Notice to Reliance of 24,500 crore; case involving profits from natural gas production and sales

New Delhi| The government has sent a demand notice of $2.81 billion (about Rs 24,500 crore) to Reliance Industries on profits from the production and sale of natural gas from the block around ONGC. This notice has been sent after the Delhi High Court’s decision on 14 February. The High Court had overturned the decision of an international arbitration tribunal in which Reliance and its UK partner firm BP Plc were not awarded any compensation liability for gas production and sale from the nearby block.

The company said in the information sent to the stock market, after the decision of the division bench, a demand letter has been received from the Ministry of Petroleum and Natural Gas on March 3, 2025. It includes Reliance Industries, BP Exploration (Alpha) Ltd. And Canadian company Nico (NECO) Ltd. A demand of $2.81 billion has been made from.

The government had filed an appeal
In fact, the government had demanded $1.55 billion from Reliance and its partners for the amount of gas that had shifted from the areas around ONGC to the KG-D6 block in 2016. Reliance had opposed this claim. In July, 2018 the arbitration tribunal also stated that the company was not obliged to pay compensation. The government’s appeal filed against this decision was upheld by a single bench of the Delhi High Court, dismissing it in May, 2023. Last month, a division bench of the High Court, while giving its verdict against Reliance and its partners, had rejected the order of the single judge.

The controversy started in 2013
The dispute started in July, 2013, when Oil and Natural Gas Corporation (ONGC) suspected that the area of its KG-D5 and G-4 blocks was linked to Reliance’s KG-D6 block. The state-run company felt that at least four wells drilled by Reliance in the area adjacent to the KG-D5 block had also exploited its resources.

Penalty imposed for default in battery plant deadline
The government has approved Reliance New Energy Battery Storage Ltd., a subsidiary of Reliance Industries. But a fine has been imposed for lapse in the deadline for setting up a battery cell plant. For this the company was given production related incentives. Reliance said, its subsidiary received a letter from the Ministry of Heavy Industries on March 3, directing it to recover compensation at the rate of 0.1 per cent of performance security (Rs 50 crore) for every day delay from January 1, 2025.