KG Basin Gas Dispute: Did Reliance Siphon Gas from ONGC? HC Confirms

In a courtroom showdown that could change the landscape of India’s energy sector, the Delhi High Court has ruled against Reliance Industries Ltd (RIL), delivering a major financial and reputational blow to the corporate giant led by billionaire Mukesh Ambani. The verdict overturned a 2018 international arbitration award that had favored RIL and its foreign partners—UK-based BP Plc and Canada’s Niko Resources—in a long-standing gas dispute.

The court didn’t mince words, accusing the companies of “insidious fraud” and “unjust enrichment” to the tune of $1.729 billion.

For the Indian government, this ruling is more than just a legal victory—it’s a statement of intent. It reinforces the government’s firm stance on protecting national resources and holding corporations accountable, no matter how powerful they are. But what exactly is this case about, and why did the Modi government fight so hard to overturn the arbitration ruling?

What is the KG Basin Theft Case?

It all started with a serious accusation—one that rocked India’s energy sector. State-owned Oil and Natural Gas Corporation (ONGC) claimed that Reliance Industries had been quietly siphoning its natural gas from the Krishna-Godavari (KG) Basin.

Between 2009 and 2013, ONGC alleged that RIL drilled wells strategically close to its block boundaries, allowing gas to migrate from ONGC’s reservoirs into RIL’s KG-D6 block. In simple terms, ONGC said that Reliance was taking gas that wasn’t theirs and selling it. The allegations were serious—this wasn’t just a corporate dispute, but a question of natural resource ownership.

RIL, which holds a 60% stake in KG-D6, denied any wrongdoing. The company maintained that it had operated strictly within the terms of its production sharing contract (PSC). However, as the battle intensified, it was clear that the case was about more than technicalities—it was about corporate accountability and India's control over its own energy reserves.

What Made the Modi Government Challenge the International Arbitration?

A few months ago, when U.S. President Donald Trump revived his famous slogan "Drill, Baby, Drill," it was a reminder of how crucial energy independence is for a country’s economic power. India, under Prime Minister Narendra Modi’s leadership, has been following a similar path—focusing on self-sufficiency in energy to support its ambitious goal of becoming a fully developed nation by 2047.

Modi has made it clear, both at home and during his visits to France and the U.S., that India’s growth depends on securing its energy supply. His government has aggressively pushed for energy security—whether through protecting India's natural resources or forming strategic partnerships with resource-rich nations like the U.S. and key African countries.

So, when an international arbitration panel ruled in favor of RIL in 2018, the Modi government wasn’t willing to let it slide. The Ministry of Oil and Gas, after consulting the Law Ministry, decided to challenge the ruling. Legal experts examined the case closely, and the government advised ONGC to take the matter to the Delhi High Court.

What followed was an intense legal battle, fought with full force. And in the end, the High Court sided with the Indian government, overturning the arbitration award and dealing a major setback to RIL and its partners.

The Origins of the ONGC-Reliance Gas Dispute

To understand the depth of this conflict, we have to rewind to 2014. That year, a report by U.S.-based consultancy DeGolyer and MacNaughton (D&M) sent shockwaves through India’s energy circles. The report indicated that RIL had extracted and sold natural gas from ONGC’s fields without authorization.

Armed with this evidence, the Indian government demanded $1.47 billion from RIL, accusing the company of siphoning gas from ONGC’s Godavari PML and KG-DWN-98/2 blocks. RIL, however, stood its ground, arguing that joint development of the fields wasn’t feasible due to differing exploration stages—a stance backed by the Directorate General of Hydrocarbons.

The legal battle dragged on, moving through multiple arbitration and court proceedings. But in May 2023, the Modi government decided to renew its challenge to the arbitration ruling, arguing that it violated public policy and accusing RIL of unjust enrichment through fraudulent means. This legal escalation set the stage for the high-stakes courtroom drama that followed.

What’s Next for Reliance?

With the Delhi High Court ruling in the government’s favor, the verdict has set a powerful precedent for India’s oil and gas sector. It sends a clear message: India’s natural resources cannot be exploited without accountability.

However, this may not be the end of the road for RIL and its partners. The consortium still has the option to challenge the decision in the Supreme Court. If they choose to do so, the battle could drag on, shaping not only India’s legal and regulatory framework for energy but also the way corporate disputes over resource migration are handled in the future.

One thing is certain—this case has gone beyond a corporate fight. It’s now a defining moment in India’s quest for energy security, corporate responsibility, and national resource protection. The final outcome could have far-reaching implications for the country's energy policies and business practices for years to come.