In a dramatic showdown before the Supreme Court on Tuesday, the Central government accused a Reliance Industries Limited (RIL)-led consortium of “stealing” natural gas belonging to the state-run Oil and Natural Gas Corporation (ONGC) from the Krishna Godavari (KG) basin off the Andhra Pradesh coast.
The allegation was made by Attorney General R Venkataramani before a three-judge bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi, and Justice Vipul M. Pancholi. The court was hearing an appeal filed by RIL challenging a February 14, 2025, Delhi High Court order that overturned a previous arbitral award and single-judge ruling which had favored the consortium.
“There were two blocks. ONGC had a block, they had a block. Gas migrated,” Attorney General Venkataramani argued. “You [the RIL-led consortium] virtually committed a theft of my gas and you are accountable for that.”
Natural Phenomenon or ‘Unjust Enrichment’?
Defending the consortium, Senior Advocate A M Singhvi countered the government’s allegations, arguing that the movement of gas was not a deliberate act but a natural consequence of subsea pressure.
Singhvi emphasized the high-risk, high-investment nature of the deep-sea exploration project, pointing out that ONGC had “did nothing at the time they got” their blocks. He explained that because the seabed lies 2,000 feet below, physical boundaries do not exist beyond coordinate lines of longitude and latitude.
“When you extract by a natural process of pressure, from the nearby sea block, some oil will always flow and migrate,” Singhvi told the bench. “That has nothing to do with voluntariness, deliberation, intent. That becomes a bugbear with them to add it to what they call stolen gas. There is nothing, it is a pressure movement.”
When questioned by Justice Bagchi about the absence of artificial barriers between the blocks, Singhvi confirmed that such barriers are impossible by definition, adding that the government ultimately benefits from the extraction through royalties and taxes regardless of which block the gas originated from.
A Decades-Long Subsea Battle
The roots of the multi-billion-dollar dispute stretch back to 2000, when the RIL-led consortium—consisting of RIL (60% stake), BP Plc (30%), and Niko Resources (10%)—signed a production-sharing contract (PSC) with the Centre to explore the KG basin.
Commercial production began in April 2009 at assets adjacent to ONGC’s Godavari petroleum and mining lease and the KG-DWN-98/2 block.
However, in 2013, ONGC accused RIL of drilling wells so close to its block boundaries that it caused natural gas to migrate from ONGC’s fields into RIL’s KG-D6 block. ONGC claimed this resulted in “unjust enrichment” for RIL between 2009 and 2013.
In response, the Indian government demanded a disgorgement of approximately $1.5 billion from RIL and its partners, alongside an additional $174 million in interest. RIL subsequently contested this demand by invoking the contract’s arbitration clause.
The Legal Tug-of-War
The dispute has seen sharp reversals across different legal forums:
- July 2018: An international arbitral tribunal ruled in favor of RIL, concluding that the production-sharing contract did not forbid the consortium from extracting and selling gas that naturally migrated from an external source.
- May 2024: A single-judge bench of the Delhi High Court dismissed the Centre’s challenge against the arbitral ruling.
- February 14, 2025: A division bench of the Delhi High Court set aside both the single-judge’s order and the arbitral award, declaring them contrary to the settled position of law.
With the Delhi High Court’s 2025 ruling having revived the government’s multi-billion-dollar claims, the battle has now reached its final frontier in the Supreme Court, where the bench will decide who ultimately owns the migrated gas of the KG Basin.
