Nayara seeks UCO Bank support amid EU sanctions, financing challenges grow.
Company looks for smaller lender to reduce risk of secondary sanctions.
US tariff threats on India-Russia trade may worsen Nayara’s operational strain.
Despite sanctions, Nayara shows healthy liquidity; exports form key revenue share.
Indian oil refiner Nayara Energy Ltd has asked government officials to broker a relationship with a domestic lender like UCO Bank Ltd. This development came after the EU sanctions prompted greater caution among larger banks, as per people familiar with the matter.
Executives at the refiner, which is partly owned by Russian energy giant Rosneft PJSC has conducted talks with officials from Finance Ministry last week, the people said on the condition of anonymity, as quoted by Bloomberg News.
Additionally, the company is seeking a local bank to finance and wire payments for crude oil imports and to assist it in receiving payments for refined fuel product exports, the people said. In July, a ratings company stated that Nayara’s liquidity was healthy.
The oil refiner may find some banks unwilling to provide even basic services after it was sanctioned by the European Union in July. Thereby, the people quoted above said, the refiner is seeking out a smaller Indian lender with less exposure to global financial markets in an effort to mitigate the risk of secondary sanctions.
US President Trump’s threat to impose a 25% tariff and additional penalties over India and Russia’s trade relationship can further compound the company’s challenges. The flows of Russian oil into India surged since Moscow invaded Ukraine in 2022, allowing Indian refiners to be benefited from discounted crude.
A spokesperson from Nayara did not respond to Bloomberg’s email query immediately. Questions sent to the Ministry of Finance also remained unanswered.
According to ship-tracking data, the refiner has loaded at least two clean-petroleum product, or CPP, cargoes since the Mumbai-based refiner was sanctioned by the European Union last month.
Ratings agency CareEdge also cited Nayara’s low leverage and healthy liquidity as positive factors, while stating that the company has cash and equivalents of 105.5 billion rupees ($1.2 billion). Exports still account for more than a quarter of the firm’s business, though direct exports to the EU are “negligible,” the agency’s July release said.
Rosneft PJSC owns just over 49% of Nayara, which accounts for nearly 8% of India’s refining capacity and 7% of its retail-fuel network. Another stake of just over 49% is held by a consortium called Kesani Enterprises Co., and the remaining is owned by retail investors. Currently, the refiner is reducing run rates at its west India refinery after the sanction prompted buyers to stay away.
RBI Eases Vostro Account Opening Norms
The Reserve Bank of India (RBI) has streamlined the process for banks to facilitate cross-border trade transactions in Indian Rupees by removing the prior RBI approval requirement for opening Special Rupee Vostro Accounts (SRVAs).
In addition to that, the central bank has decided to allow Authorised Dealer (AD) banks to open Special Rupee Vostro Accounts (SRVAs) of overseas correspondent banks without referring to the Reserve Bank for approval. As per RBI, the instruction is applicable with immediate effect.
