The Delhi High Court has ruled in favour of the government in a gas migration dispute between ONGC and a Reliance Industries-led consortium. The ruling could impact India’s oil and gas sector and influence future contractual obligations for shared reservoirs, explains Arunima Bharadwaj
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The dispute stems from a production-sharing contract (PSC) signed by a consortium led by Reliance Industries (RIL) with the Union government in 2000, securing rights to explore and extract natural gas from the Krishna Godavari (KG) basin, located off the coast of Andhra Pradesh. The contract covered various entitlements, responsibilities and revenue-sharing arrangements. The consortium commenced commercial production from the assets situated adjacent to state-owned ONGC’s Godavari petroleum and mining lease and the KG-DWN-98/2 block, in April, 2009. RIL then held 60% stake in the relevant KG-D6 block, BP Plc 30% and Niko Resources, 10%. The conflict arose when in 2013, ONGC claimed that RIL had illegally extracted natural gas from its blocks adjacent to the latter’s in the KG basin. The state-run company accused RIL of drilling wells near the boundaries of its hydrocarbon blocks which allowed gas to flow from ONGC’s fields to RIL’s KG-D6 block between 2009-2013, leading to the latter’s “unjust enrichment.”
What triggered the demand?
The petroleum and natural gas ministry raised the demand of $2.81 billion from the RIL-led consortium after the Delhi High Court (HC) in February 2025 overturned a 2018 international arbitration tribunal ruling that had favoured RIL in the gas migration dispute. In 2013, ONGC had first moved the Delhi HC seeking compensation for losses arising from the gas extraction. The Delhi HC directed the government to take a call basis of an independent study by global consultant DeGolyer and MacNaughton (D&M). The study confirmed reservoir connectivity between the two blocks. Following this, in 2016, the government raised a demand of $1.55 billion on RIL and its partners for sale of gas that allegedly migrated from ONGC’s block. RIL took the case to an international arbitration tribunal, which ruled in its favour in July 2018. A single judge of the Delhi High Court, in May 2023, dismissed the government’s appeal challenging the award. The government had then filed an appeal before the Division Bench of the Delhi High Court,
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