RIL Move SC Over KG-D6 Gas Block Dispute After Delhi HC Scraps Arbitral Award

Reliance Industries Ltd. and its consortium partners—UK’s BP Exploration (Alpha) Ltd. and Canada’s Niko (NECO) Ltd.—have approached the Supreme Court against a Delhi High Court ruling in the Krishna-Godavari (KG)-D6 gas block case. The move comes after the Ministry of Petroleum and Natural Gas issued a $2.81 billion demand notice to the consortium in March, following the court’s decision to scrap a 2018 arbitral award that had allowed Reliance to extract all hydrocarbons from the KG-D6 block.

A division bench of the Delhi High Court, comprising Justice Rekha Palli and Justice Saurabh Banerjee, had set aside the award and the earlier order favouring Reliance. The bench ruled that the arbitral award was contrary to established legal principles.

The government had challenged the tribunal's finding that Reliance was fully entitled to extract hydrocarbons from its contract area, even if some had migrated from ONGC’s adjoining block.

Reliance had signed a production sharing contract with the government in 2000 for gas exploration in the Krishna-Godavari basin.

Later, it brought in BP Exploration (Alpha) as a partner. The dispute began in 2013, when ONGC told the Directorate General of Hydrocarbons that its gas pool was connected to Reliance’s KG-D6 block. RIL maintained that some of ONGC’s gas had migrated into its own block.

In 2014, ONGC moved the Delhi High Court, which then directed the government to consider a report by DeGolyer & MacNaughton.

The report, submitted in 2015, confirmed reservoir connectivity across the blocks. A government-appointed committee headed by Justice A.P. Shah also reviewed the matter, though Reliance pulled out midway. The committee, relying only on written and oral submissions, recommended action against Reliance.

Based on this, the ministry raised a demand of $1.55 billion in November 2016, along with an additional $175 million in profit petroleum, citing “unjust enrichment.”

Reliance and its partners took the matter to arbitration, which ruled in their favour. The government challenged the award in the Delhi High Court, which initially upheld it. However, a division bench later overturned the decision and the award, prompting the consortium to now escalate the matter to the Supreme Court.