Rosneft owns a 49.13 per cent stake in Nayara Energy Ltd, formerly Essar Oil Ltd.
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YORUK ISIK
The EU on Friday imposed sanctions on the Indian oil refinery of Russian energy giant Rosneft and lowered the oil price cap, as part of a new raft of measures against Russia.
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.
“The EU just approved one of its strongest sanctions packages against Russia to date. We’re cutting the Kremlin’s war budget further, going after 105 more shadow fleet ships, their enablers, and limiting Russian banks’ access to funding. Nord Stream pipelines will be banned. A lower oil price cap.” Kaja Kallas, EU High Representative for Foreign Affairs and Security Policy, said in a post on X.
Market limitations
Technically, what this means is that while India will be able to purchase Russian crude oil at a cheaper price, Nayara Energy will not be able to export petrol and diesel to Europe processed from Russian crude. Experts believe the goal is to restrict Russia’s oil revenues while maintaining stability in global energy supplies. However, capping the Russian oil price has proved to be largely ineffective in achieving its intended impact.
The EU will impose a moving price cap on Russian crude at 15 per cent below its average market price. That means a cap of roughly $47.60 per barrel at present, well below the $60 per barrel maximum that the Group of Seven major economies have imposed since December 2022.
According to Rishi Shah, Economics Services Lead at Grant Thornton Bharat LLP, Russian oil companies have consistently demonstrated ingenuity in working around price caps through adjusted shipping premiums, complex insurance arrangements, and transfer pricing mechanisms that effectively allow them to capture higher realised prices even within the official cap framework
On the issue of export of oil products from India, Kallas said: “For the first time, we’re designating a flag registry and the biggest Rosneft refinery in India. EU sanctions mean Nayara cannot export petrol and diesel to European countries.
Shah said that the immediate disruption to refined product exports shouldn’t be underestimated, but long-term contractual obligations worth billions cannot simply be terminated overnight. These create legal and commercial pressures that often find expression through alternative routes—whether via transshipment through third countries, blended products, or modified supply chain configurations that technically comply with sanctions while maintaining commercial flows.
“This reflects a broader market truth: sanctions create significant short-term disruptions and compliance costs, but markets invariably evolve toward new equilibria,” he said.
Published on July 18, 2025
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