In particular, major traders, banks have cut off their business ties with Russian-backed Indian refineries

The logo of Russian oil company Rosneft is seen at the Rosneft Vietnam office in Ho Chi Minh City, Vietnam on April 26, 2018. REUTERS/Maxim Shemetov/File Photo

NEW DELHI, Aug 24 (Reuters) – Several international oil traders and banks have cut ties with Indian refiner Nayara Energy, an affiliate of Rosneft ( ROSN.MM ), because of concerns about Western sanctions over Russia’s invasion of Ukraine, two people with knowledge of the matter said. He told Reuters.

Nayara was not sanctioned per se, but Rosneft was sanctioned in response to what Russia called “special military action” against Ukraine.

The Russian energy giant owns 49% of Naira, India’s second largest private refiner, while a consortium led by Kesani Enterprises Co Ltd, Trafigura Group and Russia’s UCP Investment Group owns 49.13%.

Most trading firms Vitol and Glencore ( GLEN.L ) as well as producers in Canada, Latin America and Europe have refused to sell crude directly for naira, one of the people said.

The sources were not authorized to speak to the media and declined to be identified.

Nayara is currently dependent on state-run Middle Eastern producers, Chinese traders, Russian oil suppliers and domestic crude oil producers at the 400,000 bpd Vadinar refinery in western Gujarat state, he said.

“It’s becoming difficult for the organization,” one source said, noting the crackdown on inventory.

Companies that refused to talk to Naira included Phillips 66 ( PSX.N ), Occidental Petroleum Corp ( OXY.N ), Cepsa ( CPF.GQ ), Equanor ( EQNR.OL ), Gunvor, Koch, Petrogal, Respsol, Shell ( SHEL.L ), Suncor Energy (SU.TO), Ecopetrol (ECO.CN) and TotalEnergies (TTEF.PA), the second person said.

Banks and other firms that have refused to work on new hedging positions for the naira include Citigroup, Morgan Stanley, BNP Paribas (BNPP.PA), JPMorgan, France’s Engie (ENGIE.PA) as well as major banking units of Mitsubishi UFJ Financial Group (8306.T) and Sumitomo. Mitsui Financial Group (8316.T), said.

The firms, companies and banks declined to comment or did not respond to Reuters emails seeking comment.

Nayara, which accounts for 8 percent of India’s refining capacity, said it has long-term relationships with its suppliers, works with a variety of suppliers and has appropriate contracts to buy crude oil.

“In addition to honoring long and short-term contracts, our suppliers are also offering, and we collect crude on competitive terms,” ​​he said in an emailed statement.

Naira has been the buyer of Russian oil at discounted prices, which are banned by some Western companies and countries. Higher Russian oil intake and improved production spreads helped the naira’s quarterly profit rise to 35.6 billion Indian rupees ($446 million) in the April-June period. Read more

However, those results mask concerns about the work environment.

Some foreign banks and India’s HDFC Bank ( HDBK.NS ) have stopped lending to oil-income businesses, banking and industry sources told Reuters in April. Read more

India Care Ratings has put the Naira’s long-term ratings on ‘credit watch with negative implications’ due to sanctions on Moscow. Read more

Some of Nayara’s top management, including Nayara’s chief financial officer, left the company after Western countries began imposing sanctions on Russia. The company did not elaborate on the reasons for the departure.

($1 = 79.7725 Indian Rupees)

Additional reporting by Arati Somasekar, Julia Payne, Mafiana Paraga, Ron Bosso and Oliver Griffin; Editing by Edwina Gibbs

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