Reliance Industries Faces $2.81 Billion Demand in Gas Drilling Dispute

India’s Reliance Industries (RELI.NS) announced on Tuesday that the country’s Petroleum and Natural Gas Ministry has raised a demand of $2.81 billion from the company, BP Exploration, and Niko in connection with a gas drilling dispute. This demand follows a ruling made by a division bench at the Delhi High Court on February 14, which went against Reliance and its partners regarding the extraction of gas in a deepwater field located in India’s KG D6 block in the Krishna Godavari basin on the eastern coast.

In an exchange filing, Reliance stated that it has received legal advice indicating that both the division bench judgment and the provisional demand are unsustainable. The company is taking steps to challenge this judgment and has expressed that it does not anticipate any liability arising from this case. Reliance has previously stated its intention to appeal the decision in the Supreme Court of India.

The dispute traces back to a notice sent by the Indian government in 2016, which requested Reliance and its partners to deposit around $1.55 billion, citing alleged gas migration from adjacent blocks operated by state-run ONGC (ONGC.NS). Reliance contested these claims, and in July 2018, an arbitral tribunal upheld the company’s position. However, the Indian government subsequently filed an appeal. In May 2023, a single judge of the Delhi High Court affirmed the arbitration award, dismissing the government’s appeal.

In a subsequent turn of events, a division bench of the Delhi High Court ruled against Reliance and its partners in February 2025, setting aside the prior single judge order. This ongoing legal battle illustrates the complexities of regulatory challenges within India’s energy sector and the stakes involved for major companies like Reliance Industries.