Minister for Resources and Energy Anthony Roberts announced the buybacks, the latest in a series, on Monday.

“The Special Areas of the Sydney water catchment are the most sensitive and important areas for securing our drinking water supply,” Mr Roberts said, referring to the restricted “special” areas around the region’s dams.

“Our plan ensures the gas industry in NSW will operate on our terms, not to the low standards set by the previous Labor government.”

For the activist group Stop CSG Illawarra the announcement was something of an anniversary present; Tuesday, March 17 marks four years to the day since the group started its campaign.

“Community opposition to CSG, and the campaign to protect land and water, delivered this outcome,” Stop CSG Illawarra spokeswoman Jess Moore said.

“Our group now numbers almost 6000. Today marks a big victory for the campaign. Three of the four remaining CSG licences in our catchment are gone - licences that should never have been issued.”

She said new licences could still be issued over the catchment areas after the election, and a permanent ban was the only way to stop them.

The newly cancelled leases were owned by Apex Energy, and managed by its joint venture partner Magnum Gas and Power.

The Illawarra buyback came as a surprise – only last week Magnum chairman Tom Fontaines said the PELs would not be handed back, and was scathing in his assessment that the value offered for the buyback was ridiculously low.

“This new pricing is completely due to the politics and the risk and nothing to do with the technical or economic merit of the areas,” he said.

The decision would have been Apex’s to make. Late on Monday the publicly listed Magnum had not informed its shareholders of the buyback, with no mention on the ASX site when the market closed.

Apex Energy’s spokesman Chris Lawrence declined to comment on Monday afternoon.

Apex agreeing to the buyback is a win for the government as well as for environmentalists.

It means the government has been able to extricate itself from politically sensitive CSG exploration in catchment areas, without having to ban it by law and pay heavier compensation.

The move also means former leader Barry O’Farrell’s pre-election promise to stop CSG in water catchment areas has come true in the Illawarra, if not in all catchment areas.

PEL2, owned by AGL in western Sydney catchment areas, is still active and on Monday night environmentalists were calling for its cancellation.