Nayara Energy’s Vadinar refinery has received 403,000 b/d of crude so far this year, out of which 72 per cent has been Russian-origin crude grade
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AMIT DAVE
Even as sanctions by the European Union (EU) create significant challenges for Vadinar refinery, the development will propel the Rosneft-backed entity to export products, particularly diesel, to South-East Asia, Latin America and Africa.
That apart, the transition period of six months, after which the 18th round of sanctions by the EU kick-in, will push Rosneft to offload its stake in Nayara Energy, which operates the Vadinar refinery.
“The recent EU sanctions against Rosneft, which owns about 49 per cent of Nayara refinery, are set to create significant challenges for Nayara as it is likely to have a pronounced impact on its jet fuel and kerosene sales, which were primarily being exported to Europe,” said Abhishek Ranjan, South Asia oil research lead at S&P Global Commodity Insights.
Nayara Energy’s 400,000 barrels per day (b/d) Vadinar refinery has received 403,000 b/d of crude so far this year, out of which 72 per cent has been Russian-origin crude grade, according to S&P Global Commodities at Sea.
Ban on Russia
On July 18, the EU banned imports of refined products made from Russian crude oil, revised its oil price cap mechanism, and blacklisted over 100 shadow fleet tankers. The council lowered the crude oil price cap from $60 a barrel to $47.60, effective September 3, 2025.
The next cap is set at 15 per cent below the average market price for Urals and is subject to review every six months.
Platts assessments show Russia’s flagship crude export grade, Urals, has been mostly traded below $60 per barrel since late February and was last assessed at $58.48 on July 18.
For oil product imports, the EU introduced a six-month transitional period, after which EU operators will be prohibited from purchasing, importing or transferring petroleum products obtained in a third country from Russian crude oil.
Sanctions shake-up
Following the EU’s announcement, the Indian government said it does not subscribe to any unilateral sanctions measures.
While EU sanctions may push Nayara Energy to look toward non-EU markets, such as Africa, Latin America and South-East Asia, the private refiner can also consider supplying the displaced volumes to domestic markets, S&P Global Commodity Insights said.
Renewed price cap on Russian oil would further strain Nayara, which has been processing huge volumes of Russian-origin crude. Although Nayara sources crude from Iraq and Saudi Arabia, quickly replacing lost Russian supplies may prove challenging, though a global crude surplus might offer some relief, it added.
While Nayara has been mainly selling jet fuel to Europe recently, it has been redirecting its focus toward increasing diesel exports to Southeast Asia, Southern Africa, and the Middle East.
Nayara has also expanded its retail footprint, increasing the number of outlets from 6,570 to 6,760 over the course of a year, supporting higher domestic sales. In FY24, 82 per cent of its diesel and 65 per cent of its gasoline production were sold domestically, according to S&P Global Commodity Insights data.
In 2017, Nayara, which was then called Essar Oil, closed a $12.9 billion takeover deal by Rosneft and its consortium partners.
As part of the deal, the consortium took over the 20 million tonnes per annum Vadinar refinery, which has a complexity index of 11.8. The refinery is capable of processing some of the toughest crudes and producing Euro-5 and Euro-6 grade oil products.
According to S&P Global Commodity Insights, the ongoing challenges and latest EU sanctions are likely to further complicate Rosneft’s efforts to divest its stake in Nayara.
Published on July 24, 2025
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