Petronas would have an equal stake in the project through its subsidiary Petronas E&P Argentina SA, the presidency said in a statement. Petronas has not yet commented on the announcement.
The Belgium-sized Vaca Muerta deposit, located in western Argentina, is regarded as having the world’s second-largest shale gas and fourth-largest shale oil deposits.
“This investment will allow us to increase YPF’s petrol production by 30% by 2022, which will represent a total increase for Argentina of 15%,” the statement said.
The companies’ objective is to reach a production equivalent of 60,000 barrels a day by 2022, it said. Total investment could reach US$7bil within 20 years, it said.
Successive governments have targeted Vaca Muerta to reverse Argentina’s energy deficit but the plans have been hindered by a lack of infrastructure.
YPF chief executive Daniel Gonzalez told Reuters last month the company would bolster both unconventional oil and gas production by investing between US$4bil and US$5bil per year through 2022.
Petronas and YPF have already partnered in pilot exploration and production initiatives and will begin development of the unconventional fuel project in the Amarga Chica block in the province of Neuquen.
The announcement is good news for the beleaguered government of Mauricio Macri, which was forced to seek an International Monetary Fund bailout earlier this year.
Macri discussed the deal in a meeting on Tuesday with YPF president Miguel Gutiérrez, Finance Minister Nicolás Dujovne and Energy Secretary Javier Iguacel, the president’s statement said.