Serbia has vowed to fast-track new energy connections with Hungary to conserve its energy security after new US sanctions have threatened its lasting Russian oil ties, its President has said.
In a statement on Facebook Jan. 18, Serbia's President Aleksandar Vucic confirmed he had received Hungary's Prime Minister Viktor Orban in Belgrade to discuss "the realization of infrastructure projects and energy security," calling the two countries "key energy corridors in the region."
The statement said that stronger cooperation was made necessary by "emerging challenges" and emphasized the importance of Serbia's "strategic partnership" with its neighbor, as it has continued to contest new US and UK sanctions measures impacting its energy sector.
New sanctions announced Jan. 10 demanded that Russia's Gazprom Neft exit its position in Serbia's refining sector within 45 days, requiring it to give up its 50% stake in NIS, operator of the country's sole refinery.
Serbia has said that the ownership vacuum, which would leave behind a two-year crude supply contract between Gazprom Neft and Croatian pipeline operator Janaf, threatens undue disruption to its energy sector, however, calling measures "severe and serious."
While the country has sought a policy pivot from the new Trump administration, it has also advocated for "friendly relations" with Russia and has appeared to rule out nationalizing Gazprom-owned assets as it has undertaken talks with other regional players.
Druzhba pipeline plans
Local media reported that talks with Orban in Belgrade revived plans to extend Russia's Druzhba pipeline system into Serbia, which have been proposed to link the Pancevo refinery to the southern branch of the crude oil network in Hungary.
In June 2023, Hungary and Serbia signed an agreement to build a 110,000 b/d connection running from Hungary's Szazalombata to Serbia's Novi Sad, expecting construction to be conducted by Hungary's MOL and Serbia's Transnafta within the next two years.
After seeking Chinese backing for the Druzhba extension project in June, no final investment decision was taken; however, Serbia appears to have revived hopes for stronger support from Beijing. In a Facebook post by Vucic Jan. 17, the President said a meeting with Serbia's Chinese Ambassador Li Ming had focused on infrastructure and energy.
"We are working to accelerate the realization of key infrastructure projects and attract new Chinese investments," the statement said.
To date, Serbia has relied on its Adria pipeline link to the Croatian port of Omisalj for its crude oil, and was forced to cut off its Russian Urals imports after Dec. 2022 with the imposition of EU sanctions on seaborne crude.
However, with Russian crude grade still fetching steep discounts to non-sanctioned supplies, pipeline deliveries remain a cheap source of energy to central European countries still able to legally process it.
Platts, part of Commodity Insights, last assessed Urals loaded at Primorsk at a discount of $11.30/b to Dated Brent Jan. 20.
