NEW DELHI: The impact of the European Union’s sanctions on Russian crude oil has started to unfold, with US-based tech giant Microsoft halting its services to India-based Nayara Energy, a company backed by Russian oil giant Rosneft. In response, Nayara Energy has initiated legal action against Microsoft over the abrupt and unilateral suspension of what the company describes as "critical services."
According to Nayara Energy, Microsoft is restricting the company’s access to its own data, proprietary tools, and products—despite these having been obtained through fully paid-up licenses.
On July 18, 2023, the European Union introduced new sanctions package targeting Russia, aimed at further economic pressure. Among the key measures was a reduction of the price cap on Russian crude oil and the imposition of sanctions on Nayara Energy, backed by Russian oil giant Rosneft. This marks the first time that the EU has sanctioned an Indian company in relation to the Russia-Ukraine conflict. Nayara Energy Ltd, formerly known as Essar Oil Ltd, operates a 20-million-tonne-per-year refinery in Vadinar, Gujarat, and manages a retail network of over 6,750 petrol stations across India. Rosneft holds a 49.13% stake in the company.
“This decision, based solely on Microsoft’s unilateral interpretation of recent European Union (EU) sanctions, sets a dangerous precedent for corporate overreach and raises serious concerns regarding its implications on India’s energy ecosystem,” said the company in a press note.
Nayara Energy has filed a petition before the Delhi High Court, seeking an interim injunction and the resumption of services to protect its rights and ensure continued access to essential digital infrastructure. The company pointed out that while the sanctions stem exclusively from the EU, Microsoft—a US based corporation—has chosen to withdraw its services without any legal obligation to do so under either US or Indian law.
Nayara Energy is responsible for 8% of India’s total refining capacity and employs over 55,000 people across direct and indirect roles in the country.
In another development, Nayara Energy's CEO, Alessandro des Dorides, resigned last week. Sergey Denisov, the company's Chief Development Officer, has been appointed as the new CEO.
On July 21, Nayara Energy issued a statement calling the EU’s sanctions "baseless, unilateral, and a violation of international law." The company announced it is exploring legal options to counter the EU's actions and will continue to seek redress.