EnergyDispute – Supreme Court Encourages Mediation in KG Basin Gas Case
EnergyDispute – Reliance Industries Limited and its foreign partners on Wednesday informed the Supreme Court that they plan to approach the Central government for mediation in the long-running Krishna-Godavari basin gas migration dispute. The move came during a hearing before a bench led by Chief Justice Surya Kant along with Justices Joymalya Bagchi and Vipul M Pancholi.
Companies Seek Negotiated Settlement
During the proceedings, legal representatives appearing for Reliance Industries Limited (RIL), BP Exploration (Alpha) Limited, and Niko (NECO) Limited told the apex court that all petitioners would formally contact the Government of India to explore the possibility of mediation. The companies argued that an attempt at a negotiated resolution could help settle the matter without prolonged litigation.
The counsel further requested the court to pause the ongoing hearing until the mediation process reached a conclusion. According to the submissions made before the bench, the firms believed that discussions through mediation could provide a constructive path forward in the high-value dispute linked to gas extraction rights in the Krishna-Godavari basin.
Centre Opposes Suspension of Hearing
Attorney General R Venkataramani, representing the Central government, opposed the request to halt the hearing. He urged the Supreme Court to continue with the scheduled proceedings while leaving room for any parallel mediation efforts.
The Attorney General informed the bench that if there were any meaningful developments related to mediation, the government would update the court accordingly. Following the submissions from both sides, the Supreme Court decided not to suspend the hearing at this stage.
The bench observed that if the parties succeeded in resolving the issue through mediation, the court would be willing to dispose of the matter based on the settlement outcome. The judges indicated that an amicable resolution would be welcomed if both sides reached common ground.
Appeals Challenge Delhi High Court Verdict
The Supreme Court had earlier started final hearings on May 19 regarding appeals filed by Reliance Industries and its foreign partners against a Delhi High Court ruling delivered on February 14, 2025.
The high court had overturned an arbitral award that previously favored Reliance Industries and the two foreign firms. That earlier award had been upheld by a single-judge bench before being set aside by the division bench of the Delhi High Court.
The appeals now before the Supreme Court are considered significant because they involve complex issues related to energy exploration contracts, production-sharing agreements, and alleged migration of natural gas reserves in the Krishna-Godavari basin.
Background of the Arbitration Dispute
The dispute dates back several years and revolves around allegations made by the Indian government that Reliance Industries and its partners extracted gas from adjoining deposits without authorization. The government had sought compensation of nearly USD 1.55 billion from the companies.
However, in July 2018, an international arbitration tribunal rejected the government’s claim. The three-member tribunal delivered a majority decision of 2-1 in favor of Reliance Industries, BP Exploration, and Niko Limited.
Apart from dismissing the government’s financial claim, the arbitral panel also granted compensation worth USD 8.3 million to the three companies. Reliance Industries had disclosed the details of the award in a regulatory filing at the time.
Key Case Remains Important for Energy Sector
The outcome of the case is expected to have broader implications for India’s energy sector and future arbitration disputes involving exploration contracts. Legal experts believe the Supreme Court’s final ruling, or any successful mediation agreement, could influence how similar disagreements between private companies and the government are handled in the future.
For now, the court proceedings will continue while the companies simultaneously attempt to initiate mediation talks with the Centre in hopes of finding a mutually acceptable resolution.