In an exclusive interview with Fairfax Media, Mr Macfarlane said the missing link in creating a single national gas market could be the 1000-kilometre pipeline between Alice Springs and Moomba, South Australia, which would link up the Northern Territory to the east coast gas market and could cost about $1.3 billion, according to industry estimates.

Mr Macfarlane declared the project was "more than a vision" and said he was in talks with NT chief minister Adam Giles, the industry and NSW Energy Minister Anthony Roberts and that "at the moment we are trying to get enough pieces to fit".

The construction of the 900-kilometre pipeline from Browse Basin on the Kimberley coast to Darwin, which is already underway, would then effectively link the eastern Australian gas market to the gas-rich west. Gas from the Browse Basin is currently slated to be sold overseas but in the future it could also be sold into the domestic market.

In a thinly veiled criticism of the NSW government, Mr Macfarlane warned a significant gas supply shortage was loomimg in NSW, "even if between now and the state election the NSW government starts to facilitate major progress in Gosford and existing Santos explorations".

"Even if we see major progress there in the next 12 months because of all the time that has been lost in NSW, there is no way that will provide a solution to NSW's impending gas shortage and higher prices which will really start to come into being in the winter of 2016 and then 2017," he said.

"The only solution to the gas supply problem in NSW appears to be interconnection."

Mr Macfarlane said that only about five per cent of NSW's gas comes from within the state, with the rest coming South Australia and Victoria. As new export projects came on stream in Gladstone, Queensland, there was a risk that gas could be diverted from domestic to export markets, leaving NSW with a growing gas shortfall.

"It [gas] could become very expensive. There are people speculating it could cost $10 a gigajoule or more."

While prices could start to rise next year, Mr Macfarlane said they could move "in a big way" in 2016. NSW hadn't developed its own supply, he said and as "we have a domestic shortage in NSW, the only realistic solution is to connect the Northern Territory to Moomba [in South Australia]".

Mount Isa was another possible connection point, he said.

"Gas from WA will trade into the Sydney basin but it won't actually be the molecule. It would mean all one gas market," he said.

"Theoretically you could deliver from Browse to Sydney but it wouldn't ever happen, it would be done on the basis of swaps [of gas from one market on to the next]. You wouldn't seen the molecule actually delivered into Sydney."

Mr Macfarlane said that at the moment, the Commonwealth was not considering putting money into the pipeline project though he left the door open to that occurring once decisions had been taken about how to build the pipeline and where the connection would be made.

The plan, Mr Macfarlane said, could deliver additional gas supplies into NSW within three years which would be about two years faster than developing NSW's own gas supplies.

In recent months, Mr Giles has lobbied for the connection to be made between Moomba and Alice Springs. South Australian Premier Jay Weatherill has also descirbed the project as an exciting idea that could benefit his state.

Industry sources said the major commercial stumbling block to the project was whether it would be possible to get the gas into the Sydney market more cheaply than from domestic supplier. Industry is currently running a campaign that states NSW has a potential 500 year gas supply but the state continues to import 95 per cent of its gas.