Nayara in UK's crosshairs as Britain targets Russian oil giants

Mumbai-based Nayara Energy Ltd faces fresh sanctions as the UK joined the US and the European Union in implementing measures aimed at cutting revenue flow to Russia over its war against Ukraine.

Britain has chiefly targeted two Russian oil companies, Lukoil and Rosneft, and 44 shadow fleet tankers, to add pressure on Moscow.

Rosneft, a Russian government-backed oil and gas company, owns 49.13% of Nayara Energy, formerly Essar Oil, which is majority-owned by Indian entities. Nayara Energy operates a 20 million-tonne refinery in Vadinar, Gujarat.

In July, the European Union had unveiled sanctions on Nayara in similar measures targeting Russia’s ability to raise revenues.

Speaking to reporters during a trip to the US, Britain's finance minister Rachel Reeves said that apart from launching direct financial attacks on Russia, the UK is ramping up pressure on China and India, which continue to buy oil from Moscow.

“... We are ramping up pressure on companies in third countries, including India and China, that continue to facilitate getting Russia oil onto global markets,” she said.

Which Russian oil companies did Britain target?

Lukoil and Rosneft, and 44 shadow fleet tankers have been targeted by the UK to put more sanctions on Russian oil.

“We are introducing targeted sanctions against the two biggest oil companies in Russia, Lukoil and Rosneft,” Reeves said.

Lukoil and Rosneft are two of the largest Russian oil companies. Rosneft is Russia's leading oil producer, accounting for around 40% of the country's total output, and Lukoil is the second-biggest, with the largest foreign exposure among its domestic peers.

Both the companies were designated under Britain's Russia sanctions laws for what London described as their role in supporting the Russian government.

As per the British government, the two companies are strategically important to Moscow and their business activities were of economic significance to Russia, contributing to state revenues that help sustain its war in Ukraine.

What does this mean for Russia?

As an immediate effect, Lukoil and Rosneft, along with the tankers, will face an asset freeze, director disqualification, transport restrictions, and a ban on British trust services.

The measures taken by Britain will reduce ship and ship insurance availability for Russia, as some volumes of Russian oil were still being transported and insured on their routes to Asia by British-based companies, Reuters reported quoting traders familiar with Russian oil sales.

However, Russia's embassy in London has said that the move would backfire as global energy markets would destabilise and push up costs for British consumers and businesses.

“Contrary to the loud assurances of British leaders, these restrictions will not have any impact on the Russian foreign policy course,” the embassy said in a statement.

The new sanctions target 51 ships, including 44 within the so-called shadow fleet, as well as individuals and entities across sectors including energy and defence.