New Delhi: Uncertainty has deepened over the operations of Nayara Energy’s Vadinar refinery in Gujarat as the United States hardens its position on India’s continued purchase of Russian crude oil. Washington has signalled that trade “penalties” could be re-imposed if New Delhi does not scale back imports from Russia, prompting India to explore diplomatic options for securing limited waivers to keep the refinery running without disruption.
Nayara Energy operates India’s second-largest single-site refinery, with a processing capacity of 20 million tonnes per annum. The facility is designed to handle heavy crude grades and, over the past few years, has relied heavily on Russian oil as its primary feedstock. That dependence has now emerged as the refinery’s biggest vulnerability amid tightening geopolitical constraints.
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The refinery’s majority ownership rests with Rosneft, Russia’s state-controlled energy major. Following the Ukraine war, US sanctions and sustained diplomatic pressure aimed at Moscow have complicated Nayara’s operational outlook and dampened investor appetite. Sector watchers say that while the refinery would ordinarily be considered a valuable asset, the current geopolitical climate makes any change in ownership or strategic restructuring difficult in the near term.
Limited relief under consideration
Energy analysts note that India is not in a position to abruptly halt Russian oil imports, even if it chooses to reduce dependence. Refiners have already booked cargoes for the next eight to ten weeks, and cancelling those contracts is neither commercially nor logistically feasible. As a result, policymakers are considering a calibrated reduction strategy rather than an immediate stop.
The emerging approach involves seeking limited exemptions from the US for Russian crude imports specifically linked to Nayara’s operations, while gradually cutting overall volumes. Officials are also stepping up engagement with Washington to ensure operational continuity at the refinery without triggering punitive trade measures.
At the same time, Indian refiners are assessing alternative sources, including the Middle East and the United States. However, replacing Russian heavy crude is not straightforward. Nayara’s configuration is optimised for specific crude blends, and sourcing equivalent grades at scale poses technical and cost challenges.
Strategic balancing act
Experts underline that India’s oil sourcing decisions are shaped not only by economics but also by strategic autonomy. Maintaining diversified supply lines has been a long-standing policy objective, particularly in a volatile global energy market. Domestic considerations — including fuel price stability and uninterrupted supply — remain central to the government’s calculations.
India has already begun trimming Russian oil purchases. In December 2025, imports from Russia fell to $2.7 billion, the lowest monthly value in three years and nearly 27% lower than in November. Despite the decline, Russia remained India’s largest crude supplier in the current financial year, accounting for 31.5% of total imports.
US imports as a trade lever
Within government circles, there is also growing emphasis on boosting energy imports from the United States to rebalance bilateral trade. Plans to purchase up to $500 billion worth of US goods over the next five years have identified oil, gas and LPG as the quickest avenues to scale up volumes.
Officials argue that increased US energy imports could help offset friction over Russian crude while delivering broader benefits, including access to advanced technology, capital inflows and deeper integration with American markets.
Options before Nayara
For Nayara Energy, the immediate priority is sustaining operations. Three parallel tracks are being pursued: securing approval for limited Russian crude supplies, testing alternative crude blends compatible with existing infrastructure, and enhancing financial and operational flexibility.
Industry experts caution that a complete shift away from Russian feedstock will be difficult in the short term given the refinery’s design. Any meaningful transition would require time, capital investment and stable access to suitable alternative crude grades.
Overall, Nayara’s future appears closely tied to the trajectory of India-US negotiations, global geopolitical developments and evolving energy market dynamics. While near-term uncertainty is likely to persist, policymakers remain focused on safeguarding energy security without undermining diplomatic balance.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
