An exclusive report by Reuters said on Monday that the Indian government is seeking more than $30 billion in compensation from Reliance Industries and BP. This landmark arbitration case, which has been active since 2016, involves claims that the companies failed to produce expected gas from offshore fields. The report notes this is the largest claim the state has ever pursued against a private corporation.

Allegations of reservoir mismanagement

The dispute focuses on the D1 and D3 deepwater fields in the Krishna Godavari basin. According to the report, the government alleges that mismanagement by the firms caused the loss of most of the gas reserves. Officials argue that Reliance used aggressive production methods, drilling only 18 wells instead of the planned 31. This lack of infrastructure reportedly caused significant damage to the reservoir.

Failed production targets

While the fields were originally seen as vital for India’s energy independence, they suffered from water ingress and pressure issues. The report highlights that although Reliance initially estimated 10.3 trillion cubic feet of gas, only about 20% of that was eventually produced. Consequently, the government is demanding the value of this massive shortfall.

The long road to a verdict

Reliance, led by billionaire Mukesh Ambani, and its partner BP dispute the claim and argue they owe nothing. Under their production-sharing contract, the firms were allowed to recover costs before the government received its 10% profit share. The report indicates that while final arguments concluded in November, a verdict is not expected until mid-2026. Even then, the decision can be challenged in Indian courts.