Election result adds to Northern Territory gas uncertainty in Australia

SYDNEY (REUTERS) - Australia's centre-left Labor Party won a convincing vote in the Northern Territory election on Saturday (Aug 21), a result that will likely add to existing uncertainty over development of the region's onshore gas industry and could ward off foreign investment.

Labor, which trounced the ruling Country Liberals Party, has promised to put in place a moratorium on fracking - a process which involves high-pressure injections of water, chemicals and sand into the ground to release oil and gas - until its impact on the environment is fully known.

Economic forecasters Deloitte last year estimated the region's untapped shale and tight gas resources to be worth US$22.4 billion (S$30.5 billion) to the local economy over the next two decades, but opinion about controversies over fracking has sparked intense debate in the territory.

Matthew Doman, Northern Territory director for the Australian Petroleum Production & Exploration Association (APPEA), said on Sunday there was no reason for a moratorium. "Every reputable study confirms that, properly regulated, our industry is safe." Global oil and gas players like South Africa's Sasol , Japan's Inpex, and Falcon Oil & Gas have been attracted to the region, as well as Australian companies Santos and Armour Energy.

Proximity to Asia and existing pipelines and LNG export facilities makes Northern Territory attractive.

Adam Giles, the outgoing leader of the Country Liberals Party, warned before the election that imposing a moratorium on fracking would halt investment and present a sovereign wealth risk for the territory.

In February, Sydney-based Pangea Resources suspended its drilling operation in the Northern Territory, citing uncertainty over fracking legislation.

Lauren Mellor, an organiser with the Territory Frack Free Alliance, said the election result was a win for the anti-fracking campaign.

Best estimates put the prospective resources of shale gas and tight gas in the Northern Territory at nearly 270 Tcf, according to the Northern Territory government.

The election defeat ends a controversial single term in power for the Country Liberals party, which was embroiled in a series of scandals and burned through two chief ministers and six deputies.

Last month prison CCTV footage showed guards teargassing six aboriginal teenage inmates and strapping a half-naked, hooded boy to a chair at a Darwin youth prison.

Federal Labor leader Bill Shorten said the Northern Territory election result was undoubtedly a verdict on the Prime Minister Malcolm Turnbull's Liberal-National Coalition in Canberra.

Federal parliament sits for the first time on Tuesday after a July 2 election left the ruling coalition with a razor-thin majority.