India clears EU-sanctioned Nayara Energy to move petrol, diesel on foreign-flagged vessel; HPCL to benefit

Indian authorities have cleared EU-sanctioned Nayara Energy to deploy four foreign-flagged vessels for moving petrol and diesel along the country’s coast, easing domestic supply disruptions.

However, the private refiner’s non-Russian overseas trade remains stalled due to the unavailability of banking channels.

The Directorate General of Shipping approved the use of four foreign-flagged ships for the coastal movement of Nayara’s fuel output, two of which are already operating, while a third will join soon and a fourth in the coming days, reported PTI, citing officials.

The move restores shipments from Nayara’s 20-million-tonne-a-year Vadinar refinery in Gujarat, which accounts for about 8% of India’s fuel output.

It moves the fuels in ships to key locations in Maharashtra, Mangalore in Karnataka, Chennai, and parts of Andhra Pradesh and Odisha.

Unlike other refiners, Vadinar refinery relies on ships to transport products to nearby ports, from where they are distributed by truck.

Shipowners halted lifting Nayara cargoes and insurers withdrew cover under EU rules, choking domestic deliveries and halting exports. The refinery had to cut runs to match the lower offtake.

Nayara exports about 25–30% of its output, but sales abroad have been suspended as banks refuse to clear payments.

UCO Bank was tasked with facilitating dollar transactions, but its UAE partner Mashreq Bank declined to process Nayara-linked deals, officials said.

Since August, Nayara, unable to buy from other producers such as Iraq or Saudi Arabia, has only sourced crude from Russia using ships arranged by Russian suppliers.

While overseas supply remains an issue, domestic supply issues have been sorted out, officials said adding payments for local purchases are all done in rupee without any hitch.

Hindustan Petroleum Corporation Ltd (HPCL), which relies on Nayara to meet retail demand beyond its own refinery output, is among the main beneficiaries of the restored shipping arrangement.

The resumption comes ahead of the festival season, when fuel demand typically rises.

The EU’s July sanctions package targeted Nayara, where Russia’s Rosneft owns 49.13%, alongside traders and operators of the so-called shadow fleet. The measures also prompted the exit of several European executives from Nayara.

Nayara has called the sanctions unjust and harmful to India’s interests, while Rosneft has condemned them as illegal and a threat to Indian energy security.

The company is also seeking government help to source catalysts and other equipment for maintenance, which has become harder under EU restrictions, reported Reuters, citing people familiar with the matter.