Indian authorities have cleared EU-sanctioned Nayara Energy to use four foreign-flagged ships for coastal transportation of fuels such as petrol and diesel within the country, but its non-Russian overseas trade remains stalled due to the unavailability of banking channels.
The Directorate General of Shipping has approved four foreign-flagged ships being used for the coastal movement of fuel produced by Nayara and efforts are being made to resolve the stalled dollar trade, government officials said.
Nayara Energy did not reply to an email sent for comments.
Nayara's Vadinar Refinery in Gujarat makes about 8 per cent of all fuel consumed in the country. Most of this was shipped from Gujarat to key consumption hubs along the west coast, reaching as far as Odisha on the east.
This supply route was disrupted after the European Union in July imposed sanctions on Nayara. Shipowners wary of attracting secondary EU sanctions halted lifting of products from the Vadinar refinery. Shipping companies also were unable to secure insurance coverage for the voyages from Protection and Indemnity (P&I) clubs, most of which are based in Europe.
While this stalled domestic supplies, Nayara's limited exports - about 25-30 per cent of all products it made - also came to a grinding halt as banks refused to process payments for such sales. Banks also shied away from giving Nayara dollars to help it procure crude oil, which is converted into fuels such as petrol and diesel at its refinery.
In the absence of banking channels and shipping restrictions, Nayara has since August only sourced crude oil from Russia in ships arranged by Russian suppliers. It hasn't been able to buy crude oil from other suppliers such as Iraq and Saudi Arabia.
Officials said UCO Bank was tasked with establishing a mechanism to facilitate dollar payments for Nayara's crude imports and fuel exports. But the bank has expressed its inability to proceed after its UAE partner, Mashreq Bank, refused to process any Nayara-linked transactions.
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.
Nayara, which owns a 20 million tonnes a year oil refinery at Vadinar in Gujarat, is a major supplier of fuels like petrol and diesel to Hindustan Petroleum Corporation Ltd (HPCL). 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 is not connected to a pipeline network that delivers fuel directly to consumption centres. Instead, the company relies on ships to transport products to nearby ports, from where they are distributed by truck.
This supply chain was disrupted after EU sanctions.
The Directorate General of Shipping (DG Shipping), the apex regulatory body for the maritime sector in India, has approved four foreign-flagged ships being used for the coastal movement of fuel, officials said.
HPCL sells more fuel through its retail network than the products it makes at its refineries. It makes up the shortfall through sourcing from Nayara.
The shipping arrangement now in place will help tide over the surge in demand anticipated in the ensuing festival season, they said.
Two ships are already moving products for Nayara and a third is joining soon. The fourth vessel is likely to come in over the next few days.
In response to the continuing Ukraine war, the EU in July banned imports of petroleum products made from Russian crude starting in January 2026 and lowered its oil price cap. It sanctioned Russian and international companies managing shadow fleet vessels, traders of Russian crude oil, and a major customer of the shadow fleet - the Vadinar refinery, where Russian oil giant Rosneft holds a 49.13 per cent stake.
Nayara had to cut down run-rate at the refinery to match the offtake.
EU sanctions had forced about half a dozen company executives, including its CEO, all European nationals, to resign from the company.
Nayara had previously denounced the latest EU sanctions against it as unjust and harmful to India's interests, and said it was studying legal options.
Rosneft too had condemned sanctions on Nayara Energy as unjustified, illegal, and described them as a direct threat to India's energy security.
The European Union's 18th package of sanctions against Russia over its war with Ukraine was approved in July with a view to weakening its revenue sources. Nayara Energy was one of the companies that were sanctioned.
Rosneft owns a 49.13 per cent stake in Nayara Energy Ltd, formerly Essar Oil Ltd. Nayara owns and operates a 20-million-tonne-a-year oil refinery at Vadinar in Gujarat, as well as over 6,750 petrol pumps.
Besides Rosneft, an investment consortium SPV, Kesani Enterprises Company, holds another 49.13 per cent stake in Nayara. Kesani is owned by Russia's United Capital Partners (UCP) and Hara Capital Sarl, a wholly-owned subsidiary of Mareterra Group Holding (formerly Genera Group Holding S.p.A.).
Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.