Reliance Faces USD 2.81 Bn Penalty in Gas Dispute with ONGC
Mukesh Ambani-led Reliance faces Government fines pertaining to an old gas migration dispute with ONGC.
Gas Migration Dispute with ONGC and MoPNG’s USD 2.81 Bn. Demand
Ministry of Petroleum and Natural Gas (MoPNG), has demanded a total of USD 2.81 billion (about Rs. 24,500 crore) from Reliance Industries Ltd., UK’s BP Exploration (Alpha) Limited, and Canada’s NIKO (NECO) Limited. This demand stems from a gas migration dispute with Oil and Natural Gas Corporation which has its roots in 2013.
Specifics of the ONGC-RIL Dispute
In 2013, ONGC approached the Delhi High Court citing losses from operations at its KG-DWN-98/2 block in the Bay of Bengal. The company alleged that these losses were due to natural gas migrating to the adjacent KG-D6 block, which is operated by RIL along with BP*. As per ONGC, at least 4 wells in the KG-D6 gas block were drawing gas from its KG-DWN-98/2 block.
*Reliance earlier had 60% interest in the KG-D6 block, and BP and Niko held 30% and 10% respectively. In 2019, Niko exited the KG-D6 field, leaving Reliance with 66.67% interest and BP with 33.33% interest in the block.
Thereafter, a single-member panel headed by Delhi High Court Chief Justice AP Shah was formed, which submitted a report on the matter. Based on the Shah report, the government demanded USD 1.55 billion from RIL and its partners in November 2016. RIL then took the matter to an arbitral tribunal which ruled that no compensation to the government had to paid. In 2023, the government approached a single-judge panel of the Delhi High Court which upheld the tribunal’s judgement. However, on 14th February 2025, a division panel of the High Court ruled against RIL and its partners.
“Consequent upon the Division BeRIL faces $2.81bn demand in gas rownch judgment, the ministry of petroleum and natural gas has raised a demand of USD 2.81 billion on the PSC [Production Sharing Contract] contractors namely Reliance Industries, BP Exploration (Alpha) Ltd. and NIKO (NECO) Ltd.”, said Reliance’s stock filing.
“Division Bench judgment and provisional demand unsustainable” – Reliance
In its stock filing dated 4th March 2025, RIL expressed that MoPNG’s demand for compensation is ‘unsustainable’. The company also mentioned that it will be taking steps to challenge the judgemnt of Delhi High Court’s Division Bench, and that it “…does not expect any liability on this account”.
About Reliance Industries Limited: Reliance Industries Limited, headquartered in Mumbai, was founded in 1957 by Mr. Dhirubhai Ambani. The company reported a revenue of Rs. 10,00,122 crore and a Profit After Tax (PAT) of Rs. 23,207 crore during FY-24. Reliance Industries has about 3,47,362 number of employees as of 2024.
