Mumbai: In the ongoing KG-Basin gas migration dispute, Canada’s Niko Resources has told the Supreme Court that state-run did not adequately develop its adjacent gas fields and is wrongly alleging “theft” of gas from the block operated by the Reliance-led consortium.
The case is part of a long-running legal battle over alleged gas migration in the KG-D6 basin, which was operated by a consortium led by (RIL).
On the fourth straight day of hearing before a three-judge bench led by chief justice of India Surya Kant, Niko Resources argued that the directorate general of hydrocarbons (DGH) had all the reservoir data, but did not act in time. Niko’s counsel Kapil Sibal said: “All that data supplied by me, all the data supplied by Reliance was with you. You would have known from the data that there is a reservoir. You are at fault.”
Sibal argued that under the production sharing contract (PSC) with the government, a joint development between and ONGC could not have been considered since ONGC had not fully developed its block on time, and this lack of development may have led to an imbalance in output.
He said that gas flow is a natural and largely uncontrollable phenomenon, driven by geological conditions and not human intervention.
The matter will next be heard on 25 May.
The case dates back to April 2000, when RIL and its partners signed a production sharing contract (PSC) with the government for the KG-D6 block off the coast of Andhra Pradesh. RIL holds a 60% stake in the block, BP 30%, and Niko the remaining 10%.
In 2013, ONGC raised concerns that gas reservoirs in its blocks might be connected to those in the KG-D6 field. RIL and ONGC jointly appointed the US consulting firm DeGolyer and MacNaughton (D&M) to examine the issue. In 2015, D&M concluded that gas worth over ₹11,000 crore had migrated from ONGC’s fields to KG-D6, operated by the RIL-led consortium.
Following the report, the Centre formed a committee headed by former Delhi High Court Chief Justice A.P. Shah, which concluded that RIL had been “unjustly enriched” and should compensate the government. In November 2015, the oil ministry issued a demand notice seeking around $1.5 billion plus interest.
RIL, BP and Niko initiated arbitration in 2016. In 2018, a three-member tribunal ruled 2:1 in favour of the consortium, holding that the PSC did not prohibit the extraction of naturally migrated gas as long as production occurred within the contract area.
To be sure, Niko exited its 10% stake after settling with its partners RIL and BP for $36 million in 2019. The Canadian company defaulted on cash call payments for its share of investments in the gas field’s development, leading to arbitration among the partners. Following Niko’s exit, Reliance owns 66.67% and BP 33.33% in the asset.
The Centre challenged the award. While a single-judge bench of the Delhi High Court ruled in favour of the RIL-led consortium in 2023, a division bench set it aside in February 2025, paving the way for recovery proceedings against the consortium. RIL and its partners have now challenged the division bench’s decision in the Supreme Court.