Reliance halts Russian crude at Jamnagar as sanctions bite

Reliance Industries Ltd has halted the use of Russian crude at its giant export-oriented refinery in Jamnagar, drawing a line under one of the most lucrative oil arbitrage trades of the Ukraine war era as US and European sanctions finally bite.

The decision makes India’s biggest private refiner the first major Indian buyer to publicly spell out how it will comply with new US measures targeting Rosneft and Lukoil and fresh EU rules that extend the reach of sanctions to refined products made from Russian oil outside Russia.

Reliance said it stopped importing Russian crude into its Special Economic Zone (SEZ) refinery with effect from 20 November and that, from 1 December, all exports from that SEZ unit would come from non-Russian crude, The Indian Express reported, citing a Reliance spokesperson.

The SEZ refinery is one of two plants at Jamnagar in western Gujarat. Together they form the world’s largest refining complex, processing about 1.7–1.8 million barrels a day of crude.

The SEZ unit accounts for just over half of Reliance’s roughly 68.5 million tons a year of throughput and is overwhelmingly geared to exports, particularly to Europe and the US.

That export focus is what has forced Reliance to move faster than some state-owned peers.

From 21 January, new EU rules will ban imports of petroleum products that are made from Russian-origin crude even if the refining happens in a third country, effectively closing the door on “laundered” Russian oil.

Reliance has also had to contend with a more immediate threat from Washington.

On 22 October, the US Treasury’s Office of Foreign Assets Control put Rosneft and Lukoil, along with a long list of subsidiaries, on its Specially Designated Nationals list under Executive Order 14024.

Those sanctions, which took effect on 21 November after a wind-down period, come with the threat of “secondary” measures against non-US companies deemed to be providing material support or conducting significant Russian energy transactions with the two majors.

For a group that raises capital in global markets and sells into the US and Europe, the risk of being locked out of the dollar system is big.

The company had signed a landmark 10-year supply deal with Rosneft in December 2024 for nearly 500,000 barrels a day of crude, valued at around $13 billion a year and representing roughly half of Rosneft’s seaborne exports.

That agreement is now effectively frozen by the US measures, even though the contract itself has not been publicly repudiated.

Reliance has said that Russian cargoes bought before the October sanctions announcement are still being lifted and delivered.

The last such shipment under pre-sanctions commitments was loaded on 12 November, Reuters reported.

Those barrels, the company has indicated, will be processed in the Domestic Tariff Area refinery that serves the Indian market and the resulting fuels will not be exported.

Russian cargoes arriving on or after 20 November are to be segregated into the domestic refinery stream, with the SEZ unit reserved for non-Russian feedstock.

The shift represents a sharp turn for a company that has been the single biggest beneficiary of Russia’s forced discounting since 2022.

After Europe and other traditional buyers turned away from Russian crude following the full-scale invasion of Ukraine, India stepped in.

Since April 2022, Indian customs data show the country has imported Russian crude worth more than $145 billion, making it the largest buyer of seaborne Russian oil.

Reliance alone booked close to $6 billion in additional refining profits over the past three years by running discounted Russian grades through its complex Jamnagar configuration and exporting diesel, jet fuel and gasoline to Europe and North America, the FInancial Times reported, citing energy consultancy Energy Aspects estimates.

Reliance accounts for roughly half of India’s 1.7 million barrels a day of Russian crude imports, underscoring how central Jamnagar has become to Moscow’s rerouted oil flows.

That dominant role has also made the company the most exposed to secondary sanctions risk, because unlike state refiners that often buy via intermediaries, Reliance has been lifting cargoes directly from Rosneft under term deals.

The external pressure has been building for months.

US President Donald Trump has repeatedly accused India of helping to bankroll Russia’s war by buying cheap oil and in August doubled tariffs on Indian goods to 50%, explicitly linking the move to New Delhi’s Russian crude purchases.

Indian officials have pushed back in public, arguing that the country has a responsibility to secure affordable energy, but behind the scenes refiners have been reviewing contracts and preparing contingency plans since OFAC’s October designations.

About a quarter of the company’s refined product exports go to the EU, according to earlier analysis of customs and company data.

Losing access to that market would undercut the economics of Jamnagar’s export model. The company and brokerage analysts now said that the SEZ refinery will pivot toward a crude slate more heavily weighted to Middle Eastern producers, with some room for cargoes from the US Gulf and West Africa, much as Jamnagar operated before the Ukraine war.

A brokerage note from Kotak Securities suggested the near-term impact on Reliance’s refining margins may be manageable.

Russian Urals and other grades had been trading at steep discounts to global benchmarks in 2022–23; those discounts have narrowed as more buyers emerged and as sanctions channels tightened.

Replacing Russian crude with Middle Eastern barrels at today’s differentials is likely to erode some of the super-normal profits but should still leave Jamnagar running profitably, thanks to its complex configuration and integrated petrochemical units.

The bigger question is how the decision reshapes Russia’s own export map. The Rosneft–Reliance contract represented around 0.5% of global oil supply and roughly half of Rosneft’s seaborne exports.

With that route effectively shut, analysts expect more Russian barrels to be redirected toward China, Turkey and smaller refiners willing to shoulder sanctions risk, or to travel longer routes under opaque shipping and insurance arrangements.

The US Treasury said this week that the Rosneft and Lukoil sanctions are already reducing Russia’s oil revenues and will lower volumes over time.

New Delhi, meanwhile, is trying to show it is not ignoring US concerns.

Earlier this week, Oil minister Hardeep Singh Puri announced what he called the “first structured contract of US LPG for the Indian market”, a one-year deal for 2.2 million tons of LPG from the US Gulf Coast that will cover about 10% of India’s annual imports starting in 2026.

The move is widely read as a political signal that India is willing to tilt part of its energy trade toward the US even as it remains constrained by its dependence on imported oil and gas.

Amid all this, the underlying fundamentals that pulled India into the Russian crude bargain of high demand, price sensitivity and spare refining capacity have not disappeared. But the scope for keeping Russian barrels in the Jamnagar export system has narrowed sharply.