The State Bank of India (SBI) has stopped processing trade and foreign currency transactions of Nayara Energy amid concerns of potential sanctions following recent US tariff hikes. The move is aimed at avoiding possible curbs from the US and European Union, The Economic Times reported citing familiar sources.
SBI made the decision in recent days in response to the latest US sanctions, with the aim of staying fully aligned with international compliance standards. The report noted that the move was an internal policy decision, not prompted by any government directive and reflected the bank’s assessment of how best to handle such situations.
In August 2017, a consortium led by Russian oil major Rosneft acquired Essar Oil’s 20 million tonnes per annum Vadinar refinery and rebranded it as Nayara Energy. The company, which imports crude oil from overseas, commands an 8% share of India’s refining capacity – over 256 MMTPA, which is the second largest in Asia. Nayara also operates more than 6,500 fuel pumps across the country.
Operations and export markets
Like Reliance Industries, Nayara imports crude oil from international suppliers and refines it into fuels such as petrol and diesel for domestic sales and exports to Europe and the Middle East.
Nayara’s troubles intensified in July after the European Union’s 18th sanctions package against Russia came into effect. This package restricted fuel imports from Russia and introduced a $47.6 per barrel price cap on Russian crude.
Sanctions and tariffs tighten the squeeze
The EU’s July 18 sanctions package effectively became the turning point, as banks with global operations must comply strictly with such measures to avoid regulatory action, the report mentioned. Additionally, the combination of these EU sanctions and the subsequent US tariffs has significantly complicated the processing of Nayara Energy’s transactions.