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In May 2017, I bought a KIA Sportage 2013 from a KIA dealer. At that time, the car had done approx 50,000 kms and I was told that I have remaining factory warranty of 1.5 years (till end 2018) out of the total 5 year warranty from the time of sale. Ever since I serviced the car within the recommended maintenance schedule through the same KIA dealer. The car has done close to 100,000km now and last month I noticed some strange noise coming out of the engine and I took it for inspection. They checked and told me that the piston is flapping and the engine short block needs a replacement giving me an estimate of $12,000 to do the job. They offered to talk to KIA NZ to see if this could be covered under a goodwill since it was just out of warranty. KIA NZ refused to treat this under goodwill since they found that they couldn't find a record of 30,000km service and so the car's warranty expired at that point. I infact asked the question about past service history but I was told that I don't have to worry about it as long as I service the car with them. They have now offered to fix the car for $6000 but I still think that's too high for no fault of mine. Is there any option available for me?

I have not herd of this piston slap issue before in this model. Unfortunately as it is out of warranty it may be wise to reconsider their final offer of $6000, perhaps setup a meeting with the dealer principle to see if there is any further assistance they could offer you.
The other route could be to fit used engine if one was available at a lower cost.