State Bank of India (SBI) has stopped processing trade and foreign currency transactions of Nayara Energy over potential sanctions after US tariff increases late last month. The bank took the call to ensure it doesn't invite US and European Union curbs, a person familiar with the issue said.
"This call has been taken by the bank very recently after the US sanctions to ensure compliance with international rules," said the person cited above. "There has been no government direction, but every bank has to take a call on how to deal with these issues and SBI has done so."
In August 2017, a consortium lead by Russian oil major Rosneft acquired Essar Oil's 20 mtpa Vadinar refinery and renamed it as Nayara Energy. The company imports crude oil from overseas and currently has a market share of about 8% of India's refining output that, at more than over 256 MMTPA, is the second largest in Asia. Nayara also has more than 6,500 fuel pumps across the country.
Nayara, like Reliance Industries, imports crude from abroad and refines it into usable fuel like petrol and diesel for markets in Europe and Middle East besides of course selling it in India.
The company's problems started earlier in July when the European Union implemented its 18th sanctions package against Russia, restricting fuel imports from the Russian market and introducing a $47.6 per barrel price cap on Russian crude.
"These European sanctions imposed on July 18 were the last straw. All banks with international branches and operations have to adhere to the government laws to ensure that they do not attract regulatory scrutiny," said the person cited above.
"The last European sanctions along with the US tariffs imposed after that have made the processing of transactions for Nayara difficult."
"This call has been taken by the bank very recently after the US sanctions to ensure compliance with international rules," said the person cited above. "There has been no government direction, but every bank has to take a call on how to deal with these issues and SBI has done so."
In August 2017, a consortium lead by Russian oil major Rosneft acquired Essar Oil's 20 mtpa Vadinar refinery and renamed it as Nayara Energy. The company imports crude oil from overseas and currently has a market share of about 8% of India's refining output that, at more than over 256 MMTPA, is the second largest in Asia. Nayara also has more than 6,500 fuel pumps across the country.
Nayara, like Reliance Industries, imports crude from abroad and refines it into usable fuel like petrol and diesel for markets in Europe and Middle East besides of course selling it in India.
The company's problems started earlier in July when the European Union implemented its 18th sanctions package against Russia, restricting fuel imports from the Russian market and introducing a $47.6 per barrel price cap on Russian crude.
"These European sanctions imposed on July 18 were the last straw. All banks with international branches and operations have to adhere to the government laws to ensure that they do not attract regulatory scrutiny," said the person cited above.
"The last European sanctions along with the US tariffs imposed after that have made the processing of transactions for Nayara difficult."
