In what could become one of the largest corporate disputes in India’s energy sector, the government of India has reportedly sought more than US$30bn (billion) in compensation from Reliance Industries Ltd (RIL) and its partner BP plc (British Petroleum) over alleged under-production from the deepwater D1 and D3 gas fields in the KG-D6 block of the Krishna Godavari basin. According to a Reuters report citing sources familiar with the matter, the claim emerges from long-running arbitration proceedings and centres on what the State says are contractual failings by the oil–gas major and its partner.
The Reuters report states that the government argues that the companies significantly under-produced gas compared with initial reserve estimates, resulting in substantial losses of domestic energy resources. The arbitration, before a three-member tribunal, has been underway since 2016, with final arguments concluded in November this year and a verdict expected by mid-2026.
According to these sources, recoverable reserves at D1 and D3 were originally estimated at about 10.3 trillion cubic feet (tcf) but later revised down to around 3.1 tcf. The government’s argument, as reported by Reuters, is that the sharp decline was not merely geological but the result of sub-optimal field development and production strategies, leading to a loss of valuable national resources.
According to Reuters, the government contends that Reliance and BP drilled fewer wells than originally committed, and that aggressive extraction in the early years damaged reservoir performance, permanently impairing output. Gas production from the D1 and D3 fields eventually ceased in 2020 after yielding roughly 3tcf, well below original expectations.
The US$30bn figure, if confirmed, if confirmed, would represent the largest compensation claim ever pursued by the Indian government against a corporation. The case highlights not only disputes over contractual performance in upstream energy projects but also broader questions about risk allocation and investor confidence in India’s petroleum regulatory framework.
However, in a significant development, and underscoring the legal and market sensitivities around the issue, RIL has strongly refuted the reported US$30bn claim. In regulatory filings and statements to stock exchanges on 29 December 2025, RIL said it had not received any such claim from the government and described reports of a US$30bn demand as 'factually incorrect'. According to the company, the actual government claim relates to about US$247mn (million,) a figure it says has been consistently disclosed in its audited financial statements. RIL emphasised that it and BP have complied with contractual obligations and took exception to what it called a mis-characterisation of facts in media reports.
BP, which acquired a 30% stake in the KG-D6 block in 2011 for US$7.2bn, has declined to comment publicly, while government departments, including the ministries of petroleum and law, have not responded to media queries, Reuters noted.
The KG-D6 block, awarded to Reliance by the Indian government in 2000 under a production-sharing contract, was once hailed as a transformative deepwater gas project. Early production in the late-2000s and 2010s raised hopes of reduced import dependence for India’s growing energy needs. However, output from fields such as D1 and D3 fell far short of expectations amid technical, contractual and reservoir performance challenges. Official production from these fields ceased in 2020 after extracting about 3tcf of gas equivalent.
The dispute and its unfolding arbitration will be closely watched by both investors and policymakers, as the outcome could influence future upstream contracts and investor appetite for large hydrocarbon projects in India’s evolving energy landscape.
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