Nayara Energy, the Indian refiner that was slapped with EU sanctions because of its partial ownership by Rosneft, has started to recover from the blow, turning to payments in rupees for the oil it sources from the Russian company.
Bloomberg reported that Nayara had sought help from the Indian government and was currently working with local banks, including the State Bank of India, to pay for its crude oil purchases in local currency, according to unnamed sources.
Nayara Energy accounts for some 8% of India’s total refining capacity. It operates a 400,000-bpd refinery in Vadinar, which is the second-largest in the country. The facility is 49% owned by Russia’s Rosneft. Currently, the Vadinar facility is operating at 75% of capacity, and the level is rising, one of the Bloomberg sources told the publication.
The European Union included Nayara Energy in its 18th sanction package against Russia, announced in July. The sanctions disrupted the refinery’s operations, stranding tankers carrying fuels produced at the refinery en route to their destinations and prompting cancellations of purchase orders for the facility. That’s despite the fact that Nayara Energy was not really exporting any fuels to the European Union. Its main market in Europe was the UK, which has not adopted special sanctions against the company.
Meanwhile, Saudi Aramco and Iraq’s state oil marketing company SOMO stopped selling crude oil to the Nayara Energy refinery following the approval of the EU’s 18th sanction package. As a result, the refinery has boosted its intake of Russian Urals.
Also as a result of the sanctions, Nayara Energy has increased its focus on the domestic market. The company supplies more than 6,500 fuel stations in India, per Bloomberg, and has started selling more to a fellow refiner, Hindustan Petroleum Corp. Nayara Energy has started loading more crude into floating storage and using tankers under Western sanctions to export its fuels.
By Irina Slav for Oilprice.com
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