Squeezed by sanctions, Nayara Energy is said to have reached out to Indian state-run refiners and marketers, offering its export volumes of petrol and diesel to these companies, according to two sources aware of the development.
“Nayara has offered to the oil marketing companies (OMC) the petrol and diesel volumes that they export since they may no longer be able to export that going forward,” said a senior industry official aware of the development.
The OMCs, Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, and Nayara Energy did not reply to an email query.
According to sources, Nayara Energy has also reduced run rates at its refinery, currently operating it at about 80 per cent.
Nayara Energy runs India’s second-largest single-location refinery in Vadinar, Gujarat, with a capacity of 20 million tonnes per annum. Nayara Energy delivers approximately 8 per cent of India’s refining output and is currently expanding capacity to enhance its presence in the petrochemical and alternate energy sectors. The company, which has 6,300 retail outlets now, had plans to expand the network by over 50 per cent by 2030.
But on July 18, the European Union member states introduced sanctions against Russia to target the oil and energy sector revenues. Since Russian oil and gas giant Rosneft has 49.13 per cent stake in Nayara Energy, the company was caught in the direct line of fire of the sanctions. The sanctions also complicate Rosneft’s plans to divest its 49 per cent stake in Nayara.
As part of the sanctions, the price cap on Russian oil was lowered by 15 per cent to $47.6 a barrel from $60. Also, sanctions were imposed on ‘shadow fleet ships’ that are largely used to move crude oil from Russia.
Contesting the sanctions, Nayara reiterated its deep commitment to India’s energy security and long-term growth, announcing plans to invest over ‘70,000 crore in the long term across petrochemicals, ethanol plants, and marketing infrastructure expansion, among other projects.
Nayara has already set up a polypropylene unit in Vadinar, Gujarat, to diversify its product portfolio and become a prominent player in the high-growth petrochemical industry.
Nayara Energy has invested over ‘14,000 crore since August 2017 in various projects in India, including upgrading existing refining facilities, investing in a new petrochemical plant, and other new infrastructure projects.
“Nayara Energy will continue to invest over ‘70,000 crore in the long term towards petrochemicals, ethanol plants, marketing infrastructure expansion, and refinery reliability, including ESG projects,” the statement said. “We are equally committed to community development, with an annual CSR budget of ‘200 crore dedicated to meeting the diverse needs of the communities we serve.” On July 21, Nayara Energy said its operations are closely aligned with India’s national priorities, as it contributes around 8 per cent to the country’s total refining capacity, 7 per cent of India’s retail petrol pump network, and about 8 per cent of polypropylene capacity. It also employs over 55,000 direct and indirect employees across the country.
