Reliance Approaches Supreme Court Over $1.72 Billion Gas Dispute With ONGC

Reliance Industries Ltd (RIL), along with its partners BP Plc and Canada’s Niko Resources, has approached the Supreme Court to challenge a recent ruling by a division bench of the Delhi High Court concerning its dispute with ONGC over the KG-D6 block. In February, a two-judge bench of the Delhi High Court overturned a 2018 international arbitration award that had ruled in favour of the Reliance-led consortium.

Later, the government reiterated its demand of $2.81 billion from the consortium.

D&M’s 2015 report confirmed reservoir connectivity and concluded that Reliance’s gas extraction activities could deplete ONGC’s reserves. Based on these findings, the government in 2016 demanded $1.55 billion, along with $175 million in profit petroleum, accusing the Mukesh Ambani-led firm of unjust enrichment.

The consortium denied the allegations and initiated international arbitration under the terms of the Production Sharing Contract (PSC).

Now, the matter has reached the Supreme Court, with Reliance seeking to reinstate the original arbitration award and contest what it considers undue judicial interference in a case already settled through arbitration, according to a report by The Economic Times.

The Supreme Court has yet to schedule a hearing on the matter.

Delhi High Court Judgment and Reliance’s Argument

In February, a Delhi High Court division bench—comprising Justices Rekha Palli and Saurabh Banerjee—set aside a May 2023 ruling by a single judge who had upheld the 2018 arbitral award. That earlier decision had dismissed the government’s accusations of fraud and unjust enrichment by Reliance and its foreign partners, BP Plc and Canada’s Niko Resources.

In its submission to the apex court on Tuesday, RIL has reportedly argued that the division bench overstepped its jurisdiction by reassessing the merits of the case, which had already been conclusively resolved through international arbitration. The company maintains that the tribunal’s award—delivered by a panel led by a Singapore-based arbitrator—was final and binding under the PSC between the government and the consortium.

The tribunal, by a 2-1 majority, held that the PSC did not prohibit contractors from extracting gas that had migrated into their licensed blocks, thereby rejecting the government’s $1.729 billion claim.