Investors are having second thoughts about parking their funds in Australia's gas sector because of the escalating cost of doing business in the country. At risk are $100 billion worth of investments.

A study by McKinsey & Company blames the rising costs to workplace disputes and bureaucracy, removing the geographical price advantage of building gas projects for shipment to Asia.

With the threats to the investments, chances to win the next round of export contracts are fast decreasing. Ann Pickard, country manager of Shell Australia, estimates that window may be only another 18 months.

Chevron Australia Managing Director Roy Krzywosinski, who called for a boost of productivity and improvement of industrial relations, said government and industry must initiate changes no to catch the second wave of investments, which he estimated would have a window between 18 and 24 months only.

In the past 10 years, Australia's gas sector has attracted investments totaling $200 billion, higher than what was brought in by the mining industry, delegates to the Australian Petroleum Production and Exploration Association conference were told.

That amount is being used to extract and process an estimated 300 trillion cubic feet of proven gas reserves, of which only 1 trillion cubic feet would be used for domestic consumption yearly, while another I trillion would be exported,

Marita Bradshaw, senior science advisor of Geoscience Australia, said the bulk of the reserves are in the north-west shelf off Western Australia and in the Cooper, Surat and Bowen Basins.

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