India

Supreme Court Names Former Judge Desai to Mediate ONGC‑RIL Gas Dispute

By Utkarsh Anand

The Supreme Court on Friday appointed former judge Ranjana Prakash Desai to act as the sole mediator in the Krishna‑Godavari (KG) basin gas migration dispute between the Centre and a Reliance Industries Limited (RIL)-led consortium. The appointment follows the court’s earlier attempts to encourage the parties to reach an out‑of‑court settlement, which have not produced a viable solution. A bench of Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice Vipul M Pancholi requested Desai to take the assistance of two domain experts, one each proposed by the parties, to explore an amicable resolution. The dispute centers on allegations that natural gas from ONGC’s offshore blocks migrated into the adjoining KG‑D6 block operated by the RIL consortium and was extracted between 2009 and 2013. The Union government seeks disgorgement of the gains allegedly made by the consortium, amounting to nearly $1.5 billion, plus about $174 million in interest. The controversy began in 2013 when ONGC alleged that the consortium had drilled wells close to the boundary of its fields and benefited from gas that had migrated from its reservoirs, describing it as “unjust enrichment”. The consortium has denied wrongdoing, arguing that the movement of hydrocarbons across underground reservoirs is a natural geological phenomenon driven by pressure differences and cannot be prevented through artificial means. The litigation originates from a production sharing contract executed in 2000 between the Centre and the consortium for exploration and extraction of natural gas in the KG basin off the Andhra Pradesh coast. Commercial production from the KG‑D6 block began in April 2009. At that time, RIL held a 60% participating interest, while BP Plc and Niko Resources held 30% and 10%, respectively. The consortium invoked arbitration under the production sharing contract. In July 2018, an arbitral tribunal ruled in its favour, holding that the contract did not prohibit the extraction and sale of gas that had naturally migrated from adjoining reservoirs. A single judge of the Delhi High Court upheld the award in May 2024. However, a division bench reversed that decision on 14 February 2025, setting aside the award on the ground that it was contrary to settled principles of law. The consortium subsequently challenged the high court’s decision before the Supreme Court. The bench left it to Desai to determine the schedule for the proceedings, declining to impose a timeline after the attorney general suggested one. Counsel for both sides and the attorney general assured the court of their assistance. The parties were asked to contact Desai during the day or on Saturday to fix a date in accordance with her schedule. Desai, who retired from the Supreme Court in October 2014, had a judicial career spanning the Bombay High Court and the Supreme Court, and has since headed several important commissions and committees, including the Appellate Tribunal for Electricity and the Delimitation Commission of India.