In early March 2022, shortly after Russian forces entered Ukraine, workers at a northern English port refused to handle Russian oil shipments bound for the Stanlow refinery, a key supplier of fuel in the UK. Shocked by the invasion, dockers at Ellesmere Port in Cheshire pledged to block such deliveries. Essar, the Indian conglomerate owning the refinery, quickly halted all imports of Russian fuel. However, an examination of Essar’s financial records by the Guardian and investigative group SourceMaterial suggests that financial ties with Russia may not have been severed as promptly. Following the invasion, Essar engaged in intricate offshore transactions that seemingly allowed continued interactions with a sanctioned Russian bank. The company transferred billions in loans from VTB, a state-controlled Russian lender, from Cyprus to a subsidiary in Mauritius, a location not subject to Western sanctions. The involved entities in Cyprus and Mauritius were part of Essar’s UK division, Essar Energy. Essar maintains that UK sanctions did not cover the deal and that it followed all relevant laws after consulting a prominent legal firm. Nevertheless, a top expert indicates the move could signal efforts to bypass sanctions. Cypriot officials, who authorized the transfer, are now investigating potential breaches of EU rules. Experts and lawmakers suggest UK regulators should also review the matter. Despite global isolation of Russia after the 2022 Ukraine attack, India preserved strong relations. In July 2024, Russian President Vladimir Putin awarded Indian Prime Minister Narendra Modi Russia’s top civilian honor. This bond was strengthened by major energy agreements, including those with Essar, controlled by the billionaire Ruia brothers. In 2014, amid Russia’s annexation of Crimea, Essar secured a $1 billion loan from VTB. In 2017, Russian oil giant Rosneft invested $13 billion in Essar’s refining operations, a significant part of India’s energy sector. Essar’s connections reached the West as well. In 2010, to attract international capital, the group listed Essar Energy on the London Stock Exchange. The following year, it acquired the Stanlow refinery for $1.3 billion, which supplies fuel to one-sixth of UK vehicles and nine airports. Prior to the pandemic reducing fuel demand, Essar Energy reported substantial losses. To stabilize, it drew further on Russian financing, with debt to VTB reaching €2.35 billion by 2020. These loans were held in two Cypriot firms, guaranteed by UK-based Essar Energy, per corporate filings. Soon, rising geopolitical strains pitted Essar’s Russian and UK interests against each other, turning the loans into a major challenge. The February 2022 invasion altered the landscape. Russia faced widespread condemnation, and VTB along with its leader Andrey Kostin became targets of international penalties. Essar’s UK operations were among many British firms affected by Russian links. Usually, UK companies with debts to sanctioned entities apply for permission from the Office for Financial Sanctions Implementation to fulfill obligations during wind-down. In April 2022, Essar’s records noted that payments on VTB loans required a special UK government license. When questioned, Essar clarified this was general guidance, not an indication they needed approval, and emphasized UK laws did not apply to the transaction. Ultimately, Essar bypassed UK oversight and obtained Cypriot government consent to relocate the loans to Mauritius, outside sanctions’ scope. The agreement was executed by two subsidiaries of Essar Energy Limited, acting as agents. Prominent sanctions specialists recommend UK authorities probe the setup. Michael Ruck, a partner at law firm K&L Gates, described it as atypical and flagged it for possible sanctions evasion.
