Energy Security and Geopolitical Risk in Central Europe: Assessing the Long-Term Viability of Hungarian and Slovak Energy Infrastructure Amid Persistent Tensions

In 2025, the energy security of Hungary and Slovakia remains a focal point of geopolitical and economic concern. Both nations, landlocked and historically reliant on the Soviet-era Druzhba pipeline for Russian oil, face mounting risks from recurring disruptions—most notably the 2024 Ukrainian drone strike on the Unecha pumping station. These events have exposed the fragility of their energy infrastructure and underscored the urgent need for diversification. For investors, the interplay of geopolitical tensions, infrastructure limitations, and political resistance to EU energy policies presents a complex landscape of risks and opportunities.

The Druzhba Pipeline: A Lifeline Under Threat

The Druzhba pipeline, which delivers Russian crude oil to Hungary and Slovakia via Ukraine and Belarus, remains the backbone of their energy systems. Despite its critical role, the pipeline has become a geopolitical flashpoint. Ukrainian drone strikes in 2024 and 2025 have repeatedly halted flows, forcing both countries to activate emergency protocols. Hungary, for instance, sourced 86% of its crude oil from Russia in 2024, while Slovakia relies on Russian oil for key sectors. The pipeline's vulnerability has prompted calls for urgent infrastructure upgrades and redundancy planning, yet progress remains slow.

Alternative supply routes—rail, barge shipments, and reverse flows through the Adriatic Pipeline—have been deployed as stopgaps. However, these options are constrained by capacity (rail at 15–20% of pipeline volumes), cost, and technical limitations. The Adriatic Pipeline, while a potential lifeline for Hungary, lacks the throughput to fully replace Druzhba. For investors, this highlights a critical risk: the inability of short-term alternatives to address long-term energy security.

EU Diversification Efforts and National Resistance

The European Union's REPowerEU plan aims to phase out Russian oil and gas by 2027, but Hungary and Slovakia have resisted these measures. Hungary's MOL Group, a state-owned energy giant, has capitalized on Russian oil imports, reporting a 34% surge in operating income in 2025. The Hungarian government has also collected over $500 million in windfall taxes from Russian oil flows, illustrating the economic incentives to maintain the status quo. Slovakia, under Prime Minister Robert Fico, has similarly opposed EU sanctions, arguing that abrupt transitions would destabilize its energy markets.

Despite resistance, both countries have engaged in EU-funded projects to modernize infrastructure. Slovakia's €240 million EIB loan for green and digital initiatives, including the Čierny Váh pumped hydro storage modernization, signals a cautious shift toward renewable integration. Meanwhile, Hungary has pursued partnerships with Azerbaijan for oil and gas exploration and green energy corridors. These efforts, however, remain fragmented and insufficient to counteract the dominance of Russian imports.

Geopolitical Risks and Strategic Alliances

The geopolitical stakes are high. Hungary's Prime Minister Viktor Orbán has directly engaged with U.S. President Donald Trump to address energy security concerns, while Slovakia has aligned with Serbia to develop new infrastructure projects that deepen Russian influence. These alliances complicate EU cohesion and raise questions about the effectiveness of sanctions and enlargement policies. For investors, the risk of hybrid threats—such as cyberattacks or sabotage on energy infrastructure—cannot be ignored.

Hungary's MOL Group has also explored LNG imports and domestic renewable energy expansion, including 8 GW of solar capacity. However, infrastructure bottlenecks and high costs limit the scalability of these initiatives. The EU's push for LNG terminals in Southern and Western Europe has bypassed Eastern Europe, leaving Hungary and Slovakia with fewer options to diversify.

Investment Implications and Strategic Recommendations

For investors, the key lies in balancing short-term volatility with long-term resilience. Here are three strategic considerations:

1. Energy Infrastructure Modernization: Projects like Slovakia's Čierny Váh hybrid energy storage and EU-backed grid upgrades offer long-term value. These initiatives align with the EU's climate goals and could attract green financing.
2. Diversification Partnerships: Companies involved in cross-border energy corridors, such as MOL Group's Azerbaijan ventures, present opportunities. However, investors must assess the geopolitical risks of relying on Russian-aligned partners.
3. Strategic Reserves and Emergency Protocols: While Hungary and Slovakia maintain strategic petroleum reserves, their logistical complexity and limited capacity suggest a need for further investment in storage infrastructure.

Conclusion: Navigating a Fragile Energy Landscape

Hungary and Slovakia's energy infrastructure remains a double-edged sword: a lifeline for economic stability but a vulnerability in a volatile geopolitical climate. While EU-funded projects and diversification efforts offer hope, the reliance on Russian oil persists. For investors, the path forward requires a nuanced approach—supporting infrastructure resilience while hedging against political and supply risks. As the EU tightens its energy transition timeline, the ability of these nations to adapt will determine not only their energy security but also the returns for those who invest in their transformation.

In the coming years, the interplay of pipeline vulnerabilities, EU policy pressures, and national sovereignty will define the energy landscape of Central Europe. Investors who prioritize adaptability and long-term resilience will be best positioned to navigate this complex terrain.