MUMBAI, Aug 16: Mumbai-headquartered crude petroleum refiner Nayara Energy Ltd, which is part-owned by Russian energy company Rosneft PJSC, is in talks with union finance ministry officials to process payments for Russian crude oil imports, bypassing sanctions by the European Union (EU), according to market sources.
Nayara executives are working on a plan to get government-owned UCO Bank to process payments for imported Russian crude, since the bank had facilitated similar oil trades with Iran in 2018, sources said.
Nayara Energy Ltd is partly owned by Russian energy giant Rosneft PJSC and it has spoken to union finance ministry officials to get UCO Bank on board.
Rosneft PJSC owns a little over 49 per cent of Nayara, while a 49 per cent stake is held by a consortium led by Kesani Enterprises Company and the rest of the shares are held by Indian
retail investors.
The company would like UCO Bank to finance and wire payments for Russian crude oil imports and help it receive payments for refined fuel products which are exported from India.
Nayara has been finding banks reluctant to provide even basic services after the company was sanctioned by the European Union in July and UCO Bank which has very less exposure to global financial markets would be to mitigate the risk of secondary sanctions.
Nayara also expects its troubles to increase after President Donald Trump’s threat to impose a 25 per cent tariff and additional penalties over India’s imports of Russian crude petroleum after Russia attacked Ukraine in 2022, which allowed Indian refiners to benefit from discounted Russian crude.
Nayara has loaded at least two clean-petroleum product (CPP) cargoes after it was sanctioned by
the European Union last month and the company plans to continue its Russian oil imports and refining operations in India.
Most foreign banks have stopped dealing with Nayara, forcing the company to deal through Indian banks, after western sanctions were imposed on Russia and Rosneft, which owns about 49 per cent of Nayara.
While refiners are cautious about sanctions, India and Russia had set up alternatives to western insurance, finance and maritime services in order to conduct their trade in the recent past.
Indian refiners buy Russian crude on a delivered basis with insurance comprising cargo insurance, Protection and Indemnity insurance, besides hull and machinery insurance, arranged by Russian entities. India also accepts Russian insurance.
Earlier, India had devised a mechanism to settle trade with foreign nations in rupee terms through vostro accounts of foreign banks in India. Russia’s Gazprombank had opened a special vostro account with UCO Bank and Russian entities like VTB Bank and SberBank had opened accounts with their own India-based branch offices in the past.
The RBI had also introduced a mechanism for international trade settlements in rupees.
(UNI)
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