Nayara Energy released the trader

Trafigura, one of the world’s largest commodity traders, has sold a 24.5% stake in Indian oil refiner Nayara Energy to Italian energy service company Mareterra Group. The largest shareholder of Nayara is Rosneft. Due to Western sanctions, Trafigura stopped supplying Russian oil to this refinery by May. The trader explains his withdrawal from the project by changing Nayara’s strategy, which involves strengthening its positions in the Indian domestic market. Last year, Trafigura withdrew from another joint venture with Rosneft, Vostok Oil.

Trafigura announced on the sale of 24.5% in Nayara Energy, the largest shareholder of which is Rosneft (49.13% share). The buyer was Hara Capital Sarl (registered, according to Kommersant, in Luxembourg in September 2021), a subsidiary of the Italian investment company Mareterra Group Holding (formerly Genera Group Holding SpA), founded by its head Filippo Ghirelli. Genera, as stated on the company’s website, is an energy service company that finances and implements energy-saving technologies primarily in Italy and other European countries. In January 2021, its controlling stake was acquired by the Swiss investment fund SUSI Partners, which specializes, in particular, in renewable energy projects, with assets of $1.5 billion. Trafigura and Mareterra did not answer Kommersant.

The consortium Kesani Enterprises Company Limited (a joint venture between UCP Ilya Shcherbovich and Trafigura) and Rosneft bought 49.13% each in Nayara in 2016. The value of Nayara’s assets, which now includes India’s second largest refinery (with a capacity of 20 million tons of oil per year), a network of more than 6,000 filling stations, and a deep-water port in Vardinar, was estimated at $12.9 billion (including debt). In addition, Nayara plans to complete the construction of a $750 million propylene plant for 450,000 tons per year in the coming years.

Trafigura explains his exit from the project as a change in strategy aimed at expanding Nayara’s presence in the local market. “Mareterra will support Nayara in its next phase of development, including the successful implementation of the company’s clean energy initiatives, petrochemical expansion and technological innovation,” UCP said.

Under the sanctions against the Russian Federation, the world’s largest traders have stopped buying Russian oil, and banks are refusing to finance such transactions. For example, Trafigura, which was a major supplier of Russian oil to the Nayara refinery, stopped shipments by May, when blocking EU sanctions were imposed against Rosneft. The trader was also involved in the export of oil products from the Nayara plant, sanctions do not prohibit such operations even now. Summer 2022 Trafigura came out from the project with Rosneft – Vostok Oil, having sold its 10% stake to an unknown Hong Kong company Nord Axis Limited.

“Deals with Russian individuals are currently associated with image and sanctions risks, especially in the oil and gas industry,” says K&P.Group partner Irina Chebotareva. Using companies with non-public owners, the ultimate beneficiaries protect their assets from unnecessary attention and potential sanctions in connection with cooperation with Russian companies, she notes. As part of the tightening of sanctions pressure, regulators began to pay attention not only to cases of investment in sub-sanctioned companies, but also to the mixing of investments with sub-sanctioned companies, when investments are made in a neutral structure from a neutral jurisdiction, believes Mikhail Zhuzhzhalov, senior lawyer at Tomashevskaya & Partners: although a neutral joint venture may not formally be sanctioned under the 50% control rule, the regulator may consider that indirectly the Russian sanctioned entity still controls the JV.

Dmitry Kozlov