India's largest bank suspends Nayara Energy's overseas operations due to risk of sanctions

The State Bank of India (SBI) has suspended trading and currency transactions with Nayara Energy, an oil refining company almost half-owned by Rosneft. The decision was made to avoid possible consequences of sanctions, according to The Economic Times.

‘The bank did this recently, after the introduction of secondary US tariffs, to ensure compliance with international rules. No instructions were received from the government, but each bank has to decide how to deal with these issues, and SBI has done so,’ a source told the publication.

SBI, India's largest lender, has a significant international presence, including branches in the US and Europe. Facilitating transactions by companies with significant Russian involvement exposes it to secondary sanctions, measures that could cut the bank off from key global payment systems or markets.

Earlier, Bloomberg reported that Nayara had begun searching for a new financial partner in India. Due to EU sanctions, large banks have become more cautious in working with the company, so its management asked the country's Ministry of Finance to facilitate cooperation with credit institutions that have weak ties to the global financial system.

One example mentioned was UCO Bank, which already has experience in settling payments for Iranian oil under sanctions in 2018. Nayara hopes that such a bank will be able to ensure payments for imports of raw materials and the receipt of proceeds from exports of petroleum products.

According to the agency, oil supplies to Nayara have now effectively stopped. At the end of August, the company may receive the lowest volumes in its history.

This month, Nayara received only four shipments of russian Urals oil, about 2.9 million barrels. The last of these arrived on 9 August, and according to brokers and analysts Vortexa and Kpler, no new shipments are expected by the end of the month.

As a result, refining at the Vadinara plant fell to about 94,000 barrels per day, compared to almost 366,000 in the third quarter of last year.

Source: LIGA.net, The Economic Times