Nayara Energy may have to trim production until it finds alternative crude supply: Analysts

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• Nayara Energy may cut refinery output to 60-80% due to Russian crude problems.
• Switching from cheap Russian to costly Middle East oil may reduce margins.
• EU sanctions push Nayara to find new export markets and crude sources.

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Nayara Energy may have to operate its about 400,000 barrels-per-day refinery in Vadinar, Gujarat, at lower utilisation in the near term as its heavy dependence on Russian crude oil makes it difficult to quickly secure alternative supplies, analysts said.

The refinery, which benefited from discounted Russian barrels over the past two years, is estimated to be running around 60–80 percent capacity, or roughly 240,000–320,000 bpd, as sourcing, logistics and insurance constraints slow the shift to non-Russian crude, analysts said.

“It all depends on how quickly alternative crude can be sourced, as ordering, logistics and insurance are planned well in advance,” said Bhavik Patel, senior analyst at Tradebulls Securities.

“From the earlier utilisation of 80–90 percent, production may remain closer to 60–80 percent in the near term,” said Patel.  He added that moving away from discounted Russian crude would also pressure refining margins, as alternative supplies from the Middle East are priced closer to global benchmarks, reducing the cost advantage Nayara previously enjoyed.

As of Jan 23, Nayara has imported 469 thousand barrels per day (kbd) of crude from Russia, according to Kpler data.  Its imports rose triple digits in 2023, when it imported 226 kbd of crude from the region, followed by 273 kbd in 2024 and 302 kbd in 2025, data showed.

The company's Middle East crude imports have steadily declined since 2017, from 185 kbd in 2017 to 71 kbd in 2025, a shift that coincides with Rosneft’s acquisition of Nayara Energy in August 2017.

"Until now, the refined Russian crude was exported to Europe but with EU sanctions last year, they have shifted exporting to Africa and Latin America. Nayara refinery will now face  forced cuts in refinery runs (owing to less access of Russian crude) and export market constraints (owing to sanctions). Its refining margin will also decrease because now it will have to source crude from Middle East at a higher price, compared to the discounted offer from Russia. A long-term tilt to diversification could stabilise supply but make sourcing more expensive than cheap Russian barrels," said Patel.

India’s imports of Russian oil are expected to drop by about half from already weaker recent levels, Bloomberg reported on February 10, citing sources.

However, legal experts claim that since there is an absence of government notification or any formal announcement, Nayara could continue with the crude purchase from Russia.

"If the government were to formally halt Russian oil imports, it would need to issue a notification under the Foreign Trade (Development and Regulation) Act, 1992, explicitly prohibiting such imports and defining the scope of the restriction", said Anand Shrivastava, Partner at Sagus Legal.

Mumbai-based Nayara is a key player in India's fast-growing fuel sector, accounting for 8 percent of refined products output and operating more than 6,500 gas stations.

It reported a 12 percent jump in revenue in FY25 at Rs 156,030.5 crore, according to Tracxn data. Its profit jumped 31 percent to Rs 12,321 crore in the period.