Scott Morrison?s rejection of Pep11 branded ?cynical? as government pushes on with other gas projects

The federal government's decision to end a plan to drill for gas off the New South Wales coast has been labelled a cynical political move ahead of the next election.

Scott Morrison made the announcement at the Terrigal surf life saving club on Thursday, telling reporters he had overridden resources minister Keith Pitt to kill the petroleum exploration project, known as Pep11.

"The reason why we're here today, and that is to announce, that after careful consideration, the government has taken, through my own decision, the first step to formally reject an application for the petroleum export (sic) permit, known as Pep11," Morrison said.

Morrison cited widespread community opposition, a lack of financial support underpinning the project and insufficient justification to extend the permit as reasons for the refusal, saying he had "listened carefully".

But in a separate statement, the government said it was still forging ahead with gas developments in other parts of the country as part of its gas fired recovery plan.

"The Morrison government is working to unlock investment in Australian gas including through a $220m commitment to the Beetaloo strategic basin and $15.7m in support for the North Bowen and Galilee basins," it said.

As community groups such as Save Our Coast celebrated the Pep11 decision as a victory for people power, observers say the government is trying to thread the needle between backing the gas industry and losing support ahead of the next election.

Associate Prof David Holmes, director of Monash University's climate change communications research hub, said there was a "dissonance" as the government sought to "hold on to the gas fired recovery narrative, but did not want that to impinge on their electoral chances".

"There's a 'not in my backyard' element to it," Holmes said. "Going into an election, the government does not want to upset electorates concerned about mining or any kind of extraction going on in the environment."

Bruce Robertson, an energy finance analyst with the Institute for Energy Economics and Financial Analysis, said Pep11 was among a number of "mind-numbingly silly projects" proposed within NSW in recent years.

"I see it as a total failure of the planning system," Robertson said. "Our planning system at all levels has a default approval position."

Robertson said the prime minister had expressed his personal opposition to the project as early as May but had delayed the announcement until now.

"I think the politics of this situation are pretty obvious. The government are facing electoral challenges similar to what Zali Steggall did in Warringah. Morrison is trying to nip that in the bud," Robertson said.

Richie Merzian, director of climate and energy at the Australia Institute, said Thursday's announcement was a "cynical" gesture following clear opposition from federal Labor and independents to ensure it did not become an election issue.

"Pep11 was causing more trouble than it's worth," Merzian said. "This is not the only place where you have community backlash against respective fossil fuel projects.

"There is also a large and loud push against the Beetaloo, but that's far up north and out of sight in electorates that are not under threat."

Though Pep11 might not be going ahead, the government was still considering more than 100 coal and gas projects across the country.

The International Energy Agency suggested in May that limiting global heating to 1.5C, a goal set out in the Paris agreement, meant exploration and exploitation of new fossil fuel basins had to stop this year.

Pep11, has been held by several different energy providers in recent years and allows for offshore drilling for gas and oil, and seismic testing in 4,500 sq km of water from off Manly on Sydney's northern beaches up to Newcastle.

Several fossil fuel companies have previously held the licence to explore for gas in the area. At the time of the government's announcement on Thursday, Advent Energy and Bounty Oil & Gas had sought a renewal of the exploration licence and permission to undertake exploratory drilling in the area.