Microsoft Suspends Services to Rosneft-Backed Nayara Energy

 

Indian oil refiner Nayara Energy sues Microsoft over "abrupt" service suspension linked to EU sanctions, citing a dangerous precedent.

Microsoft Corp. has suspended critical services to Rosneft-backed Nayara Energy, India’s second-largest private oil refiner, prompting the Mumbai-based firm to file a lawsuit in the Delhi High Court. Nayara states Microsoft's decision, based on a "unilateral interpretation" of recent European Union sanctions, creates a "dangerous precedent" and raises "serious concerns" for India's energy ecosystem, intensifying challenges for the EU-sanctioned company.

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Nayara Energy claims Microsoft’s decision to halt services is "abrupt and unilateral," leading to a lawsuit against the tech giant. The Indian refiner asserts that Microsoft’s action is based solely on its interpretation of recent European Union sanctions, even though Nayara’s operations comply with Indian laws and regulations. According to Nayara’s statement, Microsoft is restricting its access to "its own data, proprietary tools, and products — despite these being acquired under fully paid-up licenses." This sudden withdrawal of services is causing operational difficulties for Nayara's 400,000-barrel-per-day refinery on India's west coast, which is critical to the country's energy supply. The company emphasized that its legal action aims to "avoid any disruption in serving its customers and partners," highlighting the potential impact on India's energy sector. Microsoft has not yet commented on the lawsuit or the suspension of services.

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The immediate impact is significant for Nayara Energy, which is already grappling with the repercussions of recent EU sanctions. The sanctions, which claim the refiner's profits support Russia's war in Ukraine, have already led shipowners and oil traders to avoid dealings with the company. The suspension of Microsoft services adds another layer of operational challenge, potentially disrupting internal processes and data management. Nayara argues that there is "no legal reason under US or Indian law for Microsoft to stop its services," given that Microsoft is based in the US, not the EU, and Nayara itself operates in full compliance with Indian statutes. This incident underscores the broader implications of geopolitical tensions and sanctions on global corporate operations and supply chains, potentially affecting critical national infrastructure in non-sanctioning countries.

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Nayara Energy is partly owned by the Russian oil giant Rosneft, which holds a 49.13% stake in the company. This ownership structure has placed Nayara in a difficult position amidst the ongoing conflict in Ukraine and the ensuing international sanctions against Russia. The company was recently hit with EU sanctions, leading to challenges in its shipping and trading operations as various entities became wary of association. This latest development with Microsoft is a direct consequence of the escalating global efforts to enforce sanctions and pressure entities with ties to Russia, regardless of their operational location.

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As of now, Nayara Energy's lawsuit against Microsoft is underway, with the Indian refiner seeking to restore its access to critical services while asserting its compliance with Indian laws. Microsoft has yet to make an official statement regarding the litigation or its decision. The outcome of this legal battle could set a precedent for how global tech companies navigate international sanctions and their implications for clients in non-sanctioning jurisdictions. Experts suggest this case highlights the increasing complexity for companies like Nayara, caught between national regulations and evolving international sanctions, underscoring potential vulnerabilities in global energy supply chains.