The Indian government has claimed over US $30 billion from Reliance Industries Ltd (RIL) and BP in an international arbitration dispute concerning under-production of natural gas from offshore fields in the Krishna Godavari (KG) basin. This claim stems from the D1 and D3 gas fields in the D6 block off the coast of Andhra Pradesh, which were part of India’s first major deepwater gas project.
India alleges that the companies failed to recover gas that could have been commercially produced, resulting in substantial financial loss. The government notes that production from these fields achieved only about 20% of the initial recoverable estimate of 10.3 trillion cubic feet (tcf), which was later revised down to 3.1 tcf. According to sources familiar with the arbitration, the under-production was due to fewer wells drilled than planned, aggressive production methods, and insufficient infrastructure to optimise recovery, which the government claims led to reservoir damage.
The KG-D6 block was awarded to Reliance in 2000 under a production sharing contract (PSC). In 2011, Reliance sold a 30% stake in the PSC, including the D6 block, to BP for $7.2 billion. Production from D1 and D3 officially ceased in 2020, with the block producing roughly 3 tcf of gas equivalent overall. India argues that under the PSC, it owns the hydrocarbon resources, and the shortfall in gas recovery entitles the government to compensation.
The dispute has been ongoing since 2016 before a three-member international arbitration tribunal. Final arguments concluded on 7 November 2025, with a verdict expected by mid-2026. Either party may challenge the tribunal’s decision in Indian courts. Both Reliance and BP dispute the claim, stating they have fulfilled contractual obligations under the PSC. Both companies have declined to comment further due to the confidentiality of the arbitration proceedings.
If India succeeds, the $30 billion demand would be the largest compensation claim ever pursued by the government against a corporation. The outcome could have significant implications for energy policy, as the KG-D6 block was central to India’s strategy for domestic deepwater gas production and energy independence. It could also influence how future production shortfalls under PSCs are addressed and affect investor confidence in India’s energy sector.
The arbitration ruling is closely watched by industry experts and investors because it could set a legal and commercial precedent for how production shortfalls and contractual disputes are handled in Indian energy projects. A ruling in favour of India may encourage stricter compliance and more transparent production practices, while a ruling favouring the companies could provide clarity on risk allocation in long-term exploration contracts.
In summary, India is seeking over $30 billion from Reliance and BP for under-producing gas from the D1 and D3 fields of the KG-D6 block. The government claims mismanagement led to a significant loss of recoverable reserves. A three-member international arbitration tribunal has been hearing the case since 2016, with a verdict due by mid-2026. Reliance and BP continue to defend their position, citing fulfillment of contractual obligations. The outcome will have far-reaching consequences for India’s energy sector and future offshore production contracts.