The company announced it has signed a deal worth up to $100 million with CO2 Group, which will plant the trees on its behalf over the next two years.

Woodside has the option to undertake additional plantings between 2010 and 2012.

CO2 Group's chief executive Andrew Grant said the carbon offset program confirmed the scale of the business opportunities in the rapidly emerging Australian carbon market.

"Our CO2 Australia carbon sequestration program is well positioned to capitalise on this emerging market as CO2 Australia offers a low cost and highly scaleable accredited solution to major Australian companies, multinationals and governments," he said.

Next year's plantings will take place in NSW, with all subsequent plantings in WA.

On behalf of Woodside, CO2 Australia will accredit the mallee environmental plantings under the Australian Government's Greenhouse Friendly program.

Woodside has also engaged CO2 Australia to provide a tailored program under which employees can voluntary offset their personal emissions.