Indian Refiner Tightens Trade Conditions After Latest EU Sanctions on Russia

An Indian oil refinery partially owned by Russia’s Rosneft has revised its payment conditions for crude oil transactions, following the European Union’s latest round of sanctions targeting Russia’s energy sector.

Nayara Energy, a private Indian refiner with significant links to Rosneft, has begun requiring prepayment or an irrevocable letter of credit prior to shipment of crude oil. According to a report by Bloomberg, the decision stems from heightened concerns among financial institutions and trading partners after the EU adopted fresh restrictions against firms with Russian ownership or operational ties.

While Nayara itself is not subject to EU sanctions, the tightening of compliance requirements is reportedly affecting its access to international finance and trade instruments. In particular, EU sanctions introduced earlier this month have expanded constraints on the import and transportation of Russian crude oil and petroleum products. These measures are aimed at further isolating Russia’s energy exports in response to its ongoing war against Ukraine.

Previously, Nayara’s tenders did not stipulate upfront payment or secure financial guarantees. The new conditions mark a departure from standard practice and appear designed to mitigate exposure to banks wary of violating secondary sanctions or facing reputational risk. The company’s buyers are now compelled to provide financial guarantees before any cargo leaves port.

India has emerged as one of the principal importers of Russian crude since the onset of Russia’s full-scale invasion of Ukraine in February 2022. Refineries in India have taken advantage of discounted Russian barrels, redirected from Western markets following the imposition of a G7 price cap and maritime restrictions. Nayara, with a refining capacity of 20 million tonnes per year, has played a central role in this supply shift.

At the same time, Nayara continues to export a substantial volume of refined products to European markets. Although EU sanctions have so far avoided directly targeting Nayara, the company’s Russian ownership stake—Rosneft holds approximately 49.13%—has drawn increasing scrutiny.

Analysts suggest that the shift to prepayment may signal a broader trend affecting companies with partial Russian ownership. “This illustrates the far-reaching consequences of sanctions,” said Zamir Yousuf, an analyst at commodity intelligence firm Kpler. “Banks are becoming more cautious, and companies are adjusting their commercial practices accordingly.”

Rosneft, for its part, has criticised the sanctions as “unjustified and unlawful”, and has announced its intention to divest from Nayara. However, observers note that the new restrictions may complicate any such exit. A sale of Rosneft’s stake would likely require regulatory approval in India and might be impeded by compliance concerns among potential buyers.

The EU’s latest sanctions package is part of its ongoing effort to erode Moscow’s energy revenue streams. Brussels has maintained that curbing Russia’s ability to finance its war machine remains a priority, even as global oil prices have shown little immediate reaction. Crude benchmarks remain broadly stable, with traders awaiting clearer signals on the enforcement and practical impact of the new measures.

Nonetheless, market participants are closely monitoring the fallout for global fuel flows. Indian refineries, including Nayara and state-run Indian Oil Corporation, have become key players in a shadow trade of Russian oil, blending and reselling refined products on the international market. The EU sanctions are designed in part to prevent circumvention of existing restrictions through such practices.

If financial pressure on Nayara intensifies, the firm may face growing difficulties in accessing letters of credit or conducting dollar-denominated transactions. This, in turn, could lead to reduced flexibility in procurement and sales, potentially affecting supply chains in both Asia and Europe.

It remains to be seen whether other refiners with Russian shareholding will adopt similar commercial measures. However, the move by Nayara is seen as a pre-emptive step to insulate itself from secondary risks, particularly in light of increased due diligence by banks and compliance departments globally.

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