Rosneft Initiates Talks with Reliance Industries for Nayara Energy Stake Sale

In a significant development within the energy sector, PJSC Rosneft Oil Company, a major Russian oil firm, has entered preliminary discussions with Reliance Industries Limited regarding the potential sale of its 49.13% stake in Nayara Energy. This stake encompasses a substantial oil refinery and an extensive network of petrol stations in India, making the deal pivotal for both parties involved. This negotiation, which commenced in June 2025, could potentially enable Reliance to emerge as India's leading oil refiner, surpassing state-owned Indian Oil Corporation (IOC).

Nayara Energy operates a refinery with an annual capacity of 20 million tonnes and manages approximately 6,750 petrol pumps across India. If the acquisition proceeds, Reliance would significantly bolster its position in the fuel marketing sector, where it currently operates only 1,972 petrol pumps out of a national total of 97,366.

According to industry analysts, the talks are still in the early stages, with no assurances that they will culminate in a formal agreement. Valuation issues have emerged as a key point of contention; sources indicate that Rosneft's initial valuation of USD 20 billion for Nayara is viewed as excessively high by potential investors. Reliance's interest hinges on its ambition to expand its refining capacity and fuel retailing presence, which are critical components of its strategic growth objectives.

Mukesh Ambani, Chairman of Reliance Industries, has expressed ongoing interest in various investment opportunities but refrains from commenting on specific negotiations. A spokesperson for Reliance stated, "As a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis."

For Rosneft, the urgency to divest from Nayara stems from international sanctions that have hampered its ability to fully repatriate earnings from its Indian operations. The Russian company had acquired Essar Oil in 2017 for USD 12.9 billion, which was later rebranded as Nayara Energy. Due to these sanctions, Rosneft is exploring buyers who can ensure swift overseas payouts.

Industry sources reveal that Saudi Aramco, the world's largest oil exporter, is also a potential bidder for Nayara, aiming to increase its footprint in India's rapidly growing oil market. However, similar to Reliance, Aramco has expressed concerns regarding the high valuation, which may impede any agreement.

Analysts suggest that the valuation of Nayara could be reassessed given the current market dynamics and the transition towards renewable energy sources, which may deem traditional oil refining as a sunset industry. Both Oil and Natural Gas Corporation (ONGC) and IOC have reportedly found the asking price too steep, which adds another layer of complexity to the negotiations.

Should the acquisition be finalized, it would not only reshape the competitive landscape of India's oil refining sector but also have broader implications for energy policy and market dynamics, particularly as the country seeks to balance its energy needs with environmental sustainability. The outcome of these discussions remains uncertain, but they underscore the complex interplay of geopolitics, market valuation, and the shifting landscape of global energy markets.