OREANDA-NEWS  Budapest and Belgrade say they will construct a new pipeline to supply Serbia with Russian Urals crude via the Druzhba energy system, the Hungarian government announced on Monday. The decision comes as Belgrade's shipments via Croatia fall under EU sanctions.

“The new oil pipeline would enable Serbia to be supplied with cheaper Urals crude oil, connecting to the Friendship [Druzhba] oil pipeline,” Hungarian government spokesman Zoltan Kovacs wrote on Twitter.

He added that Serbia’s oil supply was largely via a pipeline through Croatia, “but this is unlikely to be possible in the future because of the sanctions that have been adopted.”

Last week, the EU agreed on new anti-Russia restrictions, which include an oil price cap for Russian seaborne crude deliveries to third countries.

Serbia, which is heavily dependent on Russian oil supplies through Croatia, said that by imposing new restrictions, the EU was targeting Belgrade. On Friday, Serbian Prime Minister Ana Brnabic warned that a ban on seaborne oil supplies from Russia and pumping through Croatia would increase Serbia’s raw-material costs by 20%, and this would result in the loss of hundreds of millions of euros from the country’s budget.

Hungary, which is also largely reliant on Russian oil and gas, has been the most vocal critic of sanctions on Russia in the EU, saying the measures will drive up energy prices further. Earlier this month, Budapest pledged to help out Serbia with gas if needed. Prime Minister Viktor Orban said that Hungary has gas reserves covering about five to six months worth of consumption.

Druzhba, which is one of the longest pipeline networks in the world, carries crude some 4,000km from Russia to refineries in the Czech Republic, Germany, Hungary, Poland and Slovakia.