Nayara seeks India's help to ship fuel as EU sanctions disrupt operations

Nayara Energy has asked the Indian government for help with fuel shipping and payments after EU sanctions disrupted its operations and made it hard to find vessels and banking support

Russia-linked Nayara Energy is seeking assistance from the Indian government after facing new challenges from European Union (EU) sanctions that are disrupting its operations in India.

 

Nayara Energy, which operates one of India’s largest private oil refineries, has approached the Ministry of Ports, Shipping and Waterways for help in arranging vessels to transport its refined fuel across the country, news agency Reuters reported.

 

• The refiner is struggling to secure shipping services due to EU sanctions imposed last month.

• Shipping companies are terminating contracts and insurance for such voyages is becoming harder to secure, the news report said.

 

India is now exploring the use of locally flagged vessels to ensure fuel movement continues to Nayara’s retail outlets.   

 

EU sanctions disrupt crude payments

 

Along with shipping issues, Nayara is also facing payment roadblocks for its crude oil imports.

 

• The company has sought help from Indian banks to process payments for crude, Bloomberg reported.

• Nayara is considering lenders like UCO Bank, which previously handled transactions with Iran, due to their limited exposure to Western sanctions.

 

The EU included Nayara in its 18th sanctions package, targeting firms linked to Russia following the invasion of Ukraine in 2022.

 

Refinery runs cut as operational pressure builds

 

Due to the growing pressure, Nayara has started cutting run rates at its Vadinar refinery in Gujarat, which processes 400,000 barrels of oil per day.

 

• The company has maintained stable fuel supplies in India despite these challenges.

• Bloomberg reported Nayara retained healthy liquidity in July, even as international buyers pulled back.   

 

Who owns Nayara Energy?

 

• Rosneft, Russia’s state-backed energy giant, owns 49.13 per cent of Nayara.

• Another 49.13 per cent stake is held by Kesani Enterprises, a consortium led by Italy’s Mareterra Group and Russia’s United Capital Partners.

 

Nayara runs about 6,600 retail fuel stations across India and operates India’s third-largest oil refinery.

 

What’s next?

 

Nayara’s situation could worsen as the US imposed 25 per cent tariffs on India starting Thursday, and an additional 25 per cent beginning August 27.

 

• After the Ukraine war began, Indian refiners increased Russian oil purchases due to deep discounts.

• But with growing international scrutiny, Nayara may face more restrictions on both trade and finance.