Nayara Energy hit by operational delays as sanctions pressure mounts
What's the story
Nayara Energy, one of India's leading oil refiners, is facing trouble in its engineering, procurement and construction (EPC) operations due to new sanctions imposed by the European Union (EU) and the United States. Although Nayara Energy itself has not been sanctioned, the company feels the impact due to Russia's Rosneft holding a 49.13% stake. The sanctions have led companies such as Technip Energies from France and PT Timas Suplindo from Indonesia to withdraw from tenders.
Project setbacks
Withdrawal of contractors
In the past month, Technip Energies and PT Timas Suplindo have opted out of Nayara Energy's EPC tender process. A source told ET that Technip Energies was likely to be involved in the front-end engineering design for Nayara Energy's polypropylene unit but chose not to participate. Reports suggest that EPC contractor PT Timas Suplindo has also opted out of installing a single point mooring system and pipelines at Nayara Energy's refinery in Gujarat.
Strategic shift
Nayara may seek alternative EPC contractors
A senior industry official said the sanctions have impacted Nayara's EPC work and the Mumbai-based company may now look for domestic and international EPC contractors to complete the project. The EU imposed sanctions on Russia on July 18, including restrictions on imports of fuels refined from Russian crude. The US has also imposed tariffs on Indian imports, accusing India of funding Russia's war through its oil purchases.
Future plans
Nayara's long-term investment program
Nayara Energy has launched a ₹70,000 crore ($8 billion) long-term investment program, which includes projects in petrochemicals, ethanol plants, and marketing infrastructure expansion. The company is setting up a 1.5 million tons per annum ethane cracker at its refinery site. Toyo Engineering from Japan is the consulting partner for this petrochemical development project at Nayara Energy.