Imagine you own a mango orchard. Your neighbor digs a well, and suddenly your mangoes start disappearing into his property. When you confront him, he shrugs and says, "The trees naturally grew toward my well, so the mangoes are mine now."
That's essentially the story playing out between Reliance Industries Limited and Oil and Natural Gas Corporation Limited in the Krishna-Godavari Basin, except instead of mangoes, we're talking about natural gas worth billions of dollars.
The dispute centers on something called "gas migration"—a fancy term for gas moving underground from one block to another. ONGC alleges that RIL extracted gas worth approximately $1.55 billion (₹13,700 crore) that had naturally migrated from ONGC's fields into RIL's KG-D6 block AR FY25.
Here's the thing about underground gas reservoirs: they don't respect human-drawn boundaries on maps. When you drill a well and start pumping, gas flows toward the point of lowest pressure—like water draining from a bathtub. If your neighbor's well creates that pressure drop, their gas might just waltz right over into your territory.
This legal saga has more twists than a Bollywood thriller. Let's break down the timeline:
Back in July 2013, ONGC discovered something troubling. Their technical analysis showed "evidence of lateral continuity of gas pools" between their blocks and RIL's KG-D6 block id. In plain English: the underground gas reservoirs were connected, and gas was flowing from ONGC's side to RIL's side.
The government took notice and sent a demand notice in November 2016. But then things got complicated. An Arbitral Tribunal in July 2018 ruled in RIL's favor, accepting their argument that gas migration is a natural phenomenon and that once gas enters their contract area, they're entitled to extract it id.
The government appealed, and a Single Judge of the Delhi High Court upheld the arbitration award in May 2023. But then came the plot twist.
In February 2025, a Division Bench of the Delhi High Court (Justices Rekha Palli and Saurabh Banerjee) set aside both the Single Judge's judgment and the Arbitral Award AR FY25. The court found "patent illegality" in the arbitral award and held that it violated the Public Trust Doctrine—a legal principle that says the government holds natural resources in trust for the people id.
The court's logic was straightforward: RIL extracted gas that didn't belong to them without "explicit and express permission," and that's not okay when you're dealing with national resources.
How do we even know gas migrated? This isn't something you can see with your eyes.
Enter DeGolyer and MacNaughton (D&M), an international petroleum consultant. In a comprehensive 14-month study costing over $2 million, D&M found that 11.122 billion cubic metres of ONGC gas had migrated to RIL's fields between April 2009 and March 2015 id.
The numbers are staggering: 44.32% of the gas initially in place in ONGC's Godavari PML block had migrated to KG-D6, along with 34.71% from their KG-DWN-98/2 block id.
Here's where it gets interesting. A D&M report from April 2003—commissioned by Niko Resources, RIL's partner in KG-D6—had actually warned about potential connectivity with ONGC's block. The report noted that developing KG-DWN-98/3 "will be capable of depleting the OFIP on the KG-OS-IG block" id.
This report was filed with the Toronto Stock Exchange in 2004, meaning it was public knowledge. Yet RIL didn't disclose it to the Indian government or ONGC. The Delhi High Court later called this a breach of the Production Sharing Contract terms id.
A committee headed by retired Justice A.P. Shah calculated the financial liability at $1.55 billion plus $174.9 million in interest id. The committee's logic was based on "unjust enrichment"—RIL produced and sold gas that didn't belong to them and kept all the profits.
But wait, the numbers keep growing. By March 2025, the government had sent a fresh demand letter for $2.81 billion, with RIL's share at $1.87 billion AR FY25.
RIL, naturally, disputes all of this. They argue that gas migration is a natural geological phenomenon and that they operated within their licensed block boundaries. They've called the government's claim "without precedent in the oil and gas industry, anywhere in the world" id.
In March 2026, a petitioner named Jitendra Maru sought a CBI probe against RIL and Chairman Mukesh Ambani, alleging theft, dishonesty, and criminal breach of trust id.
The Bombay High Court bench (Chief Justice Shree Chandrashekhar and Justice Suman Shyam) dismissed the petition. Their reasoning? This is fundamentally a contractual and technical dispute, not a criminal one. The court noted that arbitration proceedings, civil litigation, and regulatory processes through the Directorate General of Hydrocarbons were already addressing the issue id.
This was a win for RIL, removing the immediate threat of criminal investigation. But the civil liability remains very real.
The Delhi High Court's February 2025 judgment is a watershed moment. It establishes that the Public Trust Doctrine applies to commercial resource extraction disputes—meaning companies can't just claim "finders keepers" when dealing with national resources id.
The government has already responded with legislative changes. The Oilfields (Regulation and Development) Amendment Act, 2025, which came into force in March 2025, introduces provisions for cross-boundary reservoir management and infrastructure sharing id. It also increases penalties for violations—minimum ₹25 lakh with daily penalties up to ₹10 lakh for continued offenses.
Interestingly, RIL and ONGC have signed a strategic MoU in January 2026 for sharing deepwater resources on India's east coast id. They'll share drilling rigs, marine vessels, pipelines, and processing facilities. It's a mature approach to addressing the very issues that led to this dispute.
RIL has filed an appeal against the Delhi High Court judgment AR FY25, so this story isn't over. The company faces potential liabilities totaling around $2.98 billion when you include other related disputes AR FY25.
For a company of RIL's size—with diversified businesses across oil-to-chemicals, retail, and telecom—this isn't an existential threat. But it's a significant overhang that affects investment decisions and cost of capital.
More importantly, this case sets a precedent for how India manages its natural resources. The message is clear: underground reservoirs might not respect boundaries, but companies operating in Indian waters must respect the principle that national resources belong to the people of India, not whoever drills first.
The gas might migrate naturally, but the responsibility to manage it fairly doesn't.
