Serbia's government has announced plans to begin construction on a 128-kilometer oil pipeline connecting the country to Hungary in 2025.

The project, valued at 150 million euros ($163.9 million), aims to secure a new route for Russian oil imports.

Dubravka Djedovic Handanovic, Serbia's energy minister, revealed the details in a press release following the Balkan Forum in Budapest on Tuesday. 

Serbia currently receives oil deliveries via the JANAF pipeline from Croatia. However, these shipments were impacted by European Union sanctions imposed in 2022 due to Russia's war in Ukraine.

The new pipeline will offer Serbia access to Russian Urals crude oil through the Druzhba pipeline, which stretches from Russia to various Central European countries, including Ukraine, Hungary, Slovakia, and the Czech Republic.

Signed by Serbia and Hungary, last year under the agreement for the cross-border pipeline, the route will connect Novi Sad, a city in northern Serbia, with Algyo in Hungary.

According to local media reports from November, Djedovic-Handanovic stated that Serbia's state-owned oil storage company, Transnafta, will handle construction on the Serbian side of the project.

Once operational, the pipeline will have the capacity to transport roughly 5 million tonnes of oil annually.