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Informist, Tuesday, Dec. 2, 2025

 

NEW DELHI – The Supreme Court Tuesday listed pleas by Reliance Industries Ltd. and its consortium partners - UK-based BP Exploration (Alpha) Ltd. and Canada-based Niko (NECO) Ltd. – against the Delhi High Court's February order in the Krishna Godavari-D6 gas block case for Feb. 25 and Feb. 26 for final hearing. The consortium had received a demand notice of $2.81 billion from the Ministry of Petroleum and Natural Gas in March, after the Delhi High Court set aside a 2018 arbitral award that allowed the Mukesh Ambani-led conglomerate to produce all hydrocarbons from the KG-D6 area.

 

"We are setting aside the impugned order dated May 9, 2023 passed by the learned single judge and the arbitral award passed by the learned Arbitral Tribunal dated Jul. 24, 2018, being contrary to the settled position of law along with pending applications," a bench of Justice Rekha Palli and Justice Saurabh Banerjee of the Delhi High Court had said in February, while setting aside the arbitral award granted to the RIL-led consortium.

 

In its petition, the government had challenged the finding of the arbitration tribunal, which held that RIL was "fully entitled to produce all hydrocarbons resulting from petroleum operations conducted within its contract area, which may include hydrocarbons that could have migrated from an adjacent block."

 

In 2000, the Ministry of Petroleum and Natural Gas and RIL had signed a production-sharing contract for exploration of natural gas in the Krishna-Godavari basin, where Oil and Natural Gas Corp. Ltd. and RIL had adjacent gas fields. Subsequently, Reliance Industries transferred a portion of its participating interest to BP Exploration (Alpha).

 

A dispute arose in 2013 when ONGC informed the Directorate General of Hydrocarbons that gas pools in its block were connected to those of RIL's block KG-DWN-98/2, generally known as KG-D6. RIL contended that some gas from ONGC's block had "migrated" to its block.

 

In 2014, ONGC moved the Delhi High Court, alleging that the private oil & gas company might be getting gas from its pool. In 2015, the court directed the government to consider a report prepared by DeGolyer & MacNaughton. The agency undertook an independent third-party study to verify the claimed continuity and migration of gas from the ONGC block to RIL's block. It released its final report in 2015, saying "integrated analyses indicated connectivity and continuity of the reservoirs across the blocks operated by ONGC and RIL."

 

The same year, the government also appointed a committee headed by Justice A.P. Shah to consider the agency's report. RIL withdrew halfway through the proceedings by the committee. The committee's report was based on written and oral submissions made by the parties and no experts appeared or rendered any assistance to it.

 

Based on the Shah committee's report, the Ministry of Petroleum and Natural Gas, in a letter dated Nov. 3, 2016, raised a demand on RIL for $1.55 billion along with interest up to Mar. 31, 2016, and $175 million towards revised additional cumulative profit petroleum claimed to be receivable up to Mar. 31, 2016, towards disgorgement of "unjust enrichment" claimed to have been made by RIL.

 

After the government raised the demand from the RIL-led consortium, the latter invoked arbitration. The arbitration rejected the government's demand and favoured the Mukesh Ambani-led company. Consequently, the government moved the single-judge bench of the high court, challenging the arbitration award. In May 2023, the single judge ruled in favour of RIL, after which the government moved a division bench of the Delhi High Court, which again ruled in favour of the RIL-led consortium.

 

At 1224 IST, shares of RIL were down 0.8% at INR 1,553.20 on the National Stock Exchange.  End

 

US$1 = INR 89.89

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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