CANBERRA, Dec 4 (Reuters) - Australia's oil and gas industry is burdened by unnecessary regulation, slowing multi-billion dollar investments, and reform is urgently needed, the government's main independent adviser said on Thursday.

The booming energy sector was hampered by overlapping rules imposed by state and national governments, Productivity Commissioner Philip Weickhardt said in a draft report to be finalised by April.

"There is plenty of scope to expedite project approvals and to streamline regulatory requirements for the upstream petroleum sector while still delivering the policy intent of governments," Weickhardt said.

Australia's Woodside Petroleum Ltd <WPL.AX> last month said it was considering locating its Sunrise liquefied natural gas (LNG) project in East Timor waters to avoid potential costs of a proposed Australian carbon trading scheme, starting in 2010.

Other LNG projects in Western Australia (WA) state have been delayed by environmental concerns and indigenous protestations they could damage fragile rock art painted thousands of years ago by Aborigines, prompting more government intervention. U.S. energy firm Chevron Corp <CVX.N> is planning Australia's biggest resources project, the 15 million tonnes per annum (mtpa) Gorgon LNG project, located between 130 km (80 miles) and 200 km (120 miles) off the northwest WA coast.

There are currently plans for 17 new LNG projects in Australia, Papua New Guinea and the Timor Sea over the next 10 years, increasing regional output by seven times to 117 mtpa. Resources and Energy Minister Martin Ferguson says Australia could be exporting 60 million tonnes a year by 2015.

Woodside is building the $7.7 billion Pluto project on the Burrup Peninsula, also in resource powerhouse WA.

The Productivity Commission said speeding up approvals by only a year could increase the net present value of planned projects by between 10 and 20 percent simply by bringing forward income streams.

"Given the sector contributes 2 percent of GDP, the potential income gains for Australian residents could be in the billions of dollars each year," the report said.

The draft, which is now open to comment from the public and energy firms, also recommended a new national offshore petroleum regulator be set up.

The final report will go to the centre-left government in April and could become policy. (Reporting by Rob Taylor; Editing by Ben Tan)

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