NEW DELHI, Dec 29: The Indian government is pursuing a compensation claim exceeding $30 billion from Reliance Industries and its partner BP in an ongoing international arbitration case, according to sources familiar with the matter. This marks the largest amount ever demanded by the Indian government from a corporation, centering on allegations of severe underproduction and mismanagement in the D1 and D3 deepwater gas fields of the KG-D6 block in the Krishna Godavari basin, off Andhra Pradesh.
The dispute, heard by a tribunal since 2016, stems from a production sharing contract awarded to Reliance in 2000. The government argues that Reliance initially estimated recoverable reserves at around 10 trillion cubic feet (tcf) but produced only about 20% of that amount. Officials claim the companies used “unduly aggressive” extraction methods, drilling only 18 of the planned 31 wells without sufficient infrastructure, which damaged the reservoir through water ingress and pressure issues, resulting in the permanent loss of most reserves.
Read More: https://theboardroompk.com/india-launches-heaviest-satellite-to-boost-its-global-space-role/
Arbitration Nears Verdict Amid High Stakes for Energy Sector Final arguments concluded on November 7, 2025, with a tribunal verdict expected in mid-2026. The outcome, which can be challenged in Indian courts, could significantly impact future profit-sharing arrangements and energy investments. Reliance, which operates the block, sold a 30% stake to BP in 2011 for $7.2 billion as part of a broader deal. Production from D1 and D3 ceased in February 2020, with total output from the wider KG-D6 block reaching about 3 tcf of gas equivalent.
Reliance and BP have disputed any liability during hearings, with spokespersons declining further comment, citing confidentiality. The case highlights longstanding challenges in India’s deepwater gas projects, including cost-recovery disputes and failure to meet early production targets aimed at reducing import dependence.