High-Stakes Legal Battle Over Gas Extraction Rights

The Indian Oil Ministry has issued a staggering $2.8 billion demand to Reliance Industries, led by Mukesh Ambani, and its partner BP, concerning the KG-D6 block off the Andhra coast. This move comes as the consortium prepares to contest a Delhi High Court decision that sided with the government in a long-standing dispute known as the 'gas siphon case'.

The dispute traces back to 2014 when ONGC accused RIL-BP of extracting gas that had migrated from its adjacent blocks. Following this, the ministry demanded $1.6 billion in costs and an additional $175 million in 'profit petroleum' by March 31, 2016, citing 'unjust enrichment' by RIL-BP.

Arbitration and Court Rulings

RIL-BP initiated arbitration against these claims, which in 2018 led the government to approach the Delhi High Court after the arbitration panel dismissed the unjust enrichment charge. A single-judge bench initially upheld the arbitration award, but this decision was overturned by a division bench last month, reigniting the legal battle.

Despite the ministry's demand, RIL-BP has stated that it does not foresee any immediate liability, as it plans to challenge the latest court order in the Supreme Court. The consortium, which now holds 67% and 33% stakes respectively after acquiring Niko's interest, remains steadfast in its position.