SC Appoints Justice Ranjana Prakash Desai as Mediator in KG Basin Dispute

The Supreme Court has appointed former judge Justice Ranjana Prakash Desai as the sole mediator in the long-running Krishna-Godavari (KG) basin gas migration dispute involving Reliance Industries Ltd (RIL), BP Exploration (Alpha) Ltd, Niko (NECO) Ltd and the Union government, opening a fresh avenue for resolving a contentious legal battle over the extraction and ownership of natural gas from adjoining offshore blocks. A three-judge bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi passed the order on October 30 after being informed that the parties had failed to find a mutually acceptable solution. The bench also requested the mediator to seek assistance from two domain experts, whose names may be suggested by the parties. Attorney General R Venkataramani, representing the Centre, assured full cooperation, while the parties were asked to coordinate with Justice Desai to schedule the mediation. The matter will return before the Supreme Court after four weeks for an update on the proceedings.

The dispute centres on allegations that natural gas migrated from adjoining fields operated by the state-owned Oil and Natural Gas Corporation (ONGC) into Reliance's KG-D6 block off the Andhra Pradesh coast. The controversy originated from a Production Sharing Contract signed in April 2000 between the Centre, Reliance and Niko for developing the KG-DWN-98/3 block. Reliance initially held a 90% stake and Niko 10%. In 2011, BP acquired a 30% interest, restructuring the consortium's holdings to Reliance 60%, BP 30% and Niko 10%. Commercial production from the D1, D2 and D3 fields began in April 2009.

ONGC raised concerns about geological connectivity between its adjoining KG-DWN-98/2 and Godavari blocks and Reliance's KG-D6 area in July 2013, alleging that gas from its reservoirs had migrated into the latter. An independent assessment by petroleum consultancy DeGolyer and MacNaughton (D&M), whose final report was submitted on November 19, 2015, indicated reservoir connectivity. The government subsequently constituted a committee headed by former Supreme Court judge Justice A.P. Shah, which submitted its report on August 29, 2016. The Centre raised a compensation demand of approximately USD 1.55 billion (₹12,800 crore), besides additional interest and a separate profit-petroleum claim of around USD 174.9 million.

Reliance contested the demand, maintaining that its contract did not prohibit extracting gas located within its operational block. An international arbitral tribunal delivered a 2:1 majority award in favour of the consortium in July 2018, rejecting the government's principal claims. However, a dissenting arbitrator disagreed. The Delhi High Court's single-judge bench upheld the award in May 2023, but a Division Bench set it aside on February 14, 2025, citing patent illegality and public policy concerns. The judgment examined contractual disclosure obligations, Article 297 of the Constitution and the Public Trust Doctrine.

Reliance, BP and Niko subsequently challenged the ruling before the Supreme Court. Although the court declined to suspend proceedings on May 20, 2026, to facilitate settlement discussions, the parties continued exploring mediation. The latest appointment provides an opportunity to address the technical, contractual and financial dimensions of the dispute. The mediation does not determine liability or overturn the High Court judgment, and the Supreme Court appeals remain pending.