link Serbia’s Pančevo refinery to Hungary’s Algyő and the Druzhba pipeline. It would thus offer a sort of “reverse diversification”—away from dependence on its sole current pipeline, JANAF, linked to Croatia’s Adriatic Coast, and its vulnerability to Western political conditioning. The JANAF pipeline has also been the source of Hungarian oil imports during the controversially long repairs of the Ukrainian section of the Druzhba pipeline in recent months. The idea behind the Serbia-Hungary oil pipeline was to create more robust interconnections and interdependence and to provide greater energy security for both countries. But while the project is aimed for completion by 2028, it remains to been whether Budapest’s enthusiasm will wane, particularly if Brussels and Washington push against it.
Yet another aspect of potential Serbia-Hungary cooperation, also linked to Russia, might be affected. Serbia has expressed interest on several occasions to purchase a 5-10 percent stake in the Paks 2 nuclear plant, currently built by Rosatom, in its first move towards nuclear energy. This decision would be in line with Serbia’s recent decision to reverse a Yugoslav-era post-Chernobyl moratorium on nuclear energy, particularly since it is highly pressed in EU negotiations talks to reduce its dependence on coal-powered electricity generation. Yet, Belgrade is also considering other options, which involve British, US and particularly French partners from EDF, which completed
in March a Feasibility Study on the use of nuclear energy in Serbia. Thus, any signalling from Budapest regarding a potential reassessment of the Paks 2 project would water down Belgrade’s interest, which is already criticized
by Serbia’s pro-Western opposition.
While many analysts have anticipated tough times for Belgrade-Budapest relations after the parliamentary elections, particularly due to unprecedented closeness during the Orban era, first post-electoral interactions between Vučić and Magyar were relatively smooth. These are only early signs, and they might be overturned. Yet both sides are well aware of the interdependence on key energy dossiers, of their landlocked geographies and energy-hungry industries. They also show understanding of Russia’s primordial role in both bilateral and trilateral energy projects, a stance that the worldwide repercussions of the closure of the Hormuz will certainly not change. But they also feel the heat from a Brussels impatient to exploit the post-Orban era and to impose political conditionality during Serbia’s accession talks. And they certainly sense the rising assertiveness of US attempts to capture Balkans market shares by selling LNG through Croatia’s Krk and Greece’s Alexandroupolis terminals, at the expense of Russia.
The Valdai Discussion Club was established in 2004. It is named after Lake Valdai, which is located close to Veliky Novgorod, where the Club’s first meeting took place.
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