RIL-led consortium stole ONGC share of gas, Government tells Supreme Court
Singhvi told the bench about the “huge risk and huge investment” in the project, and said “ONGC did nothing at the time they got” their blocks.
Attorney General R Venkataramani told a three-judge bench headed by CJI Surya Kant that RIL-led consortium have virtually committed a theft of gas from ONCG.
(Representative Image: ONGC) In a dispute with a Reliance Industries Limited-led consortium over gas migration in the Krishna Godavari (KG) basin, located off the Andhra Pradesh coast, the Centre Tuesday accused the consortium of stealing the Oil and Natural Gas Corporation’s share of natural gas.
Attorney General R Venkataramani, who appeared for the Centre, told a three-judge bench of Chief Justice of India Surya Kant and Justices Joymalya Bagchi and Vipul M. Pancholi: “There were two blocks. ONGC had a block, they had a block. Gas migrated. You (RIL-led consortium) virtually committed a theft of my gas and you are accountable for that.”
Venkataramani said this as Senior Advocate A M Singhvi, appearing for the RIL, commenced his arguments on its appeal challenging the February 14, 2025 order of the Delhi High Court order which overturned a 2018 international arbitration tribunal ruling and an order of a High Court single-judge bench in favour of the RIL-led consortium.
Singhvi told the bench about the “huge risk and huge investment” in the project, and said “ONGC did nothing at the time they got” their blocks.
Countering the allegations of gas theft, he said it was only a natural phenomenon due to pressure differences beneath the sea and cannot be termed something done deliberately.
“When you extract by a natural process of pressure, from the nearby sea block, some oil will always flow and migrate. That has nothing to do with voluntariness, deliberation, intent. That becomes a bugbear with them to add it to what they call stolen gas. There is nothing, it is a pressure movement,” Singhvi told the bench.
Justice Bagchi asked, “So no artificial barrier is there between the true definition of blocks right? Only coordinates as per the longitude and latitude.”
Singhvi said there cannot be any such barrier. “No. It cannot be, by definition. It’s not an enclave. The seabed is 2,000 feet below.”
He said the government is the ultimate beneficiary through royalty, taxation etc irrespective of where the gas came from.
The case has its origins in a production-sharing contract (PSC) signed by an RIL-led consortium with the Centre in 2000, securing rights to explore and extract natural gas from the KG basin. The contract covered various entitlements, responsibilities and revenue-sharing arrangements.
The RIL-led consortium commenced commercial production from the assets situated adjacent to ONGC’s Godavari petroleum and mining lease and the KG-DWN-98/2 block, in April, 2009. The RIL then held 60% stake in the relevant KG-D6 block, BP Plc 30% and Niko Resources 10%.
The conflict arose in 2013 when ONGC claimed that RIL had illegally extracted natural gas from its blocks. The state-run company accused RIL of drilling wells near the boundaries of its hydrocarbon blocks which allowed gas to flow from ONGC’s fields to RIL’s KG-D6 block between 2009 and 2013, leading to “unjust enrichment” for the latter.
The government then sought disgorgement from RIL and its partners BP Plc and Niko Resources, demanding around $1.5 billion, and additional $174 million in interest. The RIL invoked the arbitration clause.
In July 2018, the arbitral tribunal ruled in favour of RIL, rejecting the government’s claims and stating that the PSC did not prohibit contractors from extracting and selling gas that had migrated from an external source.
The Centre challenged this in the Delhi High Court where a single-judge bench dismissed it in May 2024. Following an appeal, the High Court division bench set aside the single-judge bench’s order and the arbitral award, saying they were contrary to the settled position of law.
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