The Russia-backed Indian refiner, Nayara Energy, is reportedly condemning the recent EU curbs targeting its operations and is weighing potential legal options in response. The EU's sanctions, part of a broader package aimed at increasing pressure on Russia over the war in Ukraine, have sparked concerns about energy security and potential operational instability for the refinery located in Gujarat, India.

Nayara Energy, partly owned by Russian oil giant Rosneft, has become a focal point in the geopolitical crosshairs between Brussels and Moscow. Rosneft holds a 49.1% stake in Nayara Energy. The EU's measures include lowering the price cap on Russian oil exports and restricting funds that could support Moscow's war efforts. EU foreign policy chief Kaja Kallas stated that this marks the first time the EU has designated a flag registry and the largest Rosneft refinery in India for sanctions.

In response to the sanctions, the Indian government has asserted its commitment to energy security and has pushed back against what it perceives as "double standards" in energy trade. An external affairs ministry spokesperson emphasized that India does not subscribe to unilateral sanctions and remains committed to its legal obligations. India has become a critical destination for Russian crude oil, especially after Western nations shunned imports following the conflict in Ukraine in 2022.

The sanctions could have a multifaceted impact on Nayara Energy. The restrictions on products derived from Russian oil may cloud export potential and impact operations. Analysts suggest that these measures may also complicate Rosneft's plans to exit the venture. The sanctions have made the repatriation of profits impossible. Rosneft had initiated discussions with Reliance Industries Ltd to sell its stake in Nayara, but the asking price of $20 billion was a hurdle.

Following the announcement of the sanctions, Nayara Energy has reportedly tightened its sales conditions, now requiring advance payments or letters of credit for naphtha shipments. This shift underscores the wider impact of escalating restrictions against Russia-linked energy as India becomes a key destination for Russian crude, while the EU previously remained a market for products made from that crude.

Rosneft has also voiced its opposition to the EU sanctions, with a company spokesperson labeling them as "unjustified and illegal". The spokesperson argued that Rosneft does not directly receive dividends from Nayara Energy's profits but reinvests them.

The EU's sanctions have been described as both a symbolic and tactical move to limit Russia's options and revenue streams. The revised framework includes a graded pricing band and sanctions on numerous "off-radar" oil tankers, further limiting Moscow's ability to circumvent the price cap using shadow shipping networks.