SC appoints former judge Ranjana Prakash Desai as sole mediator in KG basin dispute

NEW DELHI: The Supreme Court on Friday appointed former top court judge Ranjana Prakash Desai as sole mediator in a matter pertaining to the Krishna-Godavari basin gas migration dispute involving Reliance Industries and others.

A bench of Chief Justice of India Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi passed the order after it was informed that the parties have not been able to find a viable solution.

"The parties themselves have not been able to find a viable solution. We suggest, on their behalf, that former judge of this court Ranjana Prakash Desai be requested to act as mediator.

"We also request the learned mediator to have the assistance of two domain experts, as may be suggested by the parties, for the aforesaid purpose," the bench said.

Attorney General R Venkataramani, appearing for the Centre, assured full cooperation to the mediator.

"The parties may contact Hon'ble Justice Ranjana Prakash Desai during the course of the day or by tomorrow and fix the date and time as per his convenience," the bench said.

On May 20, the apex court had declined a submission by Reliance Industries to put the hearing in the Krishna-Godavari basin gas migration dispute on hold for the time being as the company and two other foreign firms sought mediation or conciliation with the Centre for an amicable resolution.

The top court was hearing the appeals of RIL (Reliance Industries Ltd), BP Exploration (Alpha) Ltd and Niko (NECO) Ltd against a Delhi High Court verdict that set aside an arbitral award in their favour in the gas migration dispute with the Centre.

The firms assailed the February 14, 2025, order of the high court setting aside an order of the single-judge bench that had upheld the arbitral award in favour of RIL and its two partners for allegedly siphoning gas from deposits they had no right to exploit.

In July 2018, an international arbitration tribunal rejected the Indian government's claim of USD 1.55 billion against RIL and its partners for allegedly siphoning gas from deposits they had no right to exploit. The three-member arbitral panel, by a majority of 2-1, had also awarded USD 8.3 million compensation to the three partners, Reliance had said in a regulatory filing.

Earlier, a division bench of the high court had allowed the appeal of the central government challenging the May 9, 2023 judgment of a single judge that was passed in favour of the Mukesh Ambani-promoted RIL.

The single judge, while upholding the arbitral award, had said the court was not persuaded to hold that the conclusions drawn by the arbitral tribunal were such that no reasonable person would reach.

The oil ministry on November 4, 2016, slapped a demand of USD 1.47 billion on the Reliance-BP-Niko combine for producing in seven years ending March 31, 2016 about 338.332 million British thermal units of gas that had seeped or migrated from ONGC's blocks into their adjoining KG-D6 in the Bay of Bengal.

After deducting USD 71.71 million royalty paid on the gas produced and adding interest at the rate of LIBOR plus 2 per cent, totalling USD 149.86 million, a total demand of USD 1.55 billion was made on Reliance, BP and Niko.

Reliance had disputed the government's demand as being based on a "misreading and misinterpretation of key elements of the PSC", and said that such a demand was without precedent in the oil and gas industry.

On November 11, 2016, it sent an arbitration notice. Reliance is the operator of the KG-D6 block with a 60 per cent interest while BP holds 30 per cent. The remaining 10 per cent is with Niko Resources.

The government's compensation claim flowed from the report of the Justice (retd) A P Shah Committee.

The Shah panel, in its August 28, 2016, report, concluded that there had been "unjust enrichment" to the contractor of the block KG-DWN-98/3 (KG-D6) due to the production of the migrated gas from ONGC's blocks KG-DWN-98/2 and Godavari PML.

Originally, ONGC had sued Reliance for producing gas that had migrated from its blocks KG-DWN-98/2 (KG-D5) and Godavari PML in the KG basin to the adjoining KG-D6 block of Reliance.

Under the direction of the Delhi High Court, the government had appointed a one-man committee under retired Justice Shah to go into the issue. Shah, however, said the compensation should go to the government as it is the owner of all unproduced natural resources.