India Protests EU Sanctions on Russia Affecting Gujarat Refinery

EU Sanctions Hit Nayara Energy's Refinery in Gujarat, India Pushes Back

The European Union has imposed new sanctions targeting Russian oil exports in an effort to cut off funding for Moscow’s war activities. As part of these measures, Nayara Energy’s refinery in Vadinar, Gujarat, has become the first Indian refinery to fall under Western sanctions. This step is seen as a significant escalation in the EU’s attempt to curtail Russia’s global economic activities, particularly in the oil sector.

EU foreign policy chief Kaja Kallas announced that the EU is, for the first time, designating a flag registry and targeting the largest Rosneft-linked refinery in India. The move is designed to plug loopholes in the existing sanctions regime and to discourage countries outside the EU from acting as backdoors for Russian oil.

India reacted strongly to the announcement, stating that it does not recognize any unilateral sanctions and that such moves violate international legal norms. The Ministry of External Affairs, through spokesperson Randhir Jaiswal, asserted that India takes energy security very seriously as it is essential to meet the basic needs of its citizens. He emphasized that there should be no double standards in global energy trade, subtly criticizing the West for selectively targeting certain countries while ignoring others.

The new EU measures include lowering the price cap on Russian oil, which was previously set at $60 per barrel. This cap was applied to countries outside the G7 group of developed nations, and allowed them to buy Russian oil while still accessing Western services like shipping and insurance. However, falling oil prices in recent months have made the previous cap less effective, prompting the EU to adjust the cap closer to the global market average.

In addition, the EU sanctioned 105 more “off-radar” oil tankers, raising the total to 223 out of a fleet of 400, as part of efforts to stop Moscow from circumventing sanctions using shadow fleets.

Nayara Energy’s Vadinar refinery is a critical asset in India, capable of refining 20 million tonnes of crude per year. It was acquired in 2017 by a consortium led by Russia’s Rosneft, commodities trader Trafigura, and Russian investment firm UCP for $12.9 billion from Essar Oil. Rosneft holds a 49.1% stake in the refinery.

The refinery is heavily dependent on exports to Europe and Africa, as it has a relatively small domestic retail presence—operating just 6,750 fuel stations across India. The EU’s latest sanctions pose a serious threat to Nayara’s operations, possibly leading to reduced exports, operational disruptions, and job losses.

The sanctions also jeopardize Rosneft’s plans to divest from the venture. The Russian oil major has been in discussions with Reliance Industries Ltd to sell its stake, but the high asking price of $20 billion has been a major roadblock. The sanctions further complicate the deal by making profit repatriation nearly impossible, thereby deterring potential buyers.

In summary, while the EU steps up pressure on Russia, India finds itself caught in the crossfire, defending its right to energy trade amid growing global geopolitical tensions.