The warning came today as APPEA launched its industry-first discussion paper, "NatGas - Generating Economic and Social Wealth for the Nation".

"NatGas - which outlines the view of APPEA and its members - is the most comprehensive natural gas supply strategy ever released in Australia," said APPEA's Executive Director, Barry Jones.

"The paper pulls together both the export market and the domestic market. It looks at all existing and potential uses for gas. It considers the degree of variation in regional gas markets domestically. Thus it gives a comprehensive view of issues related to gas supply development in Australia.

"Our members are deeply concerned that the potential for a horribly fragmented approach by our political parties will prevent Australians reaping the maximum benefits from the nation's abundant natural gas resources," Jones said.

Jones added that such a disjointed policy approach could lead to the serious undermining of investors' confidence and threaten the potential lucrative benefits that can flow to the nation and its people from natural gas development.

The core question asked by NatGas was 'how much wealth does the nation want to receive from gas development?'

"Potentially, there is a very large pot of gold out there. If that potential is realised, the contents of that pot of gold will generate more jobs, create new industries, expand markets for service companies and help finance a great deal of Australia's needs, as the population ages and as education and health systems have to be revitalized," said Jones.

"If we want to maximise the national benefit, governments have to remove impediments to the effective operation of the market that add costs to investment and therefore reduce market opportunities.

"But more importantly, they have to recognise that ensuring gas moves to its highest national value uses means they have to develop a fiscal framework that allows private investors to incorporate public benefits into final investment decisions.

Mr Jones said he also welcomed the support APPEA had received from all its member companies and from the other industry bodies in developing the NatGas discussion paper.

The Australian Pipeline Industry Association Limited (APIA), the national body representing Australia's gas transmission sector today welcomed the release. Chief executive officer, Dr Allen Beasley, said that despite CoAG's stated goal of increasing the role played by natural gas in Australia's energy mix, many barriers to gas development remain despite the commitment to "free and fair" trade in gas announced 10 years ago.

"The issues facing gas development in this country are unique and must be addressed quite separate from those affecting other forms of energy such as electricity."

"The commercial drivers for gas production and transmission are very different from those in other parts of the energy sector and must be pursued on their own merits."

Leading Australian companies such as BHP Billiton, Woodside Energy, Santos, Origin, Tap Oil and Beach Petroleum are among more than 50 oil and gas developers and explorers on the APPEA membership.

APPEA's overseas-based members behind the discussion paper include petroleum giants such as Exxon Mobil, Chevron Texaco, BP, Shell, Conoco Phillips and Apache.