The Indian government is demanding over $30 billion in compensation from Reliance Industries and BP for their failure to produce contracted gas volumes from two offshore fields, Reuters reported today, citing unnamed sources familiar with the situation.
The case has been running since 2016 at an arbitration tribunal, with the final ruling expected in mid-2026, the Reuters sources said. The dispute concerns gas production from the D1 and D3 deepwater gas fields in the D6 block in the Krishna Godavari basin, India’s first major offshore gas projects.
Development of the gas reserves at the D1 and D3 fields had proven to be challenging both in technical terms and in financial terms—Reliance and BP had a production cost recovery dispute with the government and reported water ingress and reservoir pressure problems. In addition to all that, production failed to live up to expectations.
According to Reliance Industries, gas production from the D6 block contributes as much as 30% of India’s total natural gas output, or 30 million cu m of gas. The company also said on its website that, together with BP, it will be starting production from three more deepwater fields in the same basin.
The Krishna Godavari basin is India’s largest offshore oil and gas region. It has also become the focus of more than one dispute between operators and the government. A recent report in Fortune India said that Reliance and its partners had invested some $10 billion in exploration and production in the basin since its discovery in the early 2000s. Since then, gas production has quickly moved to a peak, and the pricing mechanism agreed with the government in New Delhi has led to slower than desired cost recovery, the report said.
The International Energy Agency forecast earlier this year that India could see a 60% surge in natural gas demand by 2030, not least in response to the expected growth in supply of liquefied natural gas.
By Irina Slav for Oilprice.com
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