The tribunal that awarded energy company Santos mining leases for the Narrabri gas project in northern NSW failed to consider the public interest in the project's environmental impact, a court has found.

"There are a number of passages in the tribunal's reasons which indicate that it did indeed consider it was no part of its function ... to evaluate for itself the environmental impact of (such) a project," Federal Court of Australia chief justice Debra Mortimer said in allowing the appeal on Wednesday.

"The tribunal's decision and reasoning on public interest is affected by the errors alleged," she said.

In December 2022, the National Native Title Tribunal made a determination to grant Santos the petroleum production leases enabling the project to proceed.

The appeal, by the Gomeroi people, was successful by majority decision on the grounds the tribunal should have considered the affects of climate change in its determination.

However the Federal Court did not agree with the Gomeroi's other arguments about negotiating in good faith or procedural fairness.

Lawyers for the Gomeroi submitted that there was a public interest in seeking to mitigate and prevent the worst likely effects of global warming, and the preservation and continuity of the culture and society that underpins the Gomeroi people's traditional law and custom.

Justice Mortimer said the tribunal had erred by saying the Gomeroi needed to tie increases in greenhouse emissions from the Narrabri project to impacts on their native title in the land and waters of the area

The parties have until March 13 to file proposed orders with the court, or March 20 for submissions on appropriate orders if they cannot agree on them.

NSW Greens environment spokesperson Sue Higginson said Santos and the state government should walk away from the "disastrous" a fossil fuel project, which is expected to result in the emission of between 109-120 million tonnes of carbon dioxide equivalents.

"What we have seen today is that it is possible to take on these giants and win, it is appalling that First Nations communities are carrying the burden of taking on these mining giants," Ms Higginson said.

Australian Associated Press