Petroleum Ministry Issues $2.81 Billion Demand Notice to Reliance and BP Over Alleged ONGC Gas Migration
Reliance Industries Limited (RIL) and its partners, including BP Plc, have received a demand notice from the Ministry of Petroleum and Natural Gas for $2.81 billion (approximately Rs 24,500 crore) over alleged gains made from natural gas that may have migrated from state-run ONGC’s adjacent block. The notice, received on March 3, 2025, follows a recent ruling by a Division Bench of the Delhi High Court, which overturned a previous arbitration tribunal decision that had absolved RIL and its partners of any financial liability.
The dispute revolves around the Krishna Godavari (KG) basin deep-sea block KG-D6, where Reliance initially held a 60% stake, BP held 30%, and Canada’s Niko had a 10% interest. Over time, Reliance and BP acquired Niko’s stake, bringing their respective holdings to 66.66% and 33.33%. The government claims that natural gas from ONGC’s adjacent fields migrated to KG-D6, resulting in undue benefits to RIL and its partners.
The matter dates back to 2016 when the central government initially sought $1.55 billion from Reliance and its partners for the allegedly migrated gas. Reliance contested the claims before an arbitration tribunal, which in 2018 ruled in favor of the company, stating that it was not liable for any compensation. The government, however, filed an appeal in 2023, leading to a legal battle. A single-judge bench of the Delhi High Court upheld the arbitration ruling, dismissing the government’s claim. However, in February 2025, a Division Bench of the Delhi High Court overturned this decision, ruling against Reliance and its partners.
Reliance Industries has strongly opposed the demand, stating in a regulatory filing that it is legally advised that the Division Bench’s judgment and the demand notice are unsustainable. The company has announced its intent to challenge the ruling and emphasized that it does not expect any liability on this account. The uncertainty surrounding the case had a noticeable impact on RIL’s stock performance, with shares declining as much as 1% to Rs 1,159.3 apiece in intraday trade on the Bombay Stock Exchange (BSE). By 3 pm, the stock had recovered slightly, trading 0.4% lower at Rs 1,166.2.
The case has drawn significant attention due to its implications for India’s oil and gas sector and investor confidence. The government’s aggressive stance on resource migration disputes, the legal complexities surrounding production-sharing contracts, and the broader impact on foreign investment in the sector remain key concerns. The outcome of this legal challenge could set a precedent for future disputes related to natural resource extraction in India.
For video news updates, visit our YouTube channel, THE OLIGO.
