India has dispatched a shipment of diesel to China for the first time since April 2021, as European Union sanctions against Russia have disrupted the operations of Nayara Energy, a refinery part-owned by Russia’s state-controlled Rosneft.
According to data compiled by Bloomberg from Kpler, port agents, and vessel-tracking services, the tanker EM Zenith departed Nayara’s Vadinar terminal on India’s west coast on 18 July, carrying around 496,000 barrels of ultra-low-sulphur diesel. The departure occurred only hours before the EU announced sanctions on the Vadinar facility as part of its latest measures aimed at tightening restrictions on Russian oil trade.
The shipment’s course changed significantly after leaving port. Initially bound for Malaysia, the vessel reversed direction in the Strait of Malacca and remained offshore for more than 12 days. This delay coincided with reports that several Nayara cargoes had been blocked following the implementation of the EU measures. The EM Zenith has since altered its destination to Zhoushan in eastern China. Nayara has not publicly commented on the matter.
The EU sanctions have also created complications in processing payments for Nayara’s exports. In recent weeks, the company has been requiring advance payments or letters of credit before loading fuel, in an effort to mitigate the risk of non-payment. Additionally, the refinery has scaled back production due to disruptions in crude oil supply.
Sanctions and Trade Diversion
The inclusion of the Vadinar refinery on the EU’s sanctions list last month represents a targeted expansion of measures designed to close remaining channels through which Russian oil products reach international markets. Russian-linked crude and refined fuels have increasingly been routed through third countries, including India, which has emerged as one of the largest buyers of discounted Russian crude since 2022.
By sanctioning Nayara, the EU has effectively extended its restrictions into the refining sector in third countries, potentially influencing trade flows in Asia. Nayara’s ownership structure—Rosneft holds a 49.13 per cent stake—places it directly within the scope of sanctions intended to curb Russia’s ability to monetise its oil production.
With its usual export destinations complicated by the measures, the diversion of the diesel cargo to China suggests a strategic shift. Kpler data confirms that this is the first such shipment from India to China in more than four years. The development also comes at a time when India–China trade relations, although often strained in the political sphere, have shown signs of limited improvement in specific sectors.
Impact on Indian Refining
India’s refining sector has been a key beneficiary of discounted Russian crude over the past two years. However, the reliance on Russian supply has exposed refiners to geopolitical risk. Nayara’s difficulties underline the vulnerability of facilities with Russian ownership stakes to targeted sanctions.
Reliance Industries, owner of the world’s largest refining complex at Jamnagar, has reportedly been considering reducing or halting purchases of Russian crude. While Reliance is not under sanctions, the move would reflect a broader reassessment of risk in the wake of shifting Western enforcement strategies.
Nayara has appealed to the Indian government for assistance in resolving logistical challenges caused by the sanctions, particularly in securing shipping and insurance for refined products. The company’s Vadinar refinery, with a capacity of 20 million tonnes per year, is a significant contributor to India’s petroleum exports, which typically serve markets across Asia and Africa.
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