Reliance Industries Ltd (RIL) on Wednesday told the Supreme Court that the Delhi high court wrongly treated the $1.7 billion Krishna-Godavari (KG) Basin gas migration arbitration dispute as a domestic dispute by overlooking the participation of foreign partners BP Exploration and Niko Resources.
In an almost five-hour-long hearing before a bench led by Chief Justice Surya Kant, RIL’s lawyer Abhishek Manu Singhvi argued that the conglomerate had not pursued the arbitration alone but had acted only as the operator under the production sharing contract (PSC) on behalf of the entire consortium comprising RIL, BP and Niko.
Singhvi claimed that all investments under the PSC were made by all three parties, not just by RIL. Hence, the profits should be divided among the three.
“They are all contractors, and the PSC recognizes that the operator, as opposed to the contractor, would act on behalf of the contractor. All investments are funded not just by petitioner one (RIL) … but also by the other parties, i.e., Nico and BP. And they are equally entitled to the cost recovered and the profit earned.”
He relied on the notice invoking arbitration, the statement of claim, hearing transcripts and the arbitral award to contend that all three entities were treated collectively as the “contractor” under the PSC.
According to Singhvi, the arbitration notice itself stated that RIL was initiating proceedings “for and on behalf of all constituents of the contractor”, namely RIL, BP and Niko, which held 60%, 30% and 10% participating interests, respectively, in the KG-D6 block.
The senior counsel argued that the Delhi high court selectively relied on portions of the arbitral award dealing with costs to conclude BP and Niko were not parties to the proceedings.
According to him, the tribunal—comprising Singapore-based arbitrator Lawrence Boo, Supreme Court judges Justice G.S. Singhvi and Justice R.V. Raveendran—had merely denied separate cost claims because RIL led the proceedings as operator, and this could not be used to convert an international commercial arbitration into a domestic one.
Singhvi also relied on an earlier Supreme Court ruling arising out of the same PSC, arguing that the apex court had already recognized the international character of disputes involving RIL, BP and Niko.
Before the hearing, RIL and two other foreign firms had told the top court that they would write to the Centre seeking mediation in the gas migration dispute. Attorney General R. Venkataramani, however, urged the apex court to continue with the hearing in the case. SC declined to stop the hearing in the case.
On Tuesday, Singhvi said the cost of exploration and gas extraction is very high, and the government invests nothing. He said the consortium created a world-class deep-water infrastructure for the first time in India. It shares the gas, sells it to the person nominated by the government, pays taxes, yet is accused of theft. “It’s something to be proud of, and I am accused of theft with deepest respect,” claimed Singhvi.
The arguments came during the hearing of petitions filed by the RIL-led consortium challenging the Delhi high court’s February ruling that set aside the ₹12,800 crore arbitral award in their favour in the dispute with the Union government and .
The hearing will continue on Thursday.
The dispute
The case dates back to April 2000, when RIL and its partners signed a 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%.
To be sure, Niko exited its 10% stake after settling with its partners 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.
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.
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, along with interest.
, BP and Niko initiated arbitration in 2016. In 2018, the three-member arbitral 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.
The Centre challenged the award. While a single judge of the Delhi high court ruled in 2023 in favour of the RIL-led consortium, the division bench in February 2025 set it aside, paving the way for recovery proceedings against the consortium.
RIL and its partners have now challenged the division bench decision before the Supreme Court.