Hungary denied Thursday a newspaper report that the European Union has vetoed its planned nuclear project with Russia, a move which could strain frosty relations between Moscow and Brussels.

A Hungarian cabinet state secretary Andras-Giro-Szasz "firmly denied" the report, in a statement to Hungarian state newswire MTI.

The Financial Times newspaper reported Thursday that EU nuclear body Euratom has refused Hungary's plans to import nuclear fuel from Russia in a decision backed by the European Commission, scuppering the planned expansion of the Paks nuclear power plant, kilometres (75 miles) south of Budapest.

"It is not true that the EU has blocked the Paks II construction," Giro-Szasz, communication state secretary for the prime minister's office, told MTI.

Giro-Szasz said he has asked the FT to issue a correction, MTI added.

The deal was seen as a sign of increasingly close ties between Budapest and the Kremlin under Prime Minister Viktor Orban, and had caused concerns in the EU amid tensions over conflict in Ukraine.

"If the Russians now refuse to modify the original contracts, this will be the end of the road for the project," Benedek Javor, a Hungarian member of the European Parliament's Green group, told the Financial Times.

"The report is very clear that the fuel supply agreement does not comply with European law."

The planned 12.5 billion euro ($13.3 billion) expansion of Hungary's sole nuclear plant Paks, which provides 40 percent of the electricity needs of the EU member, was to be financed largely with a Russian loan.

It was to be carried out by Russia's state nuclear corporation Rosatom, with construction of two 1,200 MW reactors set to begin in 2018.

The Hungarian parliament voted to keep the details of the deal secret for 30 years, something the ruling Fidesz party said was needed for "national security reasons" but which critics said could shield corruption.

Hungary is heavily reliant on Russian gas and Orban welcomed Russian President Vladimir Putin to Budapest in February to agree a continued supply -- a visit controversial to the West as it came amid conflict between Kiev forces and pro-Russian rebels in Ukraine.