Italian energy firm Eni has signed a memorandum of understanding (MoU) with Argentina’s state-run energy company YPF to assess partnering in the country’s flagship Argentina LNG project, the Italian company revealed on April 14.

Under the terms of the agreement, Eni will examine development of upstream, transportation, and gas liquefaction facilities in the project phase for two floating LNG (FLNG) units each with a production capacity of 5mn tonnes per year (tpy).

“YPF's choice of Eni as a strategic partner stems from the specific and distinctive know-how we have developed in FLNG projects in Congo and Mozambique, and from the recognition of our global leadership in implementing projects with this technology,” Eni CEO Claudio Descalzi said in a statement.

YPF is in the midst of attempting to secure partners to accelerate the development of the country’s first LNG project, which will draw gas from Argentina’s vast Vaca Muerta shale formation, which stretches across a total area of about 30,000 square kilometres, making it the second largest shale gas reserves and the fourth largest shale oil reserves in the world.

Following completion of the first phase, a 10mn tpy onshore modular liquefaction plant is planned. A third phase expansion of the project is also proposed, which would add additional liquefaction trains and raise production capacity by a further 10mn tpy for a total of 30mn tpy.

For Argentina, the project is of immense importance as it would transform the South American country from an LNG importer to an LNG exporter and at a time when it is in the midst of restructuring its economy under the presidency of Javier Milei.

The $50bn project is projected to be completed by 2030. The next step for the project is to launch the front-end engineering and design (FEED) tender, which is expected to occur in the summer and will be followed by a 10-month construction period.