Indian government-RIL's $247M oil block dispute to be resolved soon
27 Dec 2025

The long-standing financial dispute between the Indian government and Reliance Industries Limited (RIL) over the KG-D6 oil block is likely to be resolved in early 2026.

The disagreement centers on a $247 million claim from the government for a larger share of profits from the gas field.

The legal proceedings are currently in their final stages within an international arbitration framework.

Dispute origins and production sharing contracts
Contractual conflict

The dispute started when the government barred Reliance from recovering some of its infrastructure development costs for the KG-D6 oil block.

As per the original New Exploration Licensing Policy (NELP) agreement, companies can recover all their drilling and pipeline investments before profit-sharing with the government.

Reliance and its partners BP and Niko spent this money to build a deepwater facility in line with these contracts.

Reliance's compliance and government's retroactive disallowance
Compliance claims

Reliance has claimed that it followed all rules and regulations, with no allegations of wrongdoing from the government.

However, when the gas field underperformed due to natural geological factors, the government retroactively disallowed some costs already paid by Reliance.

The company contends that "no provision of the Production Sharing Contract allows such unilateral disallowance of costs after they have been incurred."

Reliance's gas sales and government charges
Sales impact

Reliance was forced to sell its gas at lower prices for the country's benefit, but it was also slapped with additional charges.

The company highlighted that "all other blocks in KG basin around D6, developed by other operators, have performed even worse than the D6 block."

It further questioned why the government hasn't initiated similar cost recovery proceedings against these other operators.

Reliance's development of KG-D6 block and future expectations
Development success

Reliance developed the KG-D6 block in record time, making it India's most successful deepwater site.

The firm believes that the government should not only share profits but also respect private businesses' risks.

A final ruling on whether Reliance has to pay the $247 million or can recover its costs is expected by early 2026.