Lagatar24 Desk
Mumbai: The latest sanctions by former US President Donald Trump on Russian oil giants Rosneft and Lukoil are set to impact Indian private refineries—Reliance Industries (RIL) and Nayara Energy—raising concerns over earnings and operational disruptions. Analysts expect RIL’s earnings to take a hit of ₹3,000–3,500 crore in EBITDA due to the sanctions.
Reliance’s Supply Deal in Jeopardy
Rosneft currently supplies around 500,000 barrels of crude daily to RIL, accounting for nearly 20–25% of its oil-to-chemicals (O2C) business. With the new restrictions, this supply chain is under threat. Analysts predict a 12% increase in refining costs if RIL is forced to shift to alternative sources. Although the group’s overall EBITDA stands at ₹50,367 crore, the O2C segment contributes ₹15,008 crore. A ₹3,000–3,500 crore impact could still be manageable from a group-level perspective.
Nayara Energy Faces Ownership and Supply Complications
Nayara Energy, in which Rosneft holds a 50% stake, may also struggle to source crude and market refined products. Its Vadinar refinery is already operating at 60–70% capacity due to previous EU sanctions. Further pressure from US measures may cripple operations further, especially in absence of long-term alternatives.
Middle East Crude: A Costlier Substitute
Industry observers note that Middle Eastern oil may serve as an alternative, but at a higher cost. The reduced discounts and supply tightness are expected to spike prices, pushing margins lower. Every $1 drop in gross refining margins could reduce overall earnings by 9–10%.
Public Oil Companies Not Immune Either
Even though state-run companies like Indian Oil, BPCL, and HPCL don’t have formal term contracts with Russia, they are still vulnerable. Roughly 30% of their crude intake has been sourced from Russia post-Ukraine war. The loss of discounts could hurt profitability and trigger a domino effect in pricing and supply management.
