Daybreak - Reliance's broken promise is India's energy crisis

Episode Date: April 20, 2026

Seventeen years ago, Reliance Industries made a promise that was supposed to change India's energy future. It didn't. Today, with a war raging in the Middle East, the Strait of Hormuz mostly closed, and Qatar — India's single largest gas supplier — unable to guarantee supplies, that broken promise has become a full-blown crisis. India finds itself caught between Trump, Tehran, and its own structural failures. The IEA calls it the worst energy crisis in history. For India, it may be the moment that finally forces a reckoning.Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Since the U.S.-Iran war broke out in the Middle East, it has been no secret that India is scrambling to import natural gas. It powers factories, generates electricity and keeps the lights on at home. And it was one thing that India hoped it would eventually be producing more of at home. The thing is, this import dependency problem has been something the country has been trying to solve for a long time. So it's no surprise that 17 years ago, reliance industries, made a promise. The largest private sector refiner in the country once vowed that KGD6, or the Krishna-Gudavari-D-6 block, one of India's first deep-water gas fields, would transform the country's energy landscape. Instead, after an initial success, production collapsed

and India's dependence on imports from the Middle East and other geographies has only grown since then. Imports now cover more than half the country's gas needs. Nearly half of that comes from Qatar alone. And that single source dependence has left India incredibly vulnerable. For instance, a recent Iranian attack on regional energy infrastructure knocked out nearly a fifth of Qatar's export capacity.

Since then, Qatar has formally notified its long-time buyers, like India, that it can no longer guarantee deliveries. An analyst that my colleague, Anand Kalyana Raman, spoke to, said that it's not looking too good. Basically, India is in a precarious position. And while all this was taking place, something else was happening further west.

Earlier in March, US President Donald Trump announced a $300 billion oil refinery in Texas. It was backed by America First Refining and Reliance Industries. But the interesting thing was, the company made no statement of its own, No confirmation, no denial or even a further explanation on the details of the deal. And the silence was strategic. Strategic because as a senior executive in the oil and gas sector put it, India and Reliance are both walking a tightrope. You see, India has had a long-standing relationship with both the US and Iran.

So neither the country or the company can afford to antagonize Trump by pushing back. And they can't be seen siding with his adversary Iran either. Even as India maintains active diplomatic ties with the country to keep the straight of Hormuz open and the energy resources flowing. The whole thing is also awkward for reliance because even as it is being credited with refining expertise and backing a massive overseas project, it is heavily under-delivered on exploration, which is the harder, riskier business of actually finding and extracting oil and gas. And that failure has come back home to affect India. The stakes, according to the senior executive we quoted earlier, are historic. He said that this is India's 1991 movement for energy security.

You see, in 1991, India nearly ran out of foreign exchange and had to airlift gold abroad to stay afloat. The crisis forced sweeping economic reforms. Today, that executive is drawing a direct parallel. India's energy dependence has become a structural weakness of the same. order. Welcome to daybreak, a business podcast from the Ken. I'm your host, Richard Riggis, and every day of the week, my co-host, Nikita Sharma and I will bring you one new story that is worth understanding and worth your time.

Today is Tuesday, the 21st of April. After a brief post-pandemic recovery, KTD6's output first flatlined and then declined again in recent quarters, dragging down domestic production just as global supplies are under stress. But that wasn't how it was supposed to turn out. Back in 2008, Reliance said that KGD6 had started production in record time. It took only six and a half years against the global average of 9 to 10 years for deep water projects, which is basically offshore drilling in extreme ocean depths.

In fact, KGD6 was among the five largest such projects in the world. In a year, by 2009, output had ramped up to 60 million standard cubic meters per day. That's actually one of the fastest increases, globally speaking. Reliance was producing nearly two-fifths of the gas consumed in India, and the country's import dependency fell below 20%. But that tide turned fast. By 2011, the output was falling. At first, both the company and the government thought that this was a passing hiccup.

In fact, even the economic survey at the time expected a recovery and was optimistic that KGD6 would hit its peak target of 80 million standard cubic meters in a year or two. But instead, the decline continued for years. A partnership with global energy major BP was initiated. It took a 30% stake in many fields to help slow the fall. But that didn't work either.

This was a huge hit to India's energy security and its gas supplies. See, it was 2012 when KGD6 first shot. showed signs of struggle. That year, the import dependency was under 30%. But by 2020, it had crossed 50%, which was also around the time when KGD6's output had crashed to nearly zero. Now, things did start looking up during the pandemic. Three new phase started operating and briefly lifted output. But production peaked at only 30 million standard cubic meters, which, as you know by now, was obviously below the all-time high, and it has only been declining since then.

Meanwhile, consumption has only been rising, and the gap, of course, is being filled by costlier and costlier imports. The war in the Middle East has made those imports not just expensive, but in many cases almost impossible to secure. In fact, the IEA or the International Energy Agency's executive director, Fati Birol, has called this the worst energy crisis in history. worse than the oil shocks of 1973 and 1979 combined. He warned that we are heading towards a major, major disruption. And there's no quick fix for this. The US Energy Information Administration,

projects that even if access to this trade returns to how it was, oil prices will stay elevated well into 2027. That increase is going to be roughly $23 or $2,000 or $2,000 higher per barrel than they would have been, had none of it. of this happened. Other countries can't really help much either. Analyst told Anand that alternative supply from Australia or the US would be much costlier. Plus, the longer shipping distances would only add to the bill as well. He also noted that supplies this expensive may actually not even be viable for many users. Also, the problem runs further than just reliance. Even public sector players

like ONGC and Oil India haven't really pulled their weight either. The senior executive we spoke to earlier said, and I quote, at least reliance got going, even if output crashed later. Meanwhile, ONGC barely got started in its own adjacent block.

Considering that together both ONGC and Oil India account for more than two thirds of the country's natural gas production, a sector analyst claimed that even a modest output increase from them would have made a huge difference. Right now,

Reliance accounts for about 30% of domestic gas output. But that's still far below its peak, and nowhere near enough to meet the country's needs. Its international track record isn't faring much better either. Shale gas assets, which is basically gas-strapped in deep-rock formations, were required by reliance in the US between 2010 and 2013. They were eventually sold and often at a loss, triggered by low prices due to a gas abundance in the US and weak profitability. The company had also exited all its conventional oil and gas acids in Myanmar, Peru, Yemen, Oman, Kurdistan, Colombia, East Timor and Australia.

The thing is, Reliance excels at the refining part of the process. But exploration and production doesn't seem to be its strong suit. A senior executive said that it may simply not be in its DNA. Stay tuned. Reliance blames geological complexity. Things like water and sand flooding the wells, pressure drops and a natural depletion of reserves. Analyst told Anand that exploration is inherently high risk, especially in deep water.

But still, he pointed out that the company's initial projections were simply too optimistic. Not only did this throw off the gas in boat math, but it also hurt the government's share of profit from KGD6. That's basically the money it should have caught in from Reliance after the company recovered its own costs. It also put India's goal of raising the share of natural gas in its energy mix from 6% to 15% on shaky ground. What followed were a slew of allegations, counter-allegations and legal cases, all of which still continue. The government said Reliance hadn't drilled as many wells as expected, only 18 of the 31 that were planned. This denied the government a full cost recovery.

Meanwhile, ONGC claimed compensation for gas that Reliance had allegedly accepted. extracted from its block. Of course, Reliance disputed all of it. It even refuted reports that said that the government had made a claim for $30 billion. Reliance said that it was actually closer to $250 million and that the real number was disclosed in its financial statements. This fallout has ended up affecting investor confidence in the sector badly. The executive from earlier explained that when a group as big as Reliance gets stuck in litigation, others naturally become a little vary. To improve investor sentiment though, some policy reforms have been introduced. The old regime where the government got paid only after companies recovered their costs was a system ripe for

disputes. It was replaced in 2016 with a simpler revenue sharing model. In 2023, the government also revised pricing for deep water gas to incentivize exploration. The changes helped. An analyst claimed that it actually did reduce disputes between the government and the contractors. It has also helped reliance in posting a sharp jump in its operating profit from the oil and gas exploration segment over the past few years. For example, in FI25, it actually posted an operating profit of around 16,000 crore rupees, which is about 12% of its total profit. Of course, it's relatively smaller than the profit from other verticals like oil to chemicals, digital and retail, but it's still a sizable figure. The recent output decline, though, does continue to threaten all

that. Oil and gas industry stakeholders are calling for more than just incremental policy fixes. The senior executive explained that the reforms that seem big in India are already standard in many parts of the world. What India needs then to boost domestic output is radical changes. That means faster pipeline build out in gas producing states like Assam, Gujarat and Rajasthan to unlock gas that's already been found but hasn't reached the market yet because, the right infrastructure does not exist. As for deep water exploration, the executive believes that where capital requirements are huge,

the government should invite global majors with attractive terms. Of course, none of this will happen overnight. But it could still help India avoid such forced and awkward adjustments in the future. You see, the current crisis has made one thing clear. Hydro-carbons remain indispensable to India, despite the country's increasing focus on renewable energy. and a good crisis, as they say, should never be wasted. Daybreak is produced from the newsroom of the Ken

India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription offers daily long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by my colleague, Rachel Vargis and edited by Rajiv Sien.