India Stakes $30 Billion Claim Against Reliance Industries and BP Over Underproduced Gas in KG-D6 Block

New Delhi, India — The Government of India has filed a $30 billion arbitration claim against Reliance Industries Limited (RIL) and its partner BP over alleged underproduction of natural gas from the D1 and D3 fields in the KG-D6 block of the Krishna Godavari basin off Andhra Pradesh. The claim marks one of the largest compensation demands ever made by the Indian government against a private corporation.

The KG-D6 deepwater gas project, awarded to Reliance in 2000, was initially projected to contain about 10.3 trillion cubic feet (tcf) of recoverable natural gas. Subsequent evaluations reduced the estimate to around 3.1 tcf, sparking concerns over production efficiency. 

India alleges that Reliance and BP mismanaged the reservoir, implemented fewer wells than planned, and employed production strategies that damaged the gas fields, leading to a significant loss of recoverable gas. 

The government claims that under the production sharing contract (PSC), the gas belongs to India, and the underproduction represents a loss of public resource value. The $30 billion figure reflects the estimated value of the gas that could not be produced due to alleged mismanagement.

This claim, if successful, would be a precedent-setting case for how production sharing agreements are enforced and how companies are held accountable for underperformance in India’s energy sector.

Government of India:

• Argues that only about 20% of the originally estimated gas was produced.

• Alleges that fewer wells (18 instead of 31 planned) and inadequate infrastructure contributed to reservoir damage.

Reliance Industries & BP:

• Both companies dispute the government’s claims and maintain they have met contractual obligations.

• Reliance has stated that the arbitration proceedings are confidential and declined further comment, while BP has also withheld comment.

The arbitration process concluded its final hearings on November 7, 2025, and a three-member tribunal is expected to deliver a verdict by mid-2026. Both sides retain the right to challenge the tribunal’s decision in Indian courts.

Project Context

• The KG-D6 block was India’s first major deepwater gas project and was meant to significantly bolster the country’s energy security.

• Reliance sold a 30% stake to BP in 2011 for about $7.2 billion, making it a joint venture.

• Gas production officially ceased in 2020, after extraction challenges and reservoir limitations became apparent.

A ruling in favor of India could:

• Strengthen the government’s position in future PSC disputes.

• Encourage stricter oversight of private energy projects.

A ruling favoring Reliance and BP could:

• Limit government claims in underproduction or efficiency disputes.

• Reduce perceived risk for foreign investors in Indian energy projects.