Exxon Mobil ( XOM) has teamed with Synthetic Genomics in a $600 million partnership to research and develop next generation biofuels from photosynthetic algae.

"This investment comes after several years of planning and study and is an important addition to Exxon Mobil's ongoing efforts to advance breakthrough technologies to help meet the world's energy challenges," said Emil Jacobs, vice president of research and development at ExxonMobil Research and Engineering, in a statement Tuesday.

Synthetic Genomics is a privately held company founded by genomics pioneer J. Craig Venter.

Under the program, if research and development milestones are successfully met, Exxon Mobil said it expects to spend more than $600 million, which includes $300 million in internal costs and potentially more than $300 million to Synthetic Genomics.

One of Exxon Mobil's requirements was finding a biofuel source that could be produced on a large scale. It says photosynthetic algae appears to be a viable, long-term candidate. If the alliance is successful, pumping algae-based gasoline at Exxon Mobil service stations is still several years away and will mean additional, multibillion-dollar investments for mass production.

"This is not going to be easy, and there are no guarantees of success," Jacobs said in an interview with Associated Press. "But we're combining Exxon Mobil's technical and financial strength with a leader in bioscientific genomics."

For Exxon Mobil, the world's largest publicly traded oil company, the biofuels investment is tiny compared with its spending to find new supplies of crude and natural gas.

CEO Rex Tillerson said earlier this year Exxon's 2009 spending on capital and exploration projects is expected to reach $29 billion, up from the $26.1 billion it spent in 2008. The company said those levels are likely to remain in the $25 billion to $30 billion range through 2013.
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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