New Delhi: The Government of India has allowed Russia-backed Nayara Energy to use four foreign-flagged ships for coastal transportation of fuels such as petrol and diesel, easing domestic supply challenges. However, the company’s overseas trade beyond Russia remains stalled due to unavailable banking channels. Efforts are ongoing to resolve the stalled dollar transactions, while domestic supply issues are being managed through rupee payments.

The Directorate General of Shipping has approved the vessels for domestic fuel movement, with two already operational, a third joining soon, and a fourth expected in the coming days. This arrangement is expected to meet the anticipated surge in fuel demand during the festival season.

Nayara’s Vadinar refinery in Gujarat produces around 8% of India’s fuel consumption. Most of this output is shipped along the west coast to key consumption hubs and even to Odisha on the east coast. The supply chain was disrupted after the European Union imposed sanctions on Nayara in July. Shipowners, concerned about secondary EU sanctions, halted shipments from Vadinar, while European-based Protection & Indemnity (P&I) insurance clubs refused coverage for these voyages.

The Vadinar refinery, with an annual capacity of 20 million tonnes, supplies petrol and diesel to Hindustan Petroleum Corporation Ltd (HPCL). Unlike other refineries, Vadinar is not connected to a pipeline network and relies on ships to transport fuel to ports, from where it is distributed by trucks.

The EU sanctions, part of its 18th package against Russia amid the Ukraine conflict, targeted Russian crude imports and companies managing shadow fleet vessels, including Nayara, in which Russian oil major Rosneft holds a 49.13% stake. The restrictions led several European executives, including Nayara’s CEO, to resign and forced the company to reduce refinery output to match limited offtake.

Nayara and Rosneft have criticized the EU sanctions, calling them unjust and detrimental to India’s energy security. DeshGujarat