Russia-backed Nayara Energy, an Indian refinery, faced with European Union sanctions for its procurement of crude from Russia is looking at damage control. Nayara Energy is sending a shipment to China, a first for India since 2021.According to a Bloomberg report, a shipment of Indian diesel is en route to China, marking the first such delivery since 2021. This development comes as Nayara Energy, which has Russian connections, faces uncertainty in its oil product exports due to new European Union sanctions.
The vessel EM Zenith departed from Nayara’s Vadinar terminal carrying approximately 496,000 barrels of ultra-low sulfur diesel on July 18, as reported by Kpler, a port agent document and vessel tracking information gathered by Bloomberg.Also Read | Fresh trouble for Russia-backed Nayara Energy! SBI stops trade & foreign currency transactions of Indian refinery; doesn’t want to risk US tariffs, EU curbsThe ship left just before the EU announced sanctions on the Rosneft-supported refinery, as part of its intensified measures against Russian oil commerce. The ship, originally heading to Malaysia, changed course in the Strait of Malacca and remained anchored for approximately 12 days whilst several Nayara cargoes were affected by EU sanctions. The vessel has since changed its destination to Zhoushan, China, the Bloomberg report said.
Nayara Energy in troubled waters
Recent sanctions have created payment difficulties for Nayara, prompting the company to request advance payments or letters of credit before loading fuel shipments. Additionally, the company had to reduce production at its Vadinar refinery due to disruptions in crude oil deliveries.According to Kpler data, this diesel cargo to China marks the first such shipment from India since April 2021, coinciding with improved diplomatic relations between the two Asian countries.Meanwhile, State Bank of India, India’s largest public sector bank, has discontinued processing international trade and forex transactions for Nayara Energy following recent US tariff increases. According to a source who spoke to ET, this decision was taken to prevent potential US and European Union sanctions. The US administration has implemented a 25% additional tariff on India regarding its Russian crude oil trade.Also Read | ‘China issue more complicated…’: After tariff on India, will Donald Trump impose additional duties on China for Russia oil trade? What JD Vance saidSince July, Nayara Energy has encountered difficulties after the European Union implemented its 18th sanctions package, restricting fuel imports from Russia and setting a $47.6 per barrel limit on Russian crude prices.“These European sanctions imposed on July 18 were the last straw. All banks with international branches and operations have to adhere to the government laws to ensure that they do not attract regulatory scrutiny,” said the person cited above. “The last European sanctions along with the US tariffs imposed after that have made the processing of transactions for Nayara difficult.”“This call has been taken by the bank very recently after the US sanctions to ensure compliance with international rules,” the source told ET. “There has been no government direction, but every bank has to take a call on how to deal with these issues and SBI has done so.”
