State-run Petroleos de Venezuela SA, or PDVSA, said it will now team up with Chevron to exploit the reserves in that area of Venezuela's Deltana Platform.

PDVSA will control 61 per cent of the joint venture, and Chevron 39 per cent.

Some 7.0 trillion cubic feet of natural gas reserves have been discovered, and the project is expected to produce some 750 million cubic feet per day.

The company did not disclose details on compensation.

ConocoPhillips' spokesman Charlie Rowton at headquarters in Houston confirmed the sale but declined to discuss the price or other terms.

He said the sale is unrelated to separate World Bank arbitration over the nationalisation of ConocoPhillips' assets in heavy oil projects.

President Hugo Chavez's govern-ment nationalised four major oil projects in 2007, including Conoco-Phillips' operations in the nation's heavy-oil-producing Orinoco Oil Belt, after the two parties failed to agree on terms for a minority stake.

But ConocoPhillips continued to explore for offshore natural gas deposits and had worked with Chevron since 2003 in the Deltana Platform.

Chevron spokesman Scott Walker said the San Ramon, California-based company is pleased with the deal.

Possible lawsuits

"We look forward to working with PDVSA on developing this project," Walker said in an emailed statement.

Chavez's government said last week that it may sue ConocoPhillips for exercising an option to purchase PDVSA's 50 per cent stake in a joint refinery in Sweeny, Texas.

ConocoPhillips says PDVSA has failed to deliver heavy crude as required under contract to the refinery since the beginning of the year, while PDVSA says it stopped shipping 166,000 barrels of oil a day to comply with OPEC production cuts.

Rowton declined to comment on a possible lawsuit.

- AP