SYDNEY - Australia's Cougar Energy is suing the Queensland Government and three government officials for 34 million AU dollars damages ($35.02 million), the company said on Monday.

Gougar Energy said it has filed proceedings in the Queensland Supreme Court against the State of Queesland and three Queesland Government officials for stopping its power plant project at Kingaroy in the state's southeast, seeking more than 34 million AU dollars ($35.02 million) in compensation.

"The company is suing previous Department of Environment and Resource Management chief executives John Bradley and Terry Wall and current head James Reeves for negligence and breach of statutory duties in their administration of the state's environmental protection act," Gougar Energy said in a statement on Monday.

The Queensland government decided to close the company's coal gasification project at Kingaroy on July 7 after traces of the cancer-causing chemical benzene were found in groundwater monitoring bores on the site.

Cougar Chairman Malcolm McAully said in the statement that the company had started legal action following legal advice that the closure of the Kingaroy project was unreasonable.

"It is the actions of the Bligh Government, these office holders, and their unreasonable decisions, that have inflicted a significant loss on the company," he said.

"During more than 15 months we have attempted to resolve the forced close-down with the government and DERM (the Department of Environment and Resource Management) in good faith," McAully said.

"However, as all of our proposals have been rejected, the company is left with no option but to seek court intervention to redress the loss and confirm Cougar Energy's reputation as a world leading developer of alternative energy projects."

McAully said Cougar Energy had not caused any environmental harm at Kingaroy nor polluted the Kingaroy water supplies.

No benzene had been detected in any water bores on neighboring properties since Cougar Energy commenced water testing in March 2010, the company said.

"We are confident that our Kingaroy project is safe. It presents no danger to human health, no danger to drinking water, no danger to livestock and no danger to other farming activities and Cougar Energy has been unreasonably denied the opportunity to complete its trial at Kingaroy under the permits issued by the Queensland Government," McAully said.