Nayara Energy to Temporarily Halt Operations, Impacting India's Refining Capacity
Nayara Energy's Planned Shutdown
Nayara Energy, India's second-largest refinery, is set to suspend its operations for approximately 35 days starting in early April. This shutdown is expected to remove nearly 8% of the country's refining capacity from the market, potentially affecting the availability of domestic fuel. This decision comes in light of the ongoing conflict between the US and Iran, as well as tensions in the Middle East, which have led to a decrease in the availability of oil and gas.
The majority of Nayara's production is directed towards the domestic market, with limited exports following last year's sanctions. A considerable portion of its output is supplied to state-owned refiners, which tend to sell more fuel than they produce. The remainder is distributed through Nayara's extensive network of nearly 7,000 petrol stations.
In a related development, Nayara Energy, backed by Russia's Rosneft, has increased petrol prices by Rs 5 per litre and diesel by Rs 3 per litre due to rising global oil prices. The company has opted to transfer some of the increased input costs to consumers.
Last year, Nayara postponed maintenance work at its Vadinar refinery in Gujarat, which has a capacity of 20 million tonnes per year, due to sanctions imposed by the European Union.
Additionally, three major retailers—Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL)—recently raised the price of premium petrol by Rs 2 per litre and increased the bulk diesel rate for industrial users by approximately Rs 22 per litre. However, the prices for regular petrol and diesel have remained stable.
On the global front, oil prices saw an uptick on Thursday, surpassing the critical $100-per-barrel threshold amid ongoing geopolitical tensions in the Middle East. Brent Crude rose by $1.13, or 1.1%, reaching $103.35 a barrel, while West Texas Intermediate (WTI) increased by $1.08, or 1.2%, to $91.40 a barrel during early trading. This rebound follows a significant decline of over 2% in the previous session, reflecting the volatile sentiment in global energy markets.