India’s Nayara Energy has raised fuel sales to state retailer Hindustan Petroleum Corp after the Russia-backed refiner’s exports were hit by European Union sanctions, a government source said on Tuesday.
Since the imposition of sanctions, Nayara has been operating its 400,000 barrel-per-day (bpd) Vadinar refinery in western India at 70-80% capacity.
Higher local sales of refined fuels would help the company to sustain its refinery runs, the source added.
“We would like them (Nayara) to operate at as high capacity as it can,” the source, who did not wish to be identified, told reporters.
While other state fuel retailers – Indian Oil Corp and Bharat Petroleum Corp – are self sufficient, HPCL buys some quantity of diesel and petrol from other companies for local sales, the source said.
HPCL will raise fuel purchases from Nayara to make up for some of the fuel it usually buys from HPCL-Mittal Energy, which is set to shut its 226,000 bpd Bathinda refinery in northern India for 40 days.
Nayara, majority owned by Russian entities including Rosneft , is relying on Russian oil after Saudi Arabia and Iraq stopped supplying crude due to payment-related issues, the source added.
India’s finance ministry was also considering allowing state run UCO Bank to facilitate payment for Nayara’s local fuel-supply deals, the source said.
Also, some shippers had previously stopped lifting fuels for HPCL from Nayara, forcing the private refiner to use a shadow fleet.
The source said Nayara was using alternatives modes of local fuel distribution, including roads, rail and shipping.
Last week, Indian conglomerate Adani banned entry of EU, British and US-sanctioned vessels at its ports.
The source added it was Adani’s independent decision as India adheres only to United Nations sanctions and does not follow unilateral sanctions imposed by other nations. (Reporting by Nidhi Verma in New Delhi, Editing by Bernadette Baum)
