Hungary and Serbia are moving ahead with plans to build a new cross-border oil pipeline that could transport up to 5mn tonnes per year (tpy) of crude, as both countries deepen energy ties with Russia despite EU sanctions.

Hungarian Foreign Minister Peter Szijjarto announced the project after trilateral talks in Budapest with Serbia’s energy minister, Dubravka Dedović, and Russian deputy energy minister, Pavel Sorokin, earlier this week. Hungary plans to construct 180 km of new pipeline on its territory, with the aim of bringing the infrastructure online by 2027.

The proposed pipeline, according to Szijjarto, is meant to strengthen regional energy security and reduce costs, as he sharply criticised EU policies for driving up prices by attempting to phase out Russian oil and gas. "Instead of cutting off supply routes and sources, Europe should be opening new ones," the foreign ministry said in statement.

He warned that cutting off Hungary's supply of Russian crude and gas would double or even quadruple household utilities bills. "We won't allow that," he said.

The announcement comes just days after Hungary and Slovakia refrained from vetoing the EU’s latest sanctions package targeting Russian energy, including an oil price cap, a move that reportedly followed guarantees provided during negotiations, according to Radio Free Europe. The outlet notes that Hungary’s foreign ministry makes no mention of that fact in the statement.

Hungary remains heavily dependent on Russian energy, and has sought to expand physical infrastructure to secure alternative delivery routes in partnership with non-EU neighbours such as Serbia, a key ally of Viktor Orban.

Budapest has been in active discussion over the project with Belgrade, since last year, but it is the first public indication of Russia’s participation in the talks, according to TASS news agency.

The project envisions the installation of 120 km of pipeline in Serbian territory, as well as the construction of a metering station on the border between the two countries, developed jointly by Hungarian oil and gas giant MOL and Serbian peer Transnafta.

The pipeline would connect MOL’s Hungarian refinery near Budapest (Szazhalombatta) with the southern border town of Algyo and the Serbian city of Novi Sad.

The project was first made public in April during Peter Szijjarto’s visit to Belgrade. Hungary’s chief diplomat, citing the feasibility study, then said the project could be operational by 2028 with a 4.5mn tpy capacity. Construction is expected to begin physically by the end of this year or early 2026, Szijjarto said in the spring.