Indian refiner Nayara Energy, controlled by Russia’s Rosneft (49.13%), Trafigura, and United Capital Partners since 2016, has recovered to 75% operating capacity just two months after EU sanctions plunged it into crisis, Bloomberg reported on 29 September 2025.
The rapid recovery came through Indian government support, state-owned bank facilitation of local currency payments, and deployment of shadow fleet tankers—exposing how Russia maintains oil revenues when major partners actively help circumvent sanctions.
The most significant factor in Nayara’s rapid recovery is straightforward: the EU sanctioned the company, but the United States didn’t.
This transatlantic gap creates legal corridors that Indian state institutions exploit with explicit government approvals for state banks, ministry assistance securing tankers, and coordinated workarounds to restore operations.
From crisis to workaround in sixty days
When the EU sanctioned Nayara in July 2025 as part of its 18th sanctions package, the company’s European executives immediately resigned, buyers refused deliveries, and basic software systems froze. By mid-August, Nayara was pleading with India’s government to help secure tankers.
Two months later, Indian state-owned banks, including State Bank of India and UCO Bank, now facilitate rupee-denominated payments that bypass Western financial systems.
Operations at the second-largest Indian facility, 400,000-barrel-per-day Vadinar, are returning to normal capacity.
The facility now runs predominantly on Russian Urals crude—the exact product Russia was forced to export after Ukraine’s refinery strikes destroyed over 1 million barrels per day of processing capacity.
According to Bloomberg, at least one state processor, Hindustan Petroleum Corp., has increased purchases of products from Nayara. The refiner now supplies its network of 6,500 fuel outlets and is rebuilding export operations through floating storage and shadow fleet vessels.
Value transfer despite circumvention
While Nayara processes Russian crude, it captures the $12-19 per barrel refining margins that Russia’s damaged infrastructure can no longer deliver.
The Centre for Research on Energy and Clean Air documented that Russian seaborne crude revenues dropped 12% month-on-month to €170 million daily in August 2025, even as export volumes hit 16-month highs at 3.62 million barrels per day.
Each barrel refined at Vadinar represents value-added processing Russia used to capture domestically.
Rosneft maintains crude export volumes but loses the profitable downstream operations.
Shadow fleet mechanics
Nayara’s recovery strategy relies heavily on Russia’s shadow fleet infrastructure, which Ukrainian military intelligence documented in March 2025 as including 387 tankers, and the EU in July at 444 tankers transporting oil and petroleum products.
Ship-tracking data cited by Bloomberg shows at least four vessels have received Nayara cargo near Oman’s Sohar port since late August. The Wu Tai tanker, previously managed by Mumbai-based Gatik Ship Management—a company that emerged alongside Russia’s shadow fleet buildup after the February 2022 invasion—now operates under Shanghai-based Yue Liang Hu Shipmanagement.
The refiner exported nearly 2.2 million barrels of products in September—less than half the volume sold in the same period last year, when Western exports remained open.
Over half of the amount already loaded this month at Vadinar is idling or involved in ship-to-ship transfers near Sohar.
Limitations remain
Even after meeting with executives, large lenders with overseas exposure, like the State Bank of India, support only domestic payments in Indian rupees. The refiner expects to resume purchases from Saudi Arabia and Iraq within weeks, betting that the absence of US sanctions means there are no real risks.
“India’s refining sector has the resilience to ensure that whatever happening in the geopolitics, we would continue to run at more than 100% capacity,”
Nayara Chairman Prasad Panicker said at an energy conference in New Delhi earlier this month.
Fiscal pressure mounts
According to the Bank of Finland analysis, Russia’s 2025 budget assumed a $70 per barrel export price for Russian crude. However, Russian oil averaged just $63.4 per barrel in August 2025, trading at a $3.7 discount to Brent crude. With Brent futures indicating $64-65 per barrel through 2026, Russian crude would trade around $52-55 per barrel—far below budget assumptions.
Oil and gas revenues constitute approximately 30% of Russia’s federal budget. The lower export prices forced Moscow to dip into its National Wealth Fund, which fell to $35 billion by May 2025 from $135 billion in January 2022.
Effective economic pressure requires better coordination of sanctions and parallel operational campaigns against Russia’s most profitable infrastructure.
Nayara’s recovery proves that evasion of sanctions remains a challenge. Still, it also demonstrates that even successful circumvention cannot repair the deeper damage Ukraine’s refinery strikes continue inflicting on Moscow’s war financing.