partner BP have cited geological complexities for the fall in output, but the oil regulator believes they failed to drill enough wells.
Falling output had already prompted the government to disallow proportionate cost recovery to Reliance, leading to arbitration proceedings over the issue.
"They have come forward with the proposal for bank guarantees. There are some arbitration proceedings pending. Till that is settled, they will submit bank guarantees," Oil Minister Veerappa Moily told reporters at an industry event on Tuesday in Mumbai.
Gas from D6 was earmarked for strategic domestic industries including fertiliser production, cooking gas and power, but has fallen so much that only some fertiliser plants now get supplies from the offshore block.
"We will put up a cabinet note in 10-15 days. Our ministry is concerned because we are keen to close the issue," he added.
A spokesman for Reliance, controlled by India's richest man, Mukesh Ambani, declined to comment on the matter.
The minister did not disclose the amount of guarantees, although media reports have earlier estimated them at $135 million per quarter.
India, which imports nearly 80 percent of its oil and a quarter of its gas requirement, hopes to launch a new round of auctions for oil and gas blocks by mid-January, Moily said.