Nayara Energy's pump supplies steady amid EU, US sanctions trouble

Only casualty for now is the export of fuels by the refiner

With the firm coming under the European Union’s (EU’s) latest bout of sanctions 18 days ago, Rosneft-run Indian refiner Nayara Energy may have temporarily lost its export market and reshuffled top management persons, but has kept India’s domestic fuel market well supplied.

 

Petrol and diesel were plentiful, and the pump never went dry in recent weeks, they told Business Standard. They were expecting an 18-kilolitre tanker the following day to restock the outlet.

 

The refiner, which owns a 400,000 bpd (barrels a day) refinery on the west coast, in which Rosneft, Russia’s state-run producer, holds a 49.13 per cent stake, was targeted by the EU on July 18 as part of the 18th sanctions package against Russia to stop Moscow’s invasion of Ukraine.

 

Nayara is also continuing supplies to local refiners, officials from state-run refiners said.  

 

India’s domestic fuel market and imports of crude oil are relatively unscathed by the EU sanctions and subsequent secondary tariffs by United States President Donald Trump on Indian purchases of Russian oil, officials in refining units said.

 

New Delhi has made no specific comments on Nayara, but the foreign ministry said on Friday that “on our energy sourcing requirements ... we look at what is there available in the markets, what is there on offer, and also what is the prevailing global situation or circumstances”.

 

According to a Bloomberg report, the government hasn’t given oil refiners instructions to stop buying Russian oil, according to people familiar, as officials grapple with meeting energy needs and maintaining ties with Moscow without further angering Trump.

 

Exports hurt

 

The only casualty for now is the export of fuels by Nayara. The impact on export in July was minimal, with outward shipment declining by only around 10 per cent to 96,000 barrels per day (bpd) in July from June, according to the data from maritime intelligence agency Kpler. 

Nayara exported around 127,000 bpd, valued at around $4.5 billion or so, in the entire calendar year 2024, according to approximate calculations based on the data of  Kpler and Indian customs. 

The loss after the EU sanctions may have been only a few million dollars, industry officials said. No product tanker loaded fuels from the Vadinar refinery since July 21, three days after the sanctions kicked in, according to the ship-tracking data.

 

Supply options

 

Two Singapore-based trading analysts said Nayara might explore options of routing export via countries like Dubai because its buyers are unable to make payments to a sanctioned entity.  

Traders are working on options to swap large amounts of Indian-made diesel and jet fuel for more West Asian production to keep fuel flowing, said Energy Intelligence, based in the United Kingdom. 

A senior trader from a state refiner said Nayara had an option to route diesel and jet fuel through public-sector refiners, for which they would charge a margin. It is not clear if Nayara has approached a state refiner with a firm deal. Barring liquefied petroleum gas, state-run refiners are free to export transport fuels after keeping the domestic market well supplied, he added.

 

In the immediate term, Nayara has trimmed refining amid storage constraints at the refinery in the absence of export loadings, industry officials said.

 

Nayara has declined requests for comment. Rosneft, however, said in a statement that EU sanctions “violate international law and infringe on the economic interests of a sovereign state”. “Nayara Energy is an Indian legal entity whose operations support the development of its assets,”  Rosneft said. 

 

“Profits have been used exclusively for the development of the refinery,  petrochemicals and retail network.”

 

Crude oil import

 

Nayara has managed to sustain crude oil import despite a 15 per cent decline from June to 211,000 bpd in July. Overall Russian imports were down 24 per cent. 

 

Nayara’s Russian crude oil import, mainly from parent Rosneft, constitutes just 13 per cent of India’s Russian oil purchase, but over half the crude oil processed by its refinery was Russia’s medium, sour Urals grade.

 

Last month Nayara, which has 6,763 retail outlets, appointed Sergey Denisov, a senior Nayara executive, chief executive officer. 

 

The company accounts for 8 per cent of India’s refining capacity and operates around 7 per cent of the country’s petrol-pump network. 

Nayara snapshot: Vadinar refinery

• 400,000 Capacity (bpd)
• 8%  of national capacity
• 415,000 bpd Capacity in Apr-Jun
• 120,000 bpd Exports in Apr-Jun
• 9% of India’s exports
• 6,763 Petrol pumps (in no.)
• 7% of total petrol pumps in India