Argentina’s state oil company YPF and Malaysian firm Petronas have signed a preliminary deal to build a major liquefied natural gas (LNG) plant and the associated pipeline in Argentina.

Under the joint study and development agreement (JSDA), the two firms will assess the feasibility of the development of the Argentina Integrated LNG project, which is estimated to cost nearly $10bn.

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The project will comprise upstream gas production, LNG production, pipelines, and infrastructure development, as well as marketing and shipping.

Expected to produce five million tonnes of LNG in the first year of operation, the YPF-Petronas project is anticipated to take ten years to complete.

The project will have a peak production capacity of up to 25 million tonnes of gas annually. It will include a 600km pipeline out of the Vaca Muerta shale patch in Argentina.

Argentine President Alberto Fernandez was cited by Reuters as saying that the source of the exports will be the Vaca Muerta shale formation.

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Fernandez added: “We’re meeting the objective we set out: to not leave Vaca Muerta’s gas in the ground, extract it as fast as we can, use what we need, and then export and collect profits.”

Petronas president and group CEO Datuk Tengku Muhammad Taufik said: “Petronas’ expertise in integrated LNG and unconventional plays will add value to the intent and synergy of both parties in further exploring potential LNG opportunities in Argentina, leveraging on Vaca Muerta’s vast unconventional gas resources.”

YPF and Petronas could seek potential partners for the proposed LNG project, reported Bloomberg News, citing YPF Chairman Pablo Gonzalez.

Fernandez expects the agreement to potentially make Argentina ‘a big global player’ in the LNG market.

Petronas and YPF also signed a memorandum of understanding to collaborate in other areas including upstream oil, petrochemicals, and clean energy solutions in Argentina.