Shippers want to cancel their contracts for Nayara oil. Many things that take place in the field of international trade are hidden from the general public’s view. Millions of barrels of oil are transported across oceans by tankers, billion-dollar agreements are made in private boardrooms, and businesses depend on stable contracts to stay afloat. However, when larger factors rock the foundations of these agreements, occasionally, what happens behind closed doors leaks into the open. Nayara Energy, one of India’s biggest oil refiners, is currently going through a huge transition.
Pressure from EU sanctions breaks shipping contracts for Nayara Energy
The owners of three vessels chartered by India’s Nayara Energy have asked to end their contracts with the company, six sources familiar with the matter said on Tuesday, under pressure from EU sanctions imposed on the Russian-owned refiner. Nayara, majority-owned by Russian entities including oil major Rosneft (ROSN.MM), runs India’s third-biggest refinery and exports refined products and also supplies them domestically.
Fresh European Union sanctions unveiled on July 18 that target Russia and its energy sector over Moscow’s war in Ukraine have been increasingly disruptive to Nayara. Reuters earlier reported it has been forced to reduce operations at its 400,000-barrels-per-day refinery due to fuel storage constraints. India-based Seven Islands Shipping Ltd. and Great Eastern Shipping Co. have asked Nayara to release the three clean product tankers.
Pressure increases on an Indian refinery with ties to Russia
Seven Islands is seeking the release of its medium-range vessels Bourbon and Courage, while GESCO has sought the return of the Jag Pooja, the sources said. The sources declined to be named, as they were not authorised to speak to the media. Mumbai-based Nayara did not immediately respond to a Reuters request for comment. It has previously criticised the EU sanctions, calling them “unjust and unilateral.”
Seven Islands and GESCO did not immediately respond to requests for comment. However, here is a summary of what is actually happening right now:
- Bourbon is anchored near Vadinar port in western India, where Nayara’s refinery is based.
- While Courage and Jag Pooja are floating off Kochi and Ennore ports, respectively, data from analytics firm Kpler showed.
- Another tanker, Sanmar Songbird, was chartered by Indian state refiner Hindustan Petroleum Corp HPCL.NS was scheduled to load gasoline from Nayara.
Nayara’s operations face new difficulties and causing strains
This resistance from its shipping partners causes Nayara even more trouble. The corporation is already having difficulty obtaining payments and clearing certain goods due to the worldwide sanctions climate. Losing shipping partners might result in refined products piling up without ships to distribute them to buyers worldwide or crude oil remaining trapped in storage tanks.
The diversion was due to the sanctions and the lack of available insurance cover for the voyage, they said. HPCL and Sanmar did not immediately respond to requests for comment. India has become the biggest importer of Russian seaborne crude since Moscow launched its full-scale invasion of Ukraine in early 2022. Nayara’s CEO resigned in the wake of the new sanctions, and the company filed a court case in India against Microsoft
The wider energy scene in India may also be impacted by the Nayara crisis. One of the biggest private oil refiners in the nation, Nayara, provides fuel to thousands of petrol stations and commercial customers. The business may restrict gasoline supplies or increase prices for local buyers if it has trouble transporting its oil. Industry watchers caution that smaller energy companies connected to Nayara may also be negatively impacted. For instance, Nayara’s operation may result in fewer contracts or late payments for smaller shipping companies, truck drivers, or storage providers.