Microsoft has suspended all services to Nayara Energy’s Vadinar refinery, a move triggered by the European Union’s latest round of sanctions targeting Russian-aligned businesses.
Nayara, majority-owned by Russia’s Rosneft and known for operating India’s third-largest refinery, has now been caught in a geopolitical crossfire that’s swiftly altering operational, technological, and legal landscapes for the country’s strategic energy assets.
The latest wave of EU sanctions, announced on July 18, 2025, expanded measures against the Russian oil sector and for the first time, extended restrictions to third-country refineries with Russian links specifically designating Nayara’s Vadinar facility in Gujarat. The measures include asset freezes, a reduction in the oil price cap from $60 to $47.60 per barrel, severe curbs on shipping and insurance, and broad bans on importing petroleum products produced from Russian crude even if refined in India.
For Nayara, which sources a significant portion of its feedstock—up to 72% from Russia, these sanctions have led to widespread disruption. Within days, major shipping lines asked to terminate their contracts, and international oil traders became wary of handling Nayara’s products. The company was forced to reduce operations, running the 400,000 barrel-per-day (bpd) refinery at as little as 70% capacity in July, compared to over 100% utilization before the sanctions.
Microsoft’s decision to withdraw its services, including critical cloud infrastructure, Outlook email, and Teams messaging despite services being fully paid-for has amplified Nayara’s woes. Employees lost access to key communication tools, with no ability to retrieve historical emails and documents stored on the tech giant’s servers. This abrupt suspension has prompted Nayara to file for injunctions and seek legal redress in Delhi High Court, arguing the action was “unilateral, without prior notice, and sets a worrying precedent for global corporate overreach"
Nayara and Rosneft have sharply criticized the EU's move, labeling it as “unjust and unilateral” and an infringement on Indian sovereignty. The Indian government, while reiterating its commitment to legal obligations, has rejected the legitimacy of “unilateral sanctions,” emphasizing the primacy of energy security for its citizens.
The Nayara-Microsoft case underscores how technological dependencies can become flashpoints in international sanctions disputes. While Nayara’s legal challenges to Microsoft’s exit are ongoing, the episode serves as a warning to other firms with cross-border operations involving sanctioned entities. The disruption also prompts discussions on digital sovereignty, data portability, and the strategic vulnerabilities of relying on global cloud service providers.
