Reliance Industries shares end 1% lower: Govt seeks ₹24,500 crore from company, its partners; all you need to know

The government, the company said, has slapped a $2.81 billion (about ₹24,500 crore) demand notice on Reliance Industries Ltd and its partners, including BP Plc for gains made from producing and selling natural gas that may have migrated from neighbouring block of state-owned ONGC.

This follows the Delhi High Court's decision on February 14, overturning an international arbitration tribunal ruling that held the duo not responsible for paying any compensation for the gas they produced and sold, which had allegedly migrated from adjoining fields.

"Consequent upon the Division Bench judgment, the Ministry of Petroleum and Natural Gas has raised a demand of USD 2.81 billion on the PSC contractors, namely Reliance Industries Ltd, BP Exploration (Alpha) Ltd, and NIKO (NECO) Ltd," Reliance said in a stock exchange filing.

Originally, Reliance held a 60% interest in the Krishna Godavari basin deep-sea block KG-DWN-98/3, or KG-D6, while BP had 30% and Canadian firm Niko held the remaining 10%.

Subsequently, Reliance and BP took over Niko's interest in the production sharing contract (PSC) and now hold 66.66% and 33.33%, respectively.

The government had in 2016 sought $1.55 billion from Reliance and its partners for the quantum of gas that had migrated to its block KG-D6 from adjoining fields of ONGC.

Reliance contested the claims before an arbitral tribunal, which in July 2018 upheld that it was not obliged to pay any compensation.

The dispute dates back to July 2013, when Oil and Natural Gas Corporation (ONGC) suspected reservoir connectivity of its KG-DWN-98/2 (KG-D5) and G-4 blocks with that of Reliance's KG-D6.

It felt that at least four wells that Reliance drilled on the borderline with KG-D5 may have drained out its resources as well.

RIL share price trend

Shares of Reliance Industries (RIL) have fallen 23% in the past 12 months.