A bench comprising Chief Justice of India Surya Kant, Justice Joymalya Baghchi and Justice V Mohana requested former Supreme Court judge Justice Ranjana Prakash Desai to mediate the dispute. The bench also asked her to take assistance from two domain experts, who will be suggested by the parties involved.
The Court noted that both sides had repeatedly sought adjournments to explore the possibility of an amicable settlement but had failed to reach a viable solution.
Attorney General for India R Venkataramani and Senior Advocate Kapil Sibal informed the bench that discussions between the parties had not resulted in a resolution.
"Both sides have requested adjournment from time to time to enable the parties to explore settlement. We are informed that they themselves have not been able to find out a viable solution," the Court observed.
"In view of the request made on their behalf, we request Justice Ranjana P. Desai to act as the mediator. We also request her to have the assistance of two domain experts as may be suggested by the parties," it added.
The dispute centres on allegations that Reliance Industries Limited extracted natural gas that had migrated from an adjoining block operated by the Oil and Natural Gas Corporation (ONGC) into its own block in the Krishna-Godavari basin.
ONGC alleged that the gas reservoirs in the two blocks were interconnected, allowing natural gas to migrate from its block into the block operated by RIL.
Following a study conducted by DeGolyer and MacNaughton, which indicated connectivity between the reservoirs, the Union Government constituted a committee headed by former Supreme Court judge Justice AP Shah to examine the issue.
Based on the committee's findings, the Government issued a demand notice to RIL seeking approximately USD 1.74 billion, along with interest, over the alleged extraction of migrated natural gas.
RIL challenged the demand through arbitration under the Production Sharing Contract governing its exploration and extraction operations.
In its majority award, the arbitral tribunal held that although RIL had breached certain contractual obligations, the violations did not constitute a material breach of the contract that would justify the relief sought by the Government.
The Union Government subsequently challenged the arbitral award before the Delhi High Court.
In February 2025, a Division Bench of the Delhi High Court set aside the arbitral award, ruling that it suffered from patent illegality. The High Court observed that the Government, as the trustee of the country's natural resources, could not be presumed to have permitted the extraction of migrated gas simply because it had remained silent.
The High Court further emphasised that natural resources are held by the State in trust for the people and that their extraction must strictly comply with the applicable legal and contractual framework. It also rejected the approach of treating the alleged contractual violations as insignificant.
With the Supreme Court now referring the matter to mediation under former judge Justice Ranjana Prakash Desai, the long-running dispute over the alleged extraction of migrated natural gas from ONGC's block has entered a new phase of settlement efforts.
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