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(Bloomberg) — Russian energy giant Rosneft’s plan to sell its stake in India-based Nayara Energy Ltd. may be imperiled by fresh restrictions from the European Union.
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The refinery, in which Rosneft has a 49.13% stake, will be targetted in the bloc’s 18th sanctions package over Moscow’s invasion of Ukraine, an EU official said in an X post on Friday.
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Rosneft has held talks with Reliance Industries Ltd., owned by billionaire Mukesh Ambani, for a possible stake sale in Nayara, according to a local media report. The sanctions will make it difficult for Reliance to buy a stake in its competitor as it might jeopardize the company’s business in Europe, a region that regularly imports Indian fuels including diesel.
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Nayara operates a 400,000-barrels-per-day refinery and owns nearly 7,000 fuel outlets across India. It is also developing an integrated petrochemicals plant next to its refinery. Reliance Jamnagar processor, the world’s largest refining complex, is within a few kilometers of Nayara’s Vadinar unit.
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Nayara Energy didn’t reply to queries on sanctions. A Reliance spokesperson didn’t immediately comment on the matter.
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The ownership of Nayara is currently split between Rosneft and SPV Kesani Enterprises Co. Ltd., an investment consortium. The remaining shares are held by retail investors.
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Rosneft has been keen to exit its India venture as the company hasn’t been able to repatriate its earnings due to the sanctions, according to local media reports.
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Rosneft has held discussions with several potential buyers, including Saudi Aramco, the Economic Times reported. The Russian energy giant and partners bought Nayara from Essar Group in 2017 for $12.9 billion.
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EU has imposed restrictions on Russian petroleum refined in third countries, a move that could limit Indian fuel exports to Europe. The subcontinent bought 80% of Russian seaborne exports of Urals as of June this year — private refineries dominated this trade — processing them into fuels for export globally including to many across the EU.
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Over time, India has become a crucial source of fuels for countries including the Netherlands, Spain and Romania. Flows have surged since the Russia-Ukraine war in 2022, when Indian refiners started benefiting from cheaper Urals that were being diverted from western markets. Since then, processors in India have become the world’s top buyer of Russian seaborne crude, overtaking China, while sending more products to Europe.
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According to Kpler data, exports of clean petroleum products from India to EU doubled in 2023 to a monthly average of over 200,000 barrels a day versus the year before, with volumes staying high through the middle of this year.
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—With assistance from Serene Cheong and Yongchang Chin.
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