PERTH (miningweekly.com) – The New South Wales government has suspended ASX-listed Metgasco’s right to drill at an exploration well near Bentley, on the grounds that the company had not fulfilled its exploration licence conditions.

New South Wales Resources and Energy Minister Anthony Roberts said on Thursday that the state’s Office of Coal Seam Gas (OCSG) had informed Metgasco of the suspension, based on the fact that the company had not undertaken “genuine and effective” consultation with the community, as required by its licence conditions.

Metgasco is facing severe community opposition to its CSG exploration activities. Police were called in earlier this week to remove anti-gas protestors from a local farm.

“I have been advised by OCSG that fundamental concerns have been expressed by members of the effected community about the way in which Metgasco has characterised its activities,” said Roberts.

He added that the OCSG suspended Metgasco’s approval to construct the Rosella exploration well following a meeting with local land-holders.

“Metgasco must now demonstrate to the OCGS that it has complied with the fundamental conditions of its licence,” the Minister said.

Metgasco told shareholders on Thursday that despite claims to the contrary, the company was confident that it was in compliance with all conditions attached to its exploration licence, and would seek to demonstrate this to the government.

“The company is in the process of mobilising a drilling rig to drill the Rosella well and, therefore, this advice from the New South Wales government comes at a very critical time,” the miner said.

The company has sought and obtained a 48-hour ASX trading halt on its shares, pending a meeting with the government.

Earlier this year, the New South Wales government announced that it would freeze all petroleum exploration licence applications and audit existing petroleum exploration licences as it reconsidered its options for CSG in the state.

The freeze would remain in place until September 26, while the government put in place a more comprehensive application process.

The Australian Petroleum Production and Exploration Association (Appea) has expressed concern about the state government’s move to suspend Metgasco’s licence, saying it could set a damaging precedent for resource development in that state.

“Investors should be concerned about what constitutes ‘genuine and effective consultation’ in New South Wales. The industry is concerned that the presence of protestors at an operational site should not mean that genuine consultation with the community has been ineffective,” Appea said on Thursday.

“Companies willing to invest tens of millions of dollars in projects to bolster the state’s gas supply now face an uncertain future courtesy of a campaign by The Greens and extreme environmental groups to stop the production of traditional energy sources.”