EU sanctions on Vadinar refinery may push Nayara to shift exports to Africa, Southeast Asia: S&P Global report
Nayara Energy
's crude sourcing and product exports, particularly jet fuel sales to Europe, with the company now expected to explore markets in Southeast Asia, Africa, and Latin America, according to S&P Global Commodity Insights.
Nayara Energy's
Vadinar refinery
in Gujarat, which has a capacity of 400,000 barrels per day (b/d), has processed an average of 403,000 b/d of crude so far in 2025. Of this, 72 per cent was of Russian origin, data from S&P Global Commodities at Sea showed. The EU, on July 18, banned imports of petroleum products processed from Russian crude and blacklisted over 100 ships operating in the so-called 'shadow fleet.' A six-month transitional period has been introduced, post which EU operators will be prohibited from importing refined products produced from Russian oil, even if refined in a third country.
'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 .
The EU has also revised its oil price cap mechanism, lowering the cap on Russian crude from USD 60/b to USD 47.60/b, effective September 3, and linking future caps to 15 per cent below the average market price of Urals. According to Platts assessments, the Urals grade was trading at USD 58.48/b on July 18.
Export shift and domestic sales
With Europe no longer a viable market for some of its refined products, Nayara may redirect exports to non-EU destinations. According to S&P Global, Nayara has already increased diesel exports to Southeast Asia, Southern Africa, and the Middle East. At the same time, the company has expanded its domestic retail footprint from 6,570 to 6,760 outlets over the past year.
In FY 2023-24 (April–March), 82 per cent of Nayara's diesel and 65 per cent of its gasoline production were sold in the domestic market.
Stake sale complications
The new restrictions may further complicate efforts by Rosneft to divest its stake in Nayara. The 2017 acquisition of Nayara (then Essar Oil) by Rosneft and its partners was valued at USD 12.9 billion and included the 20 million metric tonnes per year Vadinar refinery with a complexity index of 11.8. The refinery is equipped to process heavy crude and produce Euro-5 and Euro-6 grade fuels.
India's response
Reacting to the EU measures, India's Ministry of External Affairs stated on July 18, 'We are a responsible actor and remain fully committed to our legal obligations. We would stress that there should be no double standards, especially when it comes to energy trade.'
While Nayara continues to source crude from countries like Iraq and Saudi Arabia, replacing Russian grades in the short term may be challenging despite a global surplus.
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