Indian refinery partially owned by Rosneft tries to recover after sanctions – Bloomberg

Two months after sanctions plunged Indian refiner Nayara Energy Ltd., partly owned by Russian company Rosneft, into crisis, leading to trade distortions and forcing its European executives to resign, the company’s operations and sales are recovering thanks to government support and workarounds, Bloomberg reports, writes UNN.

DetailsThe refinery, partly owned by Russia’s Rosneft and arguably the most prominent Indian company affected by the comprehensive sanctions, is now working with banks, including the State Bank of India, to simplify local currency payments, according to sources familiar with the situation. Indian lender UCO Bank has already received government approval to work with Nayara Energy Ltd. earlier this month and is expected to manage overseas transactions.

Operations are also returning to normal, allowing the company to move beyond fulfilling its domestic obligations, supplying over 6,500 fuel retail outlets, and to resume its export network with the help of floating storage and a fleet that includes sanctioned vessels, according to vessel tracking data compiled by Bloomberg. At least one state-owned refiner, Hindustan Petroleum Corp., has increased its purchases of petroleum products from Nayara, according to a government source.

The refinery is operating at 75% of its capacity, and this level continues to rise, one source said. The Vadinar refinery, which previously relied on a range of Saudi, Iraqi, and Russian crude grades, now primarily processes Russian Urals crude, as well as small volumes of Indian crude, the source said.

The July announcement of EU sanctions against Nayara, made by EU foreign policy chief Kaja Kallas on X, caught the company by surprise. The company quickly changed leadership and froze even basic software dependent on Western suppliers such as Microsoft Corp.

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Several of the 11 board members immediately resigned, including CEO Alessandro Des Dorides and other EU nationals. The crisis deepened when vessel suppliers such as Great Eastern Shipping Co. terminated contracts after EU-backed P&I insurance clubs ceased insurance coverage. Banks exacerbated the situation.

Not all of Nayara’s problems are behind it.

Even after meeting with executives, major lenders with an overseas presence, such as SBI, only support domestic payments in Indian rupees, sources said.

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The refinery plans to export nearly 2.2 million barrels of petroleum products in September – less than half the volume sold in the same period last year, when exports to the West were still open, according to data compiled by Kpler. More than half of the volume already shipped this month from the western port of Vadinar is idle or involved in ship-to-ship transfers in the Sohar area off the coast of Oman.

Some of Nayara’s petroleum products are being sent to storage in tankers at sea. According to vessel tracking data, since late August, at least four so-called floating storage units at the ship-to-ship transfer point off the coast of Sohar port have received nearly 130,000 tons.

One of the floating storage units, the Wu Tai, was the first to receive a Nayara cargo. It was previously managed by Mumbai-based Gatik Ship Management, which emerged with a large tanker fleet shortly after Russia began building up its shadow fleet following the 2022 invasion of Ukraine.

The Wu Tai, now managed by Shanghai-based Yue Liang Hu Shipmanagement Co., received another batch of Nayara petroleum products from the tanker Varg in late September. The vessel Blue Talu, which is currently departing Sohar and signaling Vadinar, received Nayara-produced diesel in early September, according to vessel tracking data and port agent reports. The tanker was also managed by Gatik in 2023 but changed managers two months later.

To secure future supplies, the refinery has been in talks with Saudi Arabia and Iraq to resume purchases, said a person directly involved in the matter. The company aims to convince sellers that the absence of US sanctions means no real risks, and expects to resume supplies within weeks, the publication writes.

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