Nayara Energy, one of India’s largest private oil refiners, is facing major disruptions after being added to the European Union’s latest round of sanctions. The company, which operates a massive refinery in Gujarat and supplies fuel across the country, is now struggling to secure shipping and payment channels. These challenges are forcing Nayara to seek urgent help from the Indian government to keep its operations running smoothly.
EU Sanctions Create Shipping Nightmare for Nayara
Nayara, which is partly owned by Russia’s state-run oil giant Rosneft (holding 49.13% stake), runs a huge refinery in Vadinar, Gujarat. It processes about 400,000 barrels of oil every day. But now, because of the EU’s actions, the company is finding it very hard to get ships that can carry this fuel. Shipping companies are either cancelling deals or refusing to work with the company. Many are also backing out because insurance for these trips is becoming very hard to get.
The other 49.13% of Nayara is held by Kesani Enterprises, a joint venture led by Italy’s Mareterra Group and Russia’s United Capital Partners. Because of these links, the company was included in the EU’s 18th sanctions package.
The problem is serious. Without ships, Nayara cannot move the fuel it refines to its many petrol pumps across India. The company runs around 6,600 fuel stations. These outlets serve thousands of people daily. With ships dropping out and transport getting blocked, there is growing pressure on the company to keep its supplies going.
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In response, Nayara has turned to the Indian government. It has asked the Ministry of Ports, Shipping and Waterways to step in and help arrange ships that fly the Indian flag. Using locally registered vessels might allow the company to move fuel without running into problems with foreign companies affected by sanctions.
Payments for Crude Oil Also Affected
The EU sanctions are not just causing shipping headaches. They are also making it hard for Nayara to pay for the crude oil it buys. Crude oil is the raw material that is turned into petrol, diesel, and other fuels. Nayara imports a lot of this oil, especially from Russia. But with tighter rules from the EU, many banks are afraid to handle the company’s money transfers.
Because of this, Nayara is now asking Indian banks for help. It wants to route its payments through banks that have little to no link with Western systems. One such bank being considered is UCO Bank. This public sector bank had earlier helped India handle oil deals with Iran when that country faced similar international sanctions. The company hopes that these banks will help it stay clear of trouble while continuing its imports.
The payment issue is serious because if Nayara can’t pay for crude oil, it can’t refine it. That means less fuel for vehicles, homes, and industries in India. While the company has kept supplies steady for now, the ongoing pressure could make things harder in the coming weeks.
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Refinery Output Slashed Amid Pressure
With both shipping and payments under pressure, Nayara has been forced to slow down operations at its Vadinar refinery. This plant is one of the largest in the country and plays a key role in India’s fuel market. Reports suggest that the company has cut down its refining activity to deal with the growing crisis.
Despite these hurdles, Nayara has kept its retail fuel stations in India well supplied. According to recent updates, the company still has enough cash to run its operations for now. But international buyers are beginning to pull back due to the sanctions, which may lead to more financial stress.
The roots of Nayara’s current situation go back to the Ukraine war, which started in 2022. After the conflict began, many Western countries, including those in the EU, started imposing strict sanctions on companies linked to Russia. Nayara’s ownership by Rosneft and other Russian-linked groups placed it under global scrutiny, eventually leading to its inclusion in the latest EU sanctions list.
To make matters worse, the United States has recently announced new tariffs on Indian goods. A 25% duty is already in place and another 25% will be added later in August. These global pressures are adding to Nayara’s challenges and may further complicate its ability to do business smoothly.
For now, Nayara continues to rely on the Indian government’s support to manage its operations during this difficult time.