Russian promoted Indian oil refinery posts record profit of about $447 million

India’s Nayara Energy, part owned by Russian oil major RosneftMM, posted a record quarterly profit in April-June as its margins improved due to higher intake of discounted Russian oil and fuel exports.

Nayara posted a net profit of about 35.64 billion rupees($447.5 million) in the June quarter compared to a net loss of 1.39 billion rupees a year earlier, it said in a late evening stock exchange filing on Friday.

Rosneft and Kesani Enterprises Co Ltd, a consortium led by Trafigura Group and Russia’s UCP Investment Group, holds 49.13% stake each in Nayara.

The private refiner’s June quarter profit was also higher than the 10.30 billion rupees profit posted in the entire fiscal year to March 31, 2022.

Refiners in India, which rarely used to buy Russian oil due to high freight costs, are snapping up Russian oil since late February after some western countries and companies shunned purchases from Moscow over its invasion of Ukraine.

Nayara and private refiner Reliance Industries have emerged as a key Indian buyers of Russian oil and both the companies reported profits in June quarter.

In contrast, state retailers posted a net loss during April-June as they sold refined fuels at below market rates in local markets to help the government mitigate inflation impacts.

Nayara, which operates a 400,000 barrels per day Vadinar refinery in India’s Gujarat state, has not been sanctioned as part of the international response to Russia’s ‘special operation’ in Ukraine, but Russian energy giant Rosneft has been.

Since the imposition of Western sanctions against Russia, some top management officials have left the Indian company.

On Friday Nayara announced resignation of Rosneft’s representative Krzysztof Zielicki from its board, and appointment of Andrey Bogatenkov.

Chief financial officer Anup Vikal has also resigned, Nayara said on Wednesday. Last week, it announced resignation of Jonathan Kollek, a nominee of Kesani Enterprises, from its board and appointed Sachin Gupta in his place.

Bogatenkov is vice president for commerce and logistics with Rosneft and Gupta is chief executive of Trafigura India.

Some foreign banks and India’s HDFC Bank have stopped offering trade credit for oil imports to Nayara and some suppliers are seeking payment upfront to avoid problems resulting from western sanctions.

Also, India’s CARE Ratings has placed the long-term ratings of Nayara on ‘credit watch with negative implications’ due to sanctions against Moscow.