The high-stakes legal battles between Reliance Industries and the Indian government concerning the KG-D6 oil and gas block are moving towards a critical juncture, with final outcomes anticipated in the first half of 2026. These disputes, involving allegations of production shortfalls and gas migration, have significant implications for India's energy security and investor confidence in the sector.
The Core of the KG-D6 Controversies
At the heart of the matter is the KG-DWN-98/3 block, commonly known as KG-D6, located in the Krishna-Godavari basin off the coast of Andhra Pradesh. Awarded in 2000, the block is operated by a consortium where Reliance Industries holds a 66.67% stake and BP owns 33.33%. The project, once hailed as a game-changer for India's domestic gas production, has been mired in controversy for over a decade.
The first major dispute stems from the underperformance of the D1 and D3 gas fields. Initial reserve estimates of 10.3 trillion cubic feet (TCF) were later revised down to 3.10 TCF of recoverable gas. The government, as a partner under the production-sharing contract, has contested the investments claimed by Reliance-BP, leading to a disallowance of costs and a subsequent claim for $247 million in additional profit petroleum.
Separately, a Reuters report suggested the government was seeking a staggering $30 billion in compensation for the overall production shortfall. However, Reliance has vehemently denied this, stating the only official claim is for the $247 million amount and that all matters are sub judice.
The Gas Migration Dispute and Legal Wrangling
The second, and equally complex, dispute involves state-owned Oil and Natural Gas Corporation (ONGC). ONGC alleged that gas from its adjacent KG-D5 and G-4 blocks migrated and was extracted by the Reliance-BP consortium between 2009 and 2015. An independent study by DeGolyer and MacNaughton confirmed significant migration had occurred.
The legal journey of this case has been a rollercoaster. A government-appointed committee led by former Justice A.P. Shah held the private firms liable. However, an international arbitration tribunal ruled in Reliance's favour in 2018. The Delhi High Court's division bench later overturned this, siding with the government in February 2025 and prompting Reliance to appeal to the Supreme Court. The next hearing is scheduled for February 25 and 26, 2026.
Why KG-D6 Remains Critically Important for India
Despite the controversies, the KG-D6 block's output is vital for the nation's energy matrix. In the July-September quarter, it supplied an average of 26.1 million metric standard cubic meters per day (MMSCMD). This accounted for roughly 14% of India's total domestic gas consumption during that period, helping to reduce the costly import bill.
For Reliance, the oil and gas segment remains a substantial contributor, reporting ₹6,058 crore in revenue and ₹5,002 crore in EBITDA for the same quarter. The resolution of these long-pending disputes will provide much-needed clarity, remove a major overhang on the stock, and define the future operational and financial contours of one of India's most significant energy assets.
With the Supreme Court hearing imminent and the arbitration tribunal's decision on the production shortfall expected by mid-2026, the KG-D6 block will undoubtedly be a key monitorable for policymakers, energy analysts, and investors in the coming months.
