Indian Firm Nayara Reportedly Supplies Oil to Russia Amid Crisis

Ukrainian forces have strategically targeted Russian oil installations, resulting in significant fuel shortages across the country. This has been exacerbated by an escalation in assaults on refineries, prompting lengthy queues for petrol. An Indian oil company, Nayara Energy, is said to have dispatched petroleum to Russia, as reported on Wednesday by industry sources speaking to Reuters. At least 60,000 metric tonnes of petrol were dispatched from India to Russia, with two oil tankers carrying between 30,000 to 40,000 tonnes each making the journey.

While Nayara has not confirmed these transactions, Indian Oil Minister Hardeep Singh Puri stated that it is “possible” that fuel of Indian origin was being sold to Russia via international traders, even if Indian firms are not directly exporting to the country.

In recent months, the Ukrainian military has intensified its operations against Russian energy facilities, resulting in severe fuel crises, unprecedented for a nation that traditionally ranks among the largest energy producers globally. Reports indicate that since March, over 50 incidents of Ukrainian attacks on Russian oil-related infrastructures have occurred, with some facilities, such as the refinery in Tuapse, experiencing multiple strikes.

During a meeting with government officials, Russian President Vladimir Putin acknowledged the impact of these strikes, attributing fuel shortages in certain regions to the Ukrainian attacks. Nonetheless, he maintained that these shortages were “not critical” and were temporarily manageable. In contrast, Ukrainian President Volodymyr Zelenskyy remarked that the conflict has reached a point where even Russia, often referred to as a “gas station”, is grappling with fuel scarcities.

Nayara Energy operates India's second-largest private oil refinery located in Vadinar, Gujarat, capable of processing 400,000 barrels of crude oil per day. The company acquired this refinery from Essar in 2015, in a transaction that involved both governmental and private interests, endorsed by Indian Prime Minister Narendra Modi and Russian President Vladimir Putin.

At that time, Putin was looking to reduce the Russian government's ownership in Rosneft, a major state-owned oil firm, which led to Indian public sector firms acquiring stakes in Rosneft. Currently, Nayara is predominantly controlled by Russian entities, with a business model heavily reliant on discounted Russian crude oil.

Notably, the European Union imposed sanctions on Nayara in July 2022, prohibiting the import of petroleum products refined from Russian crude. These sanctions have restricted Nayara’s access to EU shipping insurance and financing services. The EU penalties are part of an extensive sanctions regimen against Russia in response to its 2022 invasion of Ukraine.

In light of these sanctions, Nayara’s refinery has predominantly processed Russian oil, as other suppliers withdrew due to punitive measures. This shift has necessitated a reliance on international traders for crude imports and for the export of refined fuels.

As of June 2023, shipments of crude oil from Russia to India saw a significant increase, driven in part by the waiving of United States sanctions on certain Russian oil deliveries, as per ship-tracking data reported by LSEG and Kpler. This increase in imports occurred following the closure of the Strait of Hormuz amid ongoing conflicts in the region.

One tanker, the Agni, reportedly loaded with petrol from Vadinar and sailing towards Fujairah on June 20, was later tracked moving through the Suez Canal heading north, indicating the complex logistics behind the current oil supply chain amid geopolitical tensions.