The Russian energy conglomerate PJSC Rosneft Oil Company has initiated preliminary discussions with India's Reliance Industries Ltd (RIL) regarding the potential divestment of its significant stake in Nayara Energy. The Russian energy giant originally acquired the asset through its US$12.9bn (billion) purchase of Essar Oil in 2017 when the Essar group was in deep financial trouble, subsequently rebranding the operation as Nayara Energy. This development represents a pivotal moment in India's energy sector, as Rosneft seeks to offload its 49.13% ownership in the company that operates one of India's most substantial refining operations and an extensive retail network. The negotiations have gained momentum in June 2025, with reports indicating that discussions have progressed beyond initial exploratory phases, suggesting urgency on Rosneft's part to complete the divestment under current geopolitical constraints.
Nayara Energy has an oil refinery with an annual capacity of 20MT (million tonnes) and an impressive retail presence spanning 6,750 petrol stations across the country. The preliminary discussions between Rosneft and Reliance represent more than a simple asset transfer. For RIL, the Nayara Energy acquisition represents more than capacity expansion; it offers transformational strategic positioning across the energy value chain. The company currently operates twin refineries at Jamnagar in Gujarat with combined annual capacity of 68.2 MT. Adding Nayara's 20MT capacity would create a total refining capability of over 88 MT annually, surpassing IOCL's 80.8MT capacity and establishing RIL as India's dominant refiner.
RIL currently operates only 1,972 petrol stations compared to the national total of 97,366 outlets, representing a minimal market share in fuel marketing. Acquiring Nayara's 6,750 stations would immediately provide substantial retail presence and create the integrated value chain that industry experts consider essential for profitability in the oil sector.
Despite the strategic appeal of the asset, negotiations face substantial hurdles centered around valuation expectations. Rosneft initially approached the market with an ambitious valuation of US$20bn for Nayara Energy, a figure that has encountered skepticism from virtually all potential acquirers.
The valuation disconnect has proven particularly challenging as different potential buyers assign varying worth to the asset components. State-owned enterprises such as the Oil and Natural Gas Corporation and IOCL have expressed concerns about the premium pricing, particularly regarding the retail network valuation. These companies, typically, value petrol stations at approximately Rs3 crore to Rs3.5 crore per outlet, translating to a total marketing network valuation of roughly US$2.5bn to US$3bn, significantly below Rosneft's expectations.
RIL, however, appears willing to consider higher valuations due to the strategic synergies the acquisition would create. The company values the marketing network at approximately Rs7 crore per outlet, reaching around US$5.5 bn for the retail operations alone. When combined with the anticipated operational synergies between RIL's existing Jamnagar refineries and Nayara's Vadinar facility, the total strategic value could justify a more substantial investment.
Rosneft's motivation to divest stems primarily from the constraining effects of international sanctions imposed due to geopolitical tensions. These sanctions have limited the Russian company's ability to fully capitalise on its Indian investments, particularly regarding the repatriation of earnings to Russia.
For potential buyers, Rosneft's preferred acquisition partners would ideally possess substantial international earnings or represent international corporations capable of facilitating rapid overseas financial settlements. RL fits this profile well, given its significant fuel export operations and substantial overseas income streams, making it a particularly suitable candidate for structuring the complex financial arrangements required under the current sanctions regime.
The divestment process has attracted attention from several major players in the global energy sector, each bringing different strategic perspectives and financial capabilities to the negotiation table. Saudi Aramco has emerged as a serious contender, viewing the acquisition as an opportunity to establish meaningful downstream presence in what represents the world's fastest-growing oil market. For Aramco, the world's largest oil exporter, Nayara Energy represents a strategic entry point into India's expanding energy consumption market.
Aramco had previously committed to investing in a massive oil refinery and petrochemicals complex planned by State-owned enterprises in Maharashtra, though that project has faced delays due to land acquisition challenges. Additionally, the company had engaged in extensive negotiations with RIL in 2019 regarding a potential US$15bn dollar investment for a 20% stake in RIL's oil-to-chemicals business, though those discussions ultimately concluded without agreement due to valuation disagreements.
The geographical proximity between Reliance's Jamnagar facilities and Nayara's Vadinar refinery in Gujarat creates additional strategic value through operational synergies. These synergies could include optimised logistics, shared infrastructure utilization, coordinated maintenance schedules, and enhanced bargaining power with suppliers and customers. Industry analysts suggest these operational efficiencies could justify premium valuations that other potential buyers might find difficult to support.
The current ownership structure of Nayara Energy adds complexity to any potential transaction. Beyond Rosneft's 49.13% stake, UCP Investment group, another Russian financial entity, holds 24.5% and is also seeking to exit simultaneously. The remaining ownership includes, surprisingly, Trafigura group, a commodities trader, with 24.5%.
Industry sources suggest that if Rosneft and UCP successfully negotiate their exit, Trafigura may also choose to divest its holdings within months under similar terms. This scenario could potentially result in complete ownership transfer to new investors, fundamentally reshaping Nayara Energy's corporate structure and strategic direction.
