MPs have called for an investigation into Essar Energy, the owner of the Stanlow oil refinery in Cheshire, after it emerged that the company shifted billions of dollars in loans from the sanctioned Russian bank VTB to a subsidiary in Mauritius, where sanctions did not apply. The move occurred in the months following Russia's invasion of Ukraine in February 2022.
According to analysis by the Guardian and SourceMaterial, Essar transferred the loans from Cyprus to a Mauritius-based entity within the group. The loans, which totalled €2.35bn (£2bn), had been provided by VTB, a Kremlin-controlled lender often described as 'Putin's piggy bank'. The Cyprus and Mauritius entities involved included subsidiaries of Essar's UK arm, Essar Energy.
Essar stated that UK sanctions law did not apply to the transaction and that it complied with all applicable sanctions after taking legal advice. However, experts have said the restructuring raises 'red flags' regarding possible sanctions circumvention. The Cypriot authorities are examining whether the transfer violated EU sanctions regulations.
The Stanlow refinery supplies fuel for one in six British vehicles and nine airports. After the invasion, dockers at Ellesmere Port refused to unload Russian oil destined for the refinery, and Essar ceased all imports of Russian fuel. However, the company never sought a licence from the UK's Office of Financial Sanctions Implementation to handle the VTB loans, instead obtaining approval from the Cypriot government.
MPs and experts have urged British authorities to investigate whether Essar's actions breached UK sanctions. The company has maintained that it acted lawfully throughout.
