Ormil's managing director Tom Fontaine said exploration in the region had halted after the "administrative oversight" by Apex.

The joint venture is facing the possibility of losing a key exploration licence.

"While Ormil is hopeful that we will ultimately retain the permit area, exploration is obviously suspended and we are considering our options," Mr Fontaine said in an ASX announcement.

Apex had approval to drill 16 exploratory boreholes across two Illawarra titles, covering a large stretch of the escarpment and coastline and most of suburban Wollongong.

However, the southern licence expired in February and has not been renewed.

In March, Apex lodged a new application for the area, stretching from Clifton in the north to Dapto in the south.

But it faces surprise competition from the NSW Aboriginal Land Council, which submitted its own prospecting authority one week earlier.

The land council's application was expected to be dealt with first.

"This situation is a result of an administrative oversight by Apex Energy, who have been working with the Titles department and have informed us that this issue could be resolved," Mr Fontaine said.

"The recent ... application lodged by the NSW Aboriginal Land Council complicates the situation."

He yesterday added that there had been discussions within Ormil about abandoning the project.

"The longer this takes the more we are looking at other projects."

Mr Fontaine said leaving the Illawarra project was not his intention, "but I can't say that there has been no discussion within the company".

Apex's southern title, known as petroleum exploration licence 442, expired on February 26.

A renewal application lodged on February 29 was not accepted, the ASX statement said.

A later electronic application was not accepted because it didn't meet legal requirements.

The latest application, lodged on March 12, has been accepted but might not be successful.

Exploration activities can only be carried out under a valid licence.