The Northern Land Council has accused the Northern Territory government of being "sneaky" in its handling of a controversial new gas industry law.

NLC chairman, 2023 NT Australian of the Year, Samuel Bush-Blanasi said the government rushed the Petroleum Legislation Amendment Bill 2022 and "deserves to be slammed for selling out Territorians and Traditional Owners".

The Bill, passed on Thursday, was introduced to the Northern Territory Parliament mid-October by the Minister for Mining and Industry, Nicole Manison.

The NLC noted that information released by the government following the introduction of the bill (Community Bulletin #55) made no reference to changes in relation to "so-called appraisal gas".

"Appraisal gas is released following successful drilling during the exploration stage of onshore gas development. Under the current law, this gas belongs to the Crown until the production phase commences.

"The Bill proposes to change the law to make appraisal gas the property of the exploration company," the NLC said in a statement.

The Council said that despite the concerns of other land councils and native title holders, the Territory government had proceeded with legislation that "fundamentally alters the regime for onshore gas development", adding that land owners and native title holders were "caught by surprise when it was introduced as it contains changes that were kept secret".

"This is a sneaky thing to do. They pretend it's about the protecting the environment but it's really about caving in to industry," Mr Bush-Blanasi said.

"The purpose of the Bill is to implement recommendations arising from the Pepper Inquiry – the Independent Scientific Inquiry into Hydraulic Fracturing in the Northern Territory. Clause 7 of the Bill provides that property in petroleum produced from a well on a petroleum title passes to the interest holder at the wellhead.

"This thing they call 'appraisal gas' is really stolen gas. Except it's the Territory government that's stealing it and handing it over to industry."

Northern Land Council chief executive Joe Martin-Jard said he felt blindsided by the measure and questioned the integrity of the policy process.

"This was never part of the Pepper recommendations. There was no consultation, no modelling of the impact or volumes involved, no time for us to properly consider it, no consideration of alternatives, absolutely no respect for Traditional Owners and native title holders or our Council Members who answer to their communities on these issues. It's disgraceful.

"We're going to have to look at all our agreements now in this sector. This measure has created so much confusion and uncertainty."

Mr Bush-Blanasi said the government has made "a bad mistake here".

"They should stop treating Land Councils and Traditional Owners with contempt and get rid of this measure from the Bill… If they don't, I want the Chief Minister to explain why."

On passing the Bill the government said the legislation "in line with the 135 recommendations from the 'Scientific Inquiry into Hydraulic Fracturing in the Northern Territory' (Pepper Inquiry)".

The Bill satisfies 13 of the 135 recommendations.

The government said the 13 recommendations addressed by the legislation include "empowering the community through key decision making process, mandatory insurance requirements for all petroleum interests and enabling a more rigorous legislative framework that provides a strong deterrent for non-compliance".

Mining and Industry minister Nicole Manison the legislation was a step towards making onshore shale gas development in the Northern Territory "not only sustainable, but world class and best practice".

"Gas will play a critical role in the renewable energy transition as we move toward a greener future, and will be crucial for the Territory economy and local jobs," she said.

"Government has collaborated with the Territory's Land Councils to strengthen consent provisions in the legislation. Traditional Owner consent is non-negotiable, and exploration or production cannot and will not proceed without it."

Nurrdalinji Aboriginal Corporation chair, Gudanji-Wambaya man and jungai (cultural lawman), Johnny Wilson, said previous that his community was "shocked that the government has changed the rules to allow gas companies to do large scale mining on our country without our consent".

"Gas companies in the Northern Territory have never done the right thing by Aboriginal people but now they have lent on the government to allow them to ignore us even more," he said.