New EU Sanctions Derail Rosneft's Plans

On the sale of a stake in an Indian refinery.

New European Union sanctions imposed on an Indian refinery processing Russian oil may prevent Rosneft from getting rid of its stake in it. Russia's largest oil company wants to pull out of a project in India because it cannot repatriate profits from there, wrote The Moscow Times.

The EU has imposed a ban on imports of petroleum products derived from Russian crude and, according to European diplomatic leader Kai Kallas, "for the first time" applied sanctions measures to "Rosneft's largest refinery in India." This is the Vadinar refinery, owned by India's Nayara Energy, in which the Russian company holds a 49.13% stake.

"Rosneft has been in talks about a possible sale of its stake with Reliance Industries, owned by billionaire Mukesh Ambani. But sanctions would make it difficult for Reliance to participate in the deal, as it could jeopardize its business in Europe, where it regularly imports fuel, including diesel, from India, Bloomberg wrote.

Discussions were underway with several potential buyers, including Saudi Aramco, India's Economic Times reported. "Rosneft and its partners bought Nayara from Essar Group in 2017 for $12.9 billion.

The refinery has a capacity of 400,000 bpd and also owns a network of nearly 7,000 fuel outlets across India. Next to its refinery, Nayara is also building a petrochemical complex. A few kilometers away is the Reliance-owned Jamnagar refinery complex, the largest in the world.

According to local media reports, Rosneft is unable to withdraw its share of profits to Russia due to sanctions. In addition, the rupee is a non-convertible currency, and India restricts the withdrawal of capital. Because of this, Russian suppliers initially accumulated billions of dollars in Indian accounts, which they could not repatriate, but then this factor ceased to play a significant role.

Private Indian companies are among the largest buyers of Russian oil in the world. According to Kpler, since the beginning of this year, Reliance has bought 78 million barrels of Urals, or 26.9% of its offshore imports, while Nayara has bought 51 million barrels (17.6%). In total, this is more than what Indian state-owned companies (102 million, or 35.5%) and other countries around the world (58 million, or nearly 20%) have bought.

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