Nayara's 35-day halt may shave 8% off India refining capacity amid Iran war

New Delhi: Rosneft-backed Nayara Energy plans to shut operations for about 35 days from early April, taking roughly 8% of India's refining capacity offline and potentially tightening domestic fuel supply amid constraints in crude, natural gas and LPG imports due to the Iran war, people familiar with the matter said.

The company had deferred maintenance at its 20 million tonnes-a-year Vadinar refinery in Gujarat -India's second-largest-last year after EU sanctions. European vendors critical for maintenance, including suppliers of chemicals and catalysts, had declined to work with Nayara following the sanctions. Nayara is now set to proceed with the shutdown after completing most pre-turnaround activities, said the people cited above.

Most of Nayara's output is sold in the domestic market, with exports limited after last year's sanctions. A significant share is supplied to state-run refiners that sell more than they produce, with the rest sold through Nayara's network of nearly 7,000 petrol pumps.


Nayara did not respond to ET's query. However, a source close to the company said: "Nayara has adequate buffer and product reserves during this shutdown period to ensure the fuel stations are adequately stocked and that there is no disruption". Refinery shutdowns are routine, with other refiners typically adjusting to maintain supplies. However, with crude imports down about a fifth and LPG supply 'worrisome', the outage of a large refinery could strain domestic availability, an industry executive said.

Refined products such as aviation turbine fuel (ATF), petrol and diesel have become costlier in global markets, while retail fuel prices in India remain unchanged. This has led to losses in the retail business for both state-run and private refiners, which are paying higher crude costs.