Origin Energy may sell its stake in Contact Energy to help fund a planned $35 billion Australian liquefied natural gas project with ConocoPhillips, Credit Suisse Group said.

"Post 2011, we believe the sale of the Contact stake could become a funding vehicle for LNG development," Credit Suisse analysts led by Sydney-based Sandra McCullagh said in a note to clients.

Wellington, New Zealand-based utility Contact is that country's biggest publicly traded energy company.

Origin's Australia Pacific LNG venture is the equal-biggest of five such projects in Queensland planning to tap gas extracted from coal seams for conversion to liquid form and export to Asia.

Site selection for the plant is expected in the next two months, Credit Suisse said.

Tim Scott, Sydney-based spokesman for Origin, Australia's second-biggest electricity and gas retailer, declined to comment on the potential sale of its 51.4 per cent stake.

Origin rose 1.1 per cent to $14.06 in Sydney trading, compared with the 1.5 per cent decline in the benchmark index at 10.05am. Contact dropped one per cent to NZ$5.70 in Wellington, valuing Origins stake at about $1.1 billion.

Origin is expected to give the go-ahead for the LNG venture at the end of 2010, Credit Suisse said.

BLOOMBERG