Delhi High Court To Hear Government Plea Against RIL in KG-D6 Gas Block Case

The Delhi High Court has agreed to hear the government's plea in a dispute relating to the KG-D6 gas block arbitration case, involving Reliance Industries Ltd.

The division bench of Justices Manmohan and Mini Pushkarna agreed to hear the centre’s plea against RIL, for allegedly syphoning gas in the Bay of Bengal. The matter is now likely to be listed on Feb. 12.

In May, the Delhi High Court dismissed the union government's appeal against an arbitration tribunal's decision that favoured RIL regarding the sale of gas that moved from an Oil and Natural Gas Corp. block.

The international arbitral tribunal had concluded that Reliance was allowed to sell gas from deposits next to its contract area in the Krishna-Godavari basin on the east coast.

Justice Anup Jairam Bhambhani, a single-judge bench, found no issues with the tribunal's decision and rejected the appeal. Reliance had a product-sharing contract with the Ministry of Petroleum and Natural Gas, Niko Ltd., and BP PLC for natural gas extraction. Their block was next to ONGC's allocated blocks.

In 2011, ONGC informed the Directorate General of Hydrocarbons about potential gas migration between their and Reliance's blocks. In 2014, ONGC took the matter to the high court, which instructed the ministry to investigate a report from an expert agency confirming the gas migration.

In 2015, the ministry formed a one-person committee to assess the report and suggest further actions. This committee claimed that Reliance had unfairly benefited from the ONGC block. Notably, there was no expert involved in this report, and Reliance chose not to participate in the committee's proceedings.

Based on this report, the ministry demanded $1.72 billion from Reliance for diverting gas from the block—$1.55 billion for alleged fraud and over $174 million for "unjust enrichment."

In response, Reliance invoked the arbitral clause of the PSA contract. When the tribunal ruled in favour of Reliance by a 2:1 decision, the ministry approached the court under Section 34 of the Arbitration and Conciliation Act.