Major traders, banks break business ties with Russia-backed Indian refiners: Report – Times of India

Naira has been a major buyer of Russian oil, which has abandoned the product being discounted by some Western companies and countries.

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New Delhi: Many global oil traders and banks have stopped working with Indian refiners Naira EnergyA Rosneft ally as they are concerned about Western sanctions over Russia’s invasion of Ukraine, two people with knowledge of the matter told Reuters.
Naira has not been sanctioned as part of an international response to what Russia called its “special military action” against Ukraine, but sanctions against Rosneft remain in place.
Russian energy giant owns about 49% of Naira, India’s second largest private refiner, while Kesani Enterprises Co Ltd, led by Trafigura Group and Russia’s UCP Investment Group hold 49.13%.
According to one of the people, most trading firms including Vitol and Glencore as well as producers in Canada, Latin America and Europe have refused to sell crude directly to Naira.
The sources were not authorized to speak to the media and declined to be identified.
He said Naira was now dependent on state-run Middle Eastern producers, sugar traders, Russian oil supply companies as well as local crude oil producers for its 400,000 barrel per day Vadinar refinery in western Gujarat state.
“It is becoming increasingly difficult for the company,” said a source.
The second person said that the companies that have refused to deal with Naira include Philips 66, Occidental Petroleum Corp, Sepsa, Equinor, Gunvor, Coach, Petrogal, Respsol, Shell, Suncor Energy, Ecopetrol and Total Energy. .
He said banks and other firms that have declined to take on new hedging positions for Naira include Citigroup, Morgan Stanley, BNP Paribas, JP Morgan, France’s Angie as well as Mitsubishi UFJ Financial Group and Sumitomo Mitsui. Financial Group’s core banking units.
Trading firms, companies and banks either declined to comment or did not respond to Reuters emails seeking comment.
Naira, which accounts for 8% of India’s refining capacity, said it has longstanding relationships with suppliers, works with a diverse set of suppliers and enters into appropriate contracts for procuring crude.
“In addition to honoring long- and short-term contracts, our suppliers are also offering, and we lift, crude on a spot basis at competitive terms,” ​​it said in an emailed statement.
Naira has been a major buyer of Russian oil, with some Western companies and countries discontinuing the discounted product. Higher intake of Russian oil and better product cracks helped Naira’s quarterly profit climb to a record $446 million in April-June.
However, those results raise concerns about its operating environment.
Some foreign banks and India’s HDFC Bank have stopped offering trade credits for oil imports, banking and industry sources told Reuters in April.
India’s CARE Ratings has placed Naira’s long-term rating on ‘Credit Watch with Negative Implications’ due to sanctions against Moscow.
Some top management officials, including the chief financial officer of Naira, have left the company after the Western countries imposed sanctions on Russia. The company did not elaborate on the reasons for the departure.