**Nayara Energy Seeks Local Banking Support Amid EU Sanctions**
Nayara Energy, an oil refiner based in Mumbai and partially owned by Russian energy giant Rosneft PJSC, is reportedly seeking assistance from the Indian government to establish a relationship with a domestic lender, specifically UCO Bank. This initiative follows the company’s sanctions imposed by the European Union (EU) in July, which have made larger banks more cautious in their dealings with Nayara, according to sources familiar with the situation.
In discussions with officials from the Indian finance ministry last week, Nayara executives expressed the need for a local bank to facilitate financing and processing payments for crude oil imports, as well as to manage payments for exports of refined fuel products. Given the EU sanctions, Nayara may encounter reluctance from some banks to provide even basic services. To mitigate the risk of secondary sanctions, the company is focusing on smaller Indian lenders with limited exposure to global financial markets, with UCO Bank being a potential candidate due to its previous involvement in oil trades with Iran in 2018.
The financial landscape for Nayara could become even more challenging due to potential tariffs from the United States. President Donald Trump has threatened to impose a 25% tariff and additional penalties related to India’s trade ties with Russia. Since the onset of the conflict in Ukraine in 2022, the flow of Russian oil into India has surged, allowing Indian refiners to benefit from discounted crude prices.
Despite these hurdles, a report from the local rating agency CareEdge in July noted Nayara’s low leverage and strong liquidity, highlighting that the company holds cash and equivalents amounting to ₹105.5 billion ($1.2 billion). Exports account for over 25% of Nayara’s business, although direct exports to the EU are minimal. The company, which represents nearly 8% of India’s refining capacity and 7% of its retail fuel network, has been reducing its operational rates at its western India refinery as the sanctions have led to a decline in buyer interest.
Nayara Energy is primarily owned by Rosneft PJSC, which holds just over a 49% stake, while another 49% is owned by a consortium, Kesani Enterprises Co., with the remaining shares held by retail investors.
**FAQ**
**What challenges is Nayara Energy facing due to EU sanctions?**
Nayara Energy is experiencing increased caution from larger banks, making it difficult to secure financing and process payments for crude oil imports and refined fuel exports. The company is seeking support from smaller domestic lenders to navigate these challenges.