New Delhi: In a significant escalation of a long-standing dispute, the Indian government has issued a demand of $2.81 billion to Reliance Industries Ltd (RIL) and its partners, BP Exploration and Niko, over allegations of gas migration from Oil and Natural Gas Corporation (ONGC) blocks to RIL’s KG-D6 block in the Krishna Godavari basin. This move follows a recent ruling by the Delhi High Court on February 14, 2025, which overturned an earlier arbitration award that had favored RIL. The dispute, which began in 2016, centers on claims that RIL extracted gas that rightfully belonged to ONGC.
The Ministry of Petroleum and Natural Gas has been pursuing this matter aggressively, initially seeking $1.55 billion in compensation. RIL contested these claims and won an arbitration award in July 2018, which was later challenged by the government. Despite a single judge of the Delhi High Court upholding the arbitration award in May 2023, the government successfully appealed to the Division Bench, leading to the current demand.
RIL has expressed its intention to challenge the latest judgment, stating that it does not expect any financial liability. The company believes the demand and the Division Bench judgment are unsustainable. The dispute highlights the complexities of resource extraction and the legal battles that can ensue over such valuable assets.
The KG-D6 block, located in the Bay of Bengal, has been a focal point of this controversy. Originally, RIL held a 60% interest, with BP holding 30% and Niko holding 10%. Following Niko’s exit, RIL and BP now hold 66.66% and 33.33%, respectively. The government’s stance is that RIL benefited unfairly from gas that migrated from ONGC’s neighboring blocks, a claim RIL has consistently denied.
This legal battle is set to continue, with RIL planning to appeal the decision in the Supreme Court. The outcome will be closely watched, given the significant financial implications and the broader impact on India’s energy sector.
