India seeks over $30 billion from Reliance Industries and BP
India is seeking more than $30 billion in compensation from Reliance Industries and its partner BP in a long-running arbitration case over alleged underproduction from offshore gas fields, according to sources familiar with the matter.
The dispute centres on gas output from the D1 and D3 deepwater fields in the Krishna Godavari (KG-D6) basin, India’s first major deepwater gas project. Arbitration hearings have been underway since 2016, with final arguments concluded on November 7, sources said. A verdict from the three-member tribunal is expected in mid-2026 and may be challenged in Indian courts, News.Az reports, citing Reuters.
The Indian government argues that mismanagement by the companies resulted in the loss of significant gas reserves and that Reliance and BP should compensate the state for the value of the shortfall. According to people familiar with the proceedings, the government claims the companies produced only about 20% of the originally estimated recoverable gas.
When development began, Reliance had estimated recoverable reserves of around 10 trillion cubic feet (tcf) from the D1 and D3 fields, later revising the figure down to 3.1 tcf. Production difficulties, including water ingress and reservoir pressure issues, prevented the project from meeting initial expectations.
Reliance and BP have disputed the government’s claims, maintaining during arbitration hearings that they do not owe any compensation. A Reliance spokesperson declined to comment, citing the confidential nature of the proceedings, while BP also declined to comment.
The KG-D6 block was awarded to Reliance in 2000 under a production-sharing contract, under which the government owns the gas discovered and allows operators to recover costs before sharing profits. The government’s profit share started at 10% and could increase once costs were recovered.
Sources said the government accused Reliance of using fewer wells than initially planned, arguing that an “overly aggressive” production strategy damaged the reservoir. Reliance has previously stated that total production from the broader block reached 3 tcf of gas equivalent, though it did not specify how much came from the D1 and D3 fields.
If upheld, the claim would represent the largest compensation demand ever pursued by the Indian government against a corporation.
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