yum repos

There is absolutely no issue with running OS updates in an instance with internet.

When your instance has no internet access but need to get patches, you'd run into Unable to reach mirror or Network timed out problems. That is because your mirrorlist is accessible over the internet.

Two solutions:

• Use a mirrorList / baseUrl that is accessible over intranet (if possible) Update the values in /etc/yum.repos.d/
• Create a proxy for the existing mirror list and add proxy=http://<proxy>:<port> to /etc/yum.conf