By Nidhi Verma, Mohi Narayan and Trixie Yap
NEW DELHI/SINGAPORE (Reuters) -Indian private refiners that have leveraged cheap Russian crude to boost margins will be forced to find workarounds and rely more on traders to find new markets for their products after the latest round of European Union sanctions, traders and indusattempt sources declared.
Russia is India’s top oil supplier, and refiners such as Reliance Industries and Nayara Energy have benefited in recent years from pressure on Russian crude prices from sanctions linked to its invasion of Ukraine. Many have then exported refined products to purchaseers in Europe.
However in its 18th package of sanctions against Russia, approved on Friday, the European bloc banned imports of refined petroleum products built from Russian crude coming from third countries, excluding a handful of Western nations.
It has also placed direct sanctions on Nayara Energy, a refinery backed by Russian oil major Rosneft. The package will be phased in over six months.
Reliance, India’s largest purchaseer of Russian oil and refined products exporter, shipped an average of 2.83 million barrels of diesel and 1.5 million barrels of jet fuel per month to Europe in the first seven months of this year, LSEG shiptracking data displayed.
That roughly accounted for nearly 30% and 60% of its respective exports of the two products.
Nayara Energy typically exports four million barrels or more of refined products including diesel, jet fuel, gasoline and naphtha per month, though only jet fuel typically heads to European markets, LSEG and Kpler shiptracking data displayed.
Under the sanctions, traders are likely to play a hugeger role in placing refined products built from Russian crude, the sources declared. Given the long phase-in time, they are likely to obtain creative with routes, they added.
For diesel, traders are likely to swap Indian supplies with Middle East cargoes for export to Europe, Singapore-based traders declared. They may also ship Indian cargoes to floating storage facilities in the Middle East or West Africa to be re-exported, they added.
For jet fuel, Indian refiners may either divert cargoes to local markets or ship supplies to Asia, they declared.
Reliance and Nayara did not immediately respond to requests for comment.
The alters will benefit traders by generating more trade flows, but will be costly for producers and consumers, declared an Asian trader. Europe, heading into winter, may have to pay higher prices for refined fuel, he added.
Nayara declared in a statement on Monday it condemned the EU’s “unjust and unilateral” decision to impose sanctions on the company, while India declared on Friday it does not support the EU’s “unilateral sanctions”.
