An Indian refinery partly owned by Russia’s Rosneft PJSC has altered its payment terms for oil product sales, requiring prepayment or a documentary letter of credit before loading, following the European Union’s latest round of sanctions targeting Russia-linked energy companies.
According to a revised tender document seen by Bloomberg, Nayara Energy Ltd. is now demanding advance payment or a financial guarantee ahead of a scheduled naphtha shipment next month. This represents a significant change from previous tenders, which did not include such requirements.
The change comes in the wake of new EU sanctions introduced last week. These measures target entities linked to the Russian oil trade and include a lowered price cap on Russian crude, expanded restrictions on refined petroleum products, shipping, and selected financial institutions. The bloc’s intent is to curtail Russia’s capacity to finance its war in Ukraine through energy revenue.
Although Nayara Energy had previously avoided direct sanctions, the recent EU package has extended the compliance risk to companies with Russian ownership stakes. Rosneft currently holds a significant minority interest in Nayara, which operates a 400,000-barrel-per-day refinery and controls close to 7,000 retail fuel outlets across India. The company is also developing an integrated petrochemical complex adjacent to its main refining operations.
India has become one of the primary consumers of Russian crude oil since Western countries began phasing out imports in 2022, following Russia’s full-scale invasion of Ukraine. While India has maintained a policy of non-alignment, its refiners, including Nayara, have benefited from discounted Russian oil redirected from European markets.
Despite not being sanctioned directly, Nayara’s revised payment terms reflect growing concerns among trade partners and banks over the potential consequences of engaging with Russian-affiliated companies. Financial institutions may be unwilling to clear trades involving Nayara, or buyers may fear contractual complications should sanctions enforcement tighten further.
“This underscores how far-reaching the latest tranche of EU sanctions are,” said Zameer Yusof, an analyst at commodity intelligence firm Kpler. He noted that the demand for advance payment or secured credit likely stems from concerns that counterparties could default on tender commitments, or that banking channels may be disrupted.
Requests for comment from Nayara and Rosneft were not immediately answered. However, in a statement issued over the weekend, Rosneft condemned the EU measures as “unjustified and illegal”. The company has previously indicated its intention to divest from Nayara, but the current sanctions environment may complicate any potential transaction.
The situation illustrates the increasing complexity of global oil markets as regulatory frameworks evolve in response to geopolitical developments. Naphtha, the product involved in Nayara’s tender, is a key feedstock for petrochemical production, particularly in the manufacture of plastics and industrial chemicals.
Although the new EU sanctions have not triggered a major price shift in crude futures thus far, traders remain cautious. Market participants are assessing the broader implications of the sanctions regime for supply flows, payment mechanisms, and financial exposure across jurisdictions.
While the EU, the UK, and the US have each pursued sanctions against Russia, American restrictions tend to carry greater extraterritorial weight due to their impact on access to the US dollar-based financial system. Nonetheless, the EU’s inclusion of a company like Nayara—previously left untouched—signals a widening scope of enforcement aimed at limiting indirect support to the Russian economy.
