Mumbai-based Nayara Energy Ltd faces new sanctions as the UK joins the US and European Union in implementing measures aimed at reducing the flow of revenue to Russia over its war against Ukraine.
Britain has primarily targeted two Russian oil companies, Lukoil and Rosneft, and 44 shadow fleet tankers to increase pressure on Moscow.
Rosneft, the Russian government-backed oil and gas company, owns 49.13% of Nayara Energy, formerly Essar Oil, which is majority owned by Indian entities. Nayara Energy operates a 20 million tonne refinery at Vadinar in Gujarat.
In July, the European Union unveiled sanctions against Nayara in similar measures aimed at Russia’s ability to raise revenue.
Speaking to reporters during a trip to the US, Britain’s Chancellor of the Exchequer Rachel Reeves said that in addition to direct financial attacks on Russia, the UK is increasing pressure on China and India, which continue to buy oil from Moscow.
“… We are increasing pressure on companies in third countries, including India and China, that continue to facilitate the delivery of Russian oil to global markets,” she said.
Which Russian oil companies did Britain target?
Lukoil and Rosneft and 44 shadow fleet tankers have been targeted by Great Britain to impose further sanctions on Russian oil.
“We are introducing targeted sanctions against the two largest oil companies in Russia, Lukoil and Rosneft,” Reeves said.
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Lukoil and Rosneft are the two largest Russian oil companies. Rosneft is Russia’s leading oil producer, accounting for around 40% of the country’s total output, and Lukoil is the second largest, with the largest foreign exposure among its domestic peers.
Both companies have been named under UK sanctions laws against Russia for what London has described as their role in supporting the Russian government.
According to the British government, the two companies are strategically important to Moscow and their business activities were of economic importance to Russia, contributing to state revenues that help sustain the war in Ukraine.
What does this mean for Russia?
Immediately, Lukoil and Rosneft, along with the tankers, will face asset freezes, director disqualification, traffic restrictions and a ban on British trust services.
The measures taken by Britain will reduce the availability of ship and ship insurance for Russia, as some volumes of Russian oil were still transported and insured by British-based companies on their routes to Asia, Reuters reported, citing traders familiar with Russian oil sales.
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But the Russian embassy in London said the move would fail because it would destabilize global energy markets and raise costs for British consumers and businesses.
“Contrary to the vocal assurances of British leaders, these restrictions will have no impact on the course of Russian foreign policy,” the embassy said in a statement.
The new sanctions target 51 ships, including 44 in the so-called shadow fleet, as well as individuals and entities across sectors including energy and defence.
