SC appoints ex-judge Ranjana Desai as mediator in Reliance gas dispute

The Supreme Court on Friday appointed former judge Ranjana Prakash Desai as the sole mediator in the long-running Krishna-Godavari (KG) basin gas migration dispute. The case involves Reliance Industries and its partners, after the parties failed to reach a mutually acceptable settlement.

A bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi also directed the mediator to take the assistance of two domain experts, whose names will be suggested by the parties.

"The parties themselves have not been able to find a viable solution. We suggest, on their behalf, that former judge of this court Ranjana Prakash Desai be requested to act as mediator," the bench said.


Attorney General R Venkataramani, appearing for the Centre, assured the court that the government would extend its full cooperation during the mediation process.

The bench asked the parties to get in touch with Desai by Friday or Saturday and schedule the proceedings at a time convenient to her.

The appointment follows an earlier hearing on May 20, when the Supreme Court refused to put the proceedings on hold at Reliance Industries' request. The company and its two foreign partners had sought mediation or conciliation with the Centre in an attempt to settle the dispute amicably.

The apex court is hearing appeals filed by Reliance Industries Ltd (RIL), BP Exploration (Alpha) Ltd and Niko (NECO) Ltd against a Delhi High Court ruling that overturned an international arbitration award in their favour.

The case centres on allegations that the Reliance-led consortium extracted and sold natural gas that had migrated from neighbouring blocks operated by state-run Oil and Natural Gas Corporation (ONGC) into its KG-D6 field in the Bay of Bengal.

The companies have challenged the Delhi High Court's February 14, 2025, judgment, which set aside an earlier single-judge ruling that had upheld the arbitration award.

In July 2018, a three-member international arbitration tribunal had rejected the government's $1.55 billion claim against Reliance and its partners by a 2:1 majority. The tribunal also awarded $8.3 million in compensation to the consortium, Reliance had said in a regulatory filing.

The government subsequently challenged the award before the Delhi High Court.

On May 9, 2023, a single judge ruled in favour of the consortium, observing that the tribunal's conclusions could not be considered ones that no reasonable person would have reached.

However, a division bench of the High Court later overturned that decision, allowing the Centre's appeal and setting aside the arbitration award.

The dispute itself dates back to November 2016, when the petroleum ministry raised a demand of $1.47 billion against the Reliance-BP-Niko consortium.

The government alleged that the companies had produced around 338.332 million British thermal units of gas over seven years ending March 31, 2016, from reserves that had migrated from ONGC's adjoining blocks into KG-D6.

After adjusting for $71.71 million in royalty already paid and adding $149.86 million in interest calculated at LIBOR plus 2%, the government raised the total demand to $1.55 billion.

Reliance rejected the claim, arguing that it was based on a "misreading and misinterpretation of key elements of the PSC", or production-sharing contract, and had no precedent in the oil and gas industry.

The company went on to issue an arbitration notice on November 11, 2016.

Reliance operates the KG-D6 block with a 60% stake, while BP holds 30% and Niko Resources owns the remaining 10%.

The government's compensation claim was based on the findings of a committee headed by former Supreme Court judge A P Shah, which was constituted following directions from the Delhi High Court.

In its report dated August 28, 2016, the committee concluded that the consortium had benefited from "unjust enrichment" by producing gas that had migrated into KG-D6 from ONGC's KG-D5 and Godavari PML blocks.

The committee was set up after ONGC approached the court over the alleged extraction of gas from its adjoining fields.

Justice Shah also held that any compensation should go to the government, since ownership of unproduced natural resources rests with the Centre.