HDFC, some foreign banks close credit for oil imports by Rosneft-owned Nair

Naira has not been approved as part of the international response to Russia’s invasion of Ukraine, but Russian energy giant Rosneft, which owns 49% of the Indian refiner, has been approved.

To avoid the need for loans to finance foreign business, the Mumbai-headquartered company is selling its more refined fuels in India, two sources said.

All the sources declined to be named as they are not authorized to speak to the media.

Naira did not respond to a request for comment. Rosneft did not immediately respond to a request for comment.

Naira imports crude oil worth about $1 billion each month on average to its 400,000 barrel-per-day Vadinar refinery in India’s Gujarat state, two sources told Reuters.

India’s HDFC Bank and international banks such as Citibank, JP Morgan, Deutsche Bank and Japan’s Mitsubishi UFJ Financial Group have stopped opening and ratifying Letters of Credit (LCs), which are payment guarantees in oil trading for Naira. has a standard form. Sources said.

Citigroup, JPMorgan, Deutsche Bank and Mitsubishi UFJ declined to comment on Monday, while HDFC did not respond to requests for comment.

Kesani Enterprises Company Limited, a consortium led by Trafigura Group and Russia’s UCP Investment Group, is the other major stakeholder in Naira with a 49.13% stake.

Kesani has pledged all his shares in Naira to Russian bank VTB, from which he had taken a loan in 2017 to acquire the Indian refiner, a fundraising document released in August last year showed Naira.

VTB has also been approved.

Two sources said Naira has boosted local sales of its refined fuel this month, which has impacted its revenue as pump prices in India are below foreign rates.

Earlier, Naira had increased its fuel exports to earn more than the strong overseas margins. State-run refiners that dominate Indian fuel retailing are yet to hike oil prices to customers to help the government tackle inflation.

Sources said Naira will have to keep its fuel selling price close to state-refiner rates to be able to sell its products in local markets.

Russia’s invasion of Ukraine, which Moscow describes as a “special operation”, has prompted financial sanctions from the United States, Europe and Britain.

While New Delhi has called for an immediate ceasefire in Ukraine, it has refused to explicitly condemn Moscow’s actions. India has also refrained from voting on several UN resolutions on aggression.

An executive director said, “Since these LCs are routed through foreign banks in countries that have approved, we do not want to take the opportunity to spoil our working relationship, so in some cases we take a more cautious approach. Huh.” Said in an Indian state owned bank.

This source said that his bank has stopped issuing LCs for transactions involving Russia.

India’s CARE Ratings has already put Naira’s long-term rating on ‘Credit Watch with Negative Implications’ due to sanctions against Moscow.

“One can make exceptions for government companies where there is full government support, but in case of private companies it is not worth taking the risk,” said a senior official of another private lender.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.