A Reliance Industries Ltd. petrochemical plant is pictured at night in Jamnagar, Gujarat, India (Photographer: Rajan Chaughule/Bloomberg News.)  

Reliance Industries Wins Arbitration Against Government’s $1.7-Billion Claim

An international arbitration tribunal rejected the Indian government’s claim that a consortium led by Reliance Industries Ltd. siphoned gas from Oil and Natural Gas Corporation Ltd.’s fields in the Krishna-Godavari basin off the eastern coast.

Rejecting the claim in a two-one verdict, the tribunal ordered the government to pay the consortium—also comprising BP Plc and Niko Resources—$8.3 million (Rs 56.44 crore), according to RIL’s exchange filing. The government had claimed $1.7 billion from the consortium.

All the contentions of the consortium have been upheld by the majority with a finding that the consortium was entitled to produce all gas from its contract area and all claims made by the Government of India have been rejected. The consortium is not liable to pay any amount to the Government of India.
Reliance Industries Statement

The dispute arose in November 2016 when the government issued a letter to the contractor group of the D6 block in the Krishna-Godavari basin claiming migration of gas from neighbouring blocks. Later Reliance Industries, which was the operator, invoked the dispute resolution mechanism in the Production Sharing Contract and issued an arbitration notice to the government.

In March 2018, the government updated its base claim to $1.46 billion for the estimate of the gas that was migrated, produced and sold from the neighbouring blocks till the end of December 2017. The government later added an interest claim of $245 million up to December 31, 2017.