Mint Explainer | How Reliance’s disputes with government over KG-D6 gas output may be resolved by mid-2026

However, all eyes remain on the project as the outcomes for both disputes are expected in the first half of 2026, making it a crucial matter to track for investors.

What is KG-D6?

KG‑D6 is the common name for the KG‑DWN‑98/3 exploration block in the Krishna‑Godavari (KG) basin off India’s east coast near Kakinada in Andhra Pradesh. It was awarded to a consortium led by Reliance Industries in 2000 through a production-sharing contract under India’s New Exploration Licensing Policy.

Reliance controls 66.67% of the project while the UK’s BP owns 33.33% after consortium partner Niko exited its 10% stake. Several oil and gas fields were discovered within the block, including the now-shut D1, D3 and MA, and operational fields R‑Cluster, Satellite Cluster and MJ.

What is the controversy over KG-D6?

The D1 and D3 gas fields were India’s first deepwater natural gas project and had been in production since April 2009. The project was marred by technical difficulties including the ingress of sand and water.

Before commencement, the Reliance-BP joint venture had estimated the quantum of gas reserves from D1 and D3 was 10.3 trillion cubic feet (TCF), the ministry of petroleum and natural gas said in August 2012. However, this estimate was scaled down to recoverable reserves of 3.10 TCF.

The underproduction from the fields has been a pain point for the Reliance-BP venture and the Indian government, which was a partner in the project, as per the production-sharing contract.

In a separate dispute, Oil and Natural Gas Corporation Ltd (ONGC) accused Reliance-BP of drilling out gas belonging to its adjacent KG-D5 and G-4 blocks. The case dates back to 2013, when ONGC first suspected the adjacent blocks may have been connected.

When Reliance-BP started pumping gas from KG-D6, they may have inadvertently pumped gas that would rightfully have belonged to the public-sector company. The ‘gas migration’ dispute has since been taken over by the government of India, with the two sides securing wins from different adjudicating authorities.

Where does the production shortfall dispute stand today?

The government has raised a claim of $247 million from Reliance-BP after it disallowed some of the investments made in developing the infrastructure for drilling oil and gas from the block. The production-sharing agreement allows the government and the producer to share the profit oil from the project after deducting investments made in developing the project. After the government disallowed some of the investments, it has contended that it is liable to receive more profit petroleum from the project – to the tune of $247 million, as disclosed by Reliance.

Separately, Reuters reported on Monday that the government has demanded $30 billion from Reliance and BP to compensate it for the shortfall in production from D1 and D3 against estimates made prior to drilling. Reliance has denied this report and said that the only claim made by the government pertaining to this project was for $247 million.

“There is NO claim of $30 billion against Reliance and BP," the company said Monday. “The matters referred to in the report are entirely sub judice and would be determined in accordance with the laws of the country by its judicial system, in which Reliance has full faith."

The dispute is presently undergoing arbitration, and an outcome is expected in the first half of 2026.

Where does the ‘gas migration’ dispute stand?

The dispute is in the Supreme Court of India, and the next hearing is scheduled for 25 and 26 February 25.

The ministry of petroleum and natural gas raised a demand of $2.81 billion from Reliance, BP and Niko in March pertaining to the gas-migration issue. This demand has been contested by the consortium partners.

Before landing in the apex court, judgements by various adjudicating authorities see-sawed between the two sides. US-based consulting agency DeGolyer and MacNaughton, appointed in 2014 to investigate the matter, concluded that there was indeed significant migration of gas from ONGC’s blocks which was pumped out by the Reliance-led consortium from 2009 to 2015.

Subsequently, a committee led by former Chief Justice of Delhi High Court Ajit Prakash Shah found that the government was liable to seek restitution from the private companies.

The case then went before a three-member tribunal, led by Singapore-based arbitrator Lawrence Boo. The tribunal delivered a 2-1 award in favour of Reliance in July 2018, observing that the production-sharing contract did not prevent the private firms from extracting and selling gas that had migrated into their blocks.

The government challenged this tribunal’s decision in the Delhi High Court, where a single-judge bench refused to overturn this ruling. When the government appealed this decision before a division bench of the Delhi High Court, it ruled in its favour in February this year. Reliance has since moved the Supreme Court.

Why does KG-D6 matter?

The offshore block produced 26.1 million metric standard cubic meters per day (MMSCMD) of gas on average during the July-September period, as per an investor presentation from Reliance Industries. That translates to about 14% of India’s 192 MMSCMD domestic gas consumption during the quarter. This makes the field important not just for Reliance but for India to serve its domestic gas requirements and minimize its import bill.

The company’s oil and gas business division reported ₹6,058 crore in revenue and ₹5,002 crore Ebitda in the July-September quarter, compared with consolidated revenue of ₹2.8 trillion and Ebitda of ₹50,367 crore.

With the Supreme Court hearing in the gas migration case next month and the arbitration tribunal’s judgement expected in the coming months, the KG-D6 block will be a key monitorable for Reliance investors.