Petroleum Ministry seeks $2.81 billion from RIL & its partners over alleged ONGC block gas

Reliance Industries on Tuesday received a demand notice from the Ministry of Petroleum and Natural Gas, demanding a sum of $2.81 billion from the group and its partners including British energy major BP Plc over alleged gains made from natural gas that may have migrated from state-run ONGC’s neighbouring block. The demand is estimated to be worth Rs 24,500 crore. 

“Consequent upon the abovementioned Division Bench judgment, the Ministry of Petroleum and Natural Gas has raised a demand of US $2.81 billion on the PSC Contractors namely Reliance Industries Limited, BP Exploration (Alpha) Limited and NIKO (NECO) Limited. The letter of demand was received by the Company at 11:30 a.m. on March 3, 2025,” RIL wrote in a regulatory filing. 

Reliance said it is “legally advised that the Division Bench judgment and this provisional demand are unsustainable” and that it is taking steps to challenge the judgment of the Division Bench of the Delhi High Court. 

"The company does not expect any liability on this account," added Reliance Industries.

Reliance Industries shares declined as much as 1.0 per cent to Rs 1,159.3 apiece in intraday trade on BSE. At 3 pm, the stock was off its intraday low, trading 0.4 per cent lower for the day at Rs 1,166.2.

According to an earlier filing, the Delhi High Court on February 14 overturned an international arbitration tribunal ruling that held the duo not responsible for paying any compensation for the gas they produced and sold which had allegedly migrated from adjoining fields.

Initially, Reliance held 60 per cent interest in Krishna Godavari basin deep-sea block KG-D6, while BP had 30 per cent and the remaining 1 per cent was with Canada’s Niko. Later, Reliance and BP took over Niko's interest in the production sharing agreement. 

Currently, Reliance and its partner BP hold 66.66 per cent and 33.33 per cent stakes, respectively. 

Here’s a timeline of some of the key events related to this story: 

• In 2016, the central government sought $1.55 billion from Reliance and its partners for the quantity of gas allegedly migrated to its block KG-D6 from adjoining fields of ONGC.
• Reliance contested the claims before an arbitral tribunal. 
• In 2018, the tribunal upheld that the company was not obliged to pay any compensation.
• The Centre then filed an appeal in 2023. 
• A single-judge bench of the Delhi High Court upheld the arbitration award, dismissing the government's appeal. 
• In February, a division bench of the Delhi High Court set aside that single-judge order, ruling against Reliance and its partners.

With inputs from agencies