Historic Diesel Shipment from India to China Amid EU Sanctions

In a bold move, Russia-backed Nayara Energy, an Indian refinery, has shipped a significant cargo of diesel to China, marking the first such delivery since 2021. This development comes as the company navigates the choppy waters of European Union sanctions targeting its Russian crude oil procurement.

The vessel EM Zenith, carrying approximately 496,000 barrels of ultra-low sulfur diesel, departed from Nayara's Vadinar terminal on July 18. Initially bound for Malaysia, the ship altered its course to Zhoushan, China, following the EU's announcement of sanctions against the Rosneft-supported refinery.

Challenges and Adjustments

Facing payment difficulties due to recent sanctions, Nayara Energy has requested advance payments or letters of credit before loading fuel shipments. The company has also reduced production at its Vadinar refinery, citing disruptions in crude oil deliveries.

This shipment not only highlights the geopolitical tensions affecting global oil trade but also signifies a potential thaw in diplomatic relations between India and China, as this marks the first diesel cargo from India to China since April 2021.

Banking Hurdles

Adding to Nayara's challenges, the State Bank of India has halted processing international trade and forex transactions for the refinery. This decision, aimed at avoiding potential US and EU sanctions, reflects the complex interplay of international trade laws and geopolitical strategies.