The European Union’s newly announced 18th package of sanctions against Russia has sent shockwaves through the global energy sector, with India’s Nayara Energy caught in the crossfire.
The refinery, partially owned by Russian oil giant Rosneft (holding a 49.13% stake), has now been directly targeted for its continued processing of discounted Russian crude—much of which has been re-exported as refined fuels to Europe.
The sanctions, announced last Friday, are designed to undercut Russia’s energy revenues and its ability to fund the ongoing war in Ukraine. However, this marks the first time an Indian refinery has been directly sanctioned, triggering fierce condemnation from both Moscow and New Delhi.
In a strongly worded statement, Rosneft denounced the EU’s sanctions as “unjustified, illegal, and destabilizing”, warning that they pose a direct threat to India’s energy security.
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“The Nayara Energy refinery is a strategically important asset for the Indian energy industry, providing a stable supply of petroleum products to the country’s domestic market. The imposition of sanctions against the refinery directly threatens India’s energy security and will have a negative impact on its economy,” Rosneft said.
The Russian energy major clarified that it holds less than 50% of Nayara shares, does not control its operations, and emphasized that the company is managed by an independent Indian board, fully taxed within India, and reinvests its profits locally into refining, petrochemicals, and retail operations.
Rosneft also accused the EU of violating international law and undermining third-country sovereignty, characterizing the move as part of a broader agenda to destabilize energy markets and engage in unfair competition.
The sanctions had a swift and visible impact on Nayara’s operations. According to ship tracking data and industry sources:
The tanker “Talara”, chartered by BP, left Nayara’s Vadinar port without loading fuel.
A second tanker, “Chang Hang Xing Yun”, chartered by PetroChina, has also withdrawn its plan to load 35,000 metric tons of ultra-low sulphur diesel (ULSD) from Nayara. It is now rerouted to load fuel from Kuwait before heading toward East Africa.
Additionally, Nayara canceled a spot naphtha export tender, reportedly after needing to revise payment terms post-sanctions. Three trade sources confirmed the tender was withdrawn before being awarded.
India’s Ministry of External Affairs (MEA) criticized the EU’s actions as “extraterritorial and unjustified”, arguing that unilateral sanctions imposed outside UN frameworks set a dangerous precedent. The Indian government reaffirmed its stance against aligning with bloc-specific sanctions.
Meanwhile, state-run oil companies in India, which dominate domestic fuel retailing, are now reluctant to engage in new deals with Nayara. According to an official from one of the public sector refiners:
“We are already covered for this fiscal year’s demand. Any new contracts with Nayara will now require government permission, and they may have to offer heavy discounts.”
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Rosneft, along with investment partner Kesani Enterprises, has reportedly been exploring options to divest its stake in Nayara due to the difficulty of repatriating earnings under Western sanctions. Talks have been held with Reliance Industries Ltd and Saudi Aramco, but the new sanctions significantly complicate any potential stake sale.
Experts say Reliance, a competitor and major global refiner, would face reputational and compliance risks if it acquired Nayara under its current status—especially as Reliance continues to export refined fuels to Europe and maintain a strong Western business presence.
Nayara operates one of India’s largest private refineries with a capacity of 400,000 barrels per day, and owns nearly 7,000 fuel stations across the country. It has also been developing an integrated petrochemical complex next to its flagship refinery in Gujarat.
Since the Ukraine war began in 2022, Nayara and other Indian refiners have been buying discounted Russian Urals crude, processing it, and exporting refined products—including diesel and jet fuel—to destinations across Europe, Southeast Asia, and Africa.
According to analysts at Energy Aspects, the sanctions now put at risk an estimated 200,000 bpd of diesel and 50,000 bpd of jet fuel exports from India to Europe.
They also warn that sanctions could lead to credit restrictions from global banks, affecting crude procurement and possibly forcing Nayara to reduce refinery throughput in the coming months.
