In a potential shake-up of India’s energy landscape, Russian oil major Rosneft PJSC has entered early-stage discussions with Reliance Industries Ltd (RIL) to divest its 49.13% stake in Nayara Energy, a key player in India’s refining and fuel retailing sector. The move, if finalized, could significantly bolster Reliance’s refining capacity and retail footprint, positioning it ahead of state-run Indian Oil Corporation (IOC) as the country’s top oil refiner.
Rosneft acquired Essar Oil in 2017 for $12.9 billion, rebranding it as Nayara Energy. The company operates a 20 million tonnes per annum (MTPA) refinery in Vadinar, Gujarat, and runs over 6,750 fuel retail outlets nationwide. However, Western sanctions following Russia’s geopolitical tensions have restricted Rosneft’s ability to repatriate earnings from its Indian operations, prompting the firm to explore exit options.
Reliance Industries, led by Mukesh Ambani, is regarded as a strategic fit for Nayara’s assets. With 68.2 MTPA refining capacity at its Jamnagar complex—located near Nayara’s Vadinar refinery—Reliance could potentially surpass IOC’s 80.8 MTPA capacity and expand its fuel retail network from 1,972 to over 8,700 outlets. The acquisition could also create significant operational synergies in refining and distribution.
Rosneft initially valued Nayara at $20 billion, but recent reports suggest the figure has been revised to $17 billion amid global uncertainties. Despite the cut, valuation remains a sticking point. For example, Indian public sector firms like IOC and ONGC have reportedly found the expected valuation too steep. However, Reliance, given the proximity of its infrastructure and integration opportunities, may view the price as more justifiable.
The other stakeholders in Nayara include UCP Investment Group and commodities trader Trafigura, each holding a 24.5% stake. Both parties are believed to be open to selling their shares if agreeable terms are reached.
A successful deal would give Reliance significant strategic advantages: it would become India’s largest oil refiner, expand its control over downstream infrastructure, and strengthen its end-to-end value chain from crude imports to pump sales. The acquisition also aligns with Reliance’s strategy of vertical integration and global energy dominance, especially considering its continued processing of Russian crude and fuel exports to Western nations.
Rosneft’s desire to exit is rooted in its inability to access cash flows due to Western banking restrictions. India remains one of the few sizable markets that continues to source Russian crude, making Nayara’s operations a critical foothold. However, Rosneft may now prefer to monetize its stake while preserving some engagement via crude supply agreements or partnerships.
Other suitors reportedly passed on the opportunity. The Adani Group declined due to its clean energy alignment with TotalEnergies. Saudi Aramco, while evaluating the opportunity, remains cautious due to the high valuation. Additionally, previous talks with Reliance over a $15 billion stake in its O2C business fell through, adding a layer of complexity to any future deal.
Despite being preliminary, industry insiders believe Reliance is best positioned for the acquisition due to operational synergies, logistical benefits, and regional dominance. If the deal proceeds, it could trigger more consolidation in India’s downstream oil sector, influence pricing, and reshape market share in refining and retail.
Market watchers have responded positively, with energy stocks gaining in late June trade. Analysts note the transaction could bring improved efficiency, better market penetration for Reliance, and expanded consumer outreach through fuel retailing.
A Reliance spokesperson commented, “Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations.” Rosneft, on the other hand, has not officially confirmed the discussion but is widely believed to be exploring strategic divestments globally.
The coming months will be crucial in determining whether this transaction comes to fruition. Industry experts suggest that if Reliance is able to negotiate favorable terms, the company could alter the power balance in India’s oil refining and marketing business for years to come.
