Major Traders, Lenders Snap Business Ties With Russia-Backed Indian Refiner Nayara: Report

Russian energy giant Rosneft owns about 49 per cent of Nayara which is India's second-largest private refiner, while Kesani Enterprises holds 49.13 per cent

Major international global oil traders and banks have ceased dealing with Indian refiner Nayara Energy, Reuters said in a report on Wednesday. Traders and lenders cut ties with Nayara, an affiliate of Rosneft, as they are worried about Western sanctions over Russia for its Ukraine invasion, sources told the news agency.

According to the report, Nayara per se has not been sanctioned as part of the international response to what Russia calls its "special military action" against Ukraine but sanctions are in place against Rosneft.

The Russian energy giant, Rosneft, owns about 49 per cent of Nayara which is India's second-largest private refiner, while Kesani Enterprises Co Ltd, a consortium led by Trafigura Group and Russia's UCP Investment Group, holds 49.13 per cent.

Sources said that most trading firms, including Vitol and Glencore as well as producers in Canada, Latin America, and Europe have stooped directly sell crude to Nayara.

Nayara is now dependent on state-run Middle Eastern producers, Chinese traders, companies supplying Russian oil as well as local crude oil producers for its 400,000 barrels per day at Vadinar refinery in Gujarat, according to the sources.

A sources said, “It is increasingly becoming difficult for the company,” adding that it has been unable to hedge for cracks and inventory.

Companies such as Phillips 66, Occidental Petroleum Corp, Cepsa, Equinor, Gunvor, Koch, Petrogal, Respsol, Shell, Suncor Energy, Ecopetrol and TotalEnergies have declined to deal with Nayara, another sources said.

While banks and other firms that have refused to work on new hedging positions for Nayara include Citigroup, Morgan Stanley, BNP Paribas, JPMorgan, France’s Engie as well as the core banking units of Mitsubishi UFJ Financial Group, and Sumitomo Mitsui Financial Group, they said.

The trading firms, companies, and lenders either declined to comment or did not respond to Reuters emails seeking comment.

Nayara, which accounts for 8 per cent of India's refining capacity, said it had longstanding relationships with its suppliers, works with a diverse set of suppliers and has appropriate contracts for the purchase of crude oil.

“Apart from honouring the long- and shorter-term contracts, our suppliers are also offering, and we pick up crudes on a spot basis on competitive terms," the refiner said.

Nayara has been a key buyer of Russian oil, snapping up the discounted product shunned by some western companies and countries. The higher intake of Russian oil and improved product cracks helped Nayara's quarterly profit climb to a record Rs 3,560 crore in April-June.