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GAIL (India) Ltd’s arbitration proceedings against Focus Energy Ltd and its consortium partners have taken a contentious turn, with Focus Energy formally denying all claims made by GAIL and filing counterclaims worth ₹5.29 billion. The dispute stems from a long-standing Gas Sale and Purchase Agreement (GSPA) related to the supply of natural gas from the SGL fields in Rajasthan’s RJ-ON/6 block, which expired in September 2024.
The arbitration, currently underway in Delhi, has drawn attention due to the scale of financial claims and the complexity of contractual obligations under India’s upstream and midstream gas framework.
Key Highlights
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GAIL’s Claims: GAIL alleges non-supply of “Make-Up Gas” despite having paid ₹1.97 billion in Annual Take-or-Pay (AToP) and Quarterly Minimum Payments (QMP) between 2010 and 2015
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Focus Energy’s Response: Denies all claims and invokes Force Majeure due to adverse reservoir behavior since 2018
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Counterclaims Filed: Focus Energy and its partners have filed counterclaims totaling ₹5.29 billion against GAIL
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Legal Proceedings: GAIL has sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, including security deposit and extension of the Restoration Period
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Contractual Background: GSPA expired on September 30, 2024; Production Sharing Contract (PSC) expired on August 20, 2024
The crux of GAIL’s grievance lies in its assertion that despite fulfilling its payment obligations under the GSPA, it did not receive the agreed quantity of gas, nor was it compensated through Make-Up Gas provisions. GAIL claims that the Restoration Period—meant to allow for post-expiry gas recovery—was insufficient and seeks judicial intervention to extend it.
Focus Energy, along with iServices Investment Ltd and Newbury Oil Company Ltd, has countered that reservoir conditions deteriorated beyond control, triggering Force Majeure clauses. They argue that GAIL’s refusal to off-take available gas during the Restoration Period undermines its entitlement to further claims.
The Delhi High Court, in its January 2025 hearing, acknowledged the urgency of the matter given the expiry of both the PSC and GSPA. The tribunal is now tasked with evaluating the validity of Force Majeure claims, the enforceability of Make-Up Gas provisions, and whether interim relief is warranted.
Industry observers note that the outcome could set a precedent for future disputes in India’s gas contracting ecosystem, especially as more blocks transition out of PSC regimes and into revenue-sharing models under the Hydrocarbon Exploration and Licensing Policy (HELP).
GAIL, India’s largest gas transmission and marketing company, has been actively expanding its infrastructure footprint while navigating legacy contractual challenges. The arbitration with Focus Energy underscores the operational and legal complexities of long-term gas supply agreements in a volatile upstream environment.
Sources: CaseMine, Jus Mundi, AINvest
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