AGL Energy shares climbed after the federal government was forced to admit it would approve the first stage of a new coal seam gas project in New South Wales.
Federal Environment Minister Tony Burke on Monday granted conditional approval for a 110-well coal seam methane gas project at Gloucester on the state's mid-north coast. He was forced to act after a leaked letter showed he intended to approve the controversial project along with Whitehaven Coal's Boggabri and Maules Creek mines.
He has accused the NSW government of leaking the sensitive information and causing market uncertainty and has ruled it out of any future dealings over the mine proposals. The approval remains subject to 36 conditions protecting fauna and flora and groundwater.
Mr Burke said there was no guarantee the three projects would go ahead, insisting they were "highly conditional". He said the CSG project would only go ahead if AGL met conditions relating to potential adverse effects on groundwater.
Federal Lyne independent MP Rob Oakeshott said he was disappointed about the decision in a "busted planning process" despite community concern about threats to drinking water.
AGL group general manager of upstream gas Mike Moraza said the company would work on satisfying conditions and securing planning approval from the NSW government.
AGL shares closed up 20¢ at $15.45.