SHONKY coal seam gas operators across NSW risk losing their exploration licences as the government cracks down on "speculators and cowboys" in the market.
NSW Premier Barry O'Farrell on Wednesday announced a six-month freeze on processing new exploration licences, while his government reviews the controversial process.
He accused the former Labor government of granting licences "like confetti" and allowing exploration "from Palm Beach to Cronulla and from Bondi Junction to St Marys".
"We're taking decisive action to ensure the state's resources are developed for the people of NSW and not for the benefit of Labor MPs, their cronies and their union mates," he told parliament.
The premier warned his government was also auditing existing petroleum exploration licences - a process that could lead to licences being revoked.
The government is concerned about the application process, which has seen small companies - sometimes run by one person - being allowed to explore large areas, despite not having the experience or financial backing for the projects.
Mr O'Farrell said the former Labor government granted 39 exploration licences while his government had yet to grant a single one.
He pointed out that three-quarters of the licences granted under Labor were issued by former ministers Eddie Obeid and Ian Macdonald, who were later found to have acted corruptly by the Independent Commission Against Corruption.
He slammed Labor for only charging $1000 for exploration applications.
That fee is now being raised to $50,000.
Resources Minister Anthony Roberts said it had been "far too easy for speculators and cowboys to be granted petroleum exploration licences over large areas of land with little regulation and little oversight".
The Greens welcomed the decision but urged the premier to allow farmers and the community to stop CSG projects near them.
Phil Laird, from anti-CSG group Lock the Gates, commended the announcement.
"The previous regime seemed to focus entirely on mining and gas, whereas this is showing that the government's trying to clean up the process," he told AAP.
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