Blow to Indian refiners as US sanctions key Russian firms

NEW DELHI: Billionaire Mukesh Ambani’s Reliance Industries Ltd, India’s largest buyer of discounted Russian oil, plans to scale back imports of Russian crude oil following fresh US sanctions on Moscow-linked firms, sources said. State-run refiners, however, may continue purchases through intermediary traders for now, industry officials said.

Reliance, which operates the world’s largest single-site oil refining complex at Jamnagar in Gujarat, purchased about half of the 1.7-1.8 million barrels per day of discounted Russian crude shipped to India.

The company refines the crude into petrol, diesel and aviation turbine fuel (ATF), a large share of which is exported to markets such as Europe and the United States at market prices, generating strong margins.

All this may change after US President Donald Trump imposed sanctions on Open Joint Stock Company Rosneft Oil Company (Rosneft) and Lukoil OAO (Lukoil) – Russia’s two largest oil companies that he accuses of helping fund the Kremlin’s “war machine” in Ukraine. The two companies together export 3.1 million barrels of oil per day.

Rosneft alone is responsible for 6 per cent of global and nearly half of all Russian oil production.

The sanction means that no entity, American or foreign, can have any commercial dealings with the sanctioned Russian companies. Violators face civil or criminal penalties.

Reliance, which has signed a 25-year deal to buy up to 500,000 barrels of crude oil per day (25 million tonnes in a year) with Rosneft, will now reduce and potentially halt all purchases from Russia, three sources with knowledge of the matter said.

The company has huge business interest in the US and cannot risk attracting scrutiny, they said. Reliance, which

bought an estimated $35 billion worth of Russian oil since the start of the Ukraine war in February 2022, started “recalibration” of its imports soon after the recent European Union adopted its 18th package of sanctions against Moscow in late July this year.

Transactions involving the two sanctioned Russian firms need to be wound down by November 21.

Reliance did not respond to emails seeking comments. The other company to be hit hard by the US sanctions is Nayara Energy. The firm, in which Rosneft holds a 49.13 percent stake, has been entirely reliant on Russian crude supplies since the EU imposed sanctions against it in July. Nayara did not respond to an email sent for comments.