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has agreed to invest up to $8 billion for a half stake in a liquefied natural gas project in Queensland, Australia.

The Houston-based oil company said Sunday it is venturing with Australia's Origin Energy, which holds and operates the coal bed methane assets. Under the plan, Conoco will invest an initial $5 billion to the joint venture and make as many as four additional payments of $500 million each to the venture based on project milestones.

The 50/50 joint venture will be comprised of the coal bed methane development, operated by Origin Energy, and a liquefied natural gas (LNG) project, operated by Conoco. The venture will market the LNG primarily to Asian markets. ConocoPhillips will lead the marketing for the first 10 years of the venture.

"With this investment, ConocoPhillips has gained access to the leading coal bed methane resource in Australia, comprising 8.1 million net acres. Moreover, the company has enhanced its LNG position with the creation of an additional Australian LNG hub serving Asia-Pacific markets," said Conoco CEO Jim Mulva in a statement.

Origin Energy estimates the Bowen and Surat basins in Queensland have a gross resource base of 42 trillion cubic feet, and Conoco predicts peak production of 175,000 net barrels of oil equivalent (BOE) per day in 2023.

The deal, which is subject to regulatory approvals in Australia, is expected to close in October 2008.

This article was written by a staff member of