Uruguay and Argentina have sealed a deal which will see the South American neighbours join forces to build a 25 million cubic metres per day liquefied natural gas plant in Uruguay.

Uruguay's state-run energy company Ancap and its Argentine counterpart Enarsa, as well as Uruguay's electricity outfit UTE, will manage the project.

The trio have called for expressions of interest from potential partners, setting a deadline for 11 April.

Mario Botto, Ancap's chief engineer for the project, would not confirm media reports that the proposed plant would be built outside Montevideo, telling UpstreamOnline that an exact location had not yet been chosen. However, he said the plant would be sited in Uruguay.

Botto said that feedstock for the plant had not been sourced.

"The gas could be coming from anywhere in the South Atlantic," he said, adding that a decision on sourcing would be made after Ancap, UTE and Enarsa had decided on a partner or partners for the project.

Latin American media reports said that Spanish player Repsol YPF, Brazilian giant Petrobras and UK company BG Group are all keen to take a stake in the proposed development.

The LNG project will cost an estimated $2.5 billion to build and could be fully operational in three to four years, Uruguay's Minister of Industry, Energy & Mining Daniel Martinez told Prensa Latina.

Martinez added that the project's output would meet not only Uruguay's gas needs, but also satisfy demand in Argentina's capital Buenos Aires and the surrounding province.