By Ashley Tang and Florence Tan

KUALA LUMPUR (Reuters) -Malaysian state energy company Petronas and Italian energy group Eni said on Tuesday they were pressing ahead with a planned joint venture to develop gas assets in Indonesia and Malaysia with the signing expected by the end of this year.

The final agreement will be subject to regulatory approvals by governments, authorities and partners, state-controlled Eni said in a statement, without providing a time frame. Petronas said the whole process could take one to two years from now.

Tuesday's announcement follows a pact the companies signed in February, which they said could deliver in the medium term up to 500,000 barrels per day of oil equivalent (boe), combining about 3 billion boe of reserves with an additional 10 billion boe of potential exploration upside. By comparison, Eni's total hydrocarbon production was 1.71 million boe last year.

"Asia has huge, huge potential," Eni CEO Claudio Descalzi told Reuters on the sidelines of the Energy Asia conference.

"The cooperation between countries, to find synergies and exchange energies and put together resources and competencies, is essential. And that is a very strong example, Indonesia and Malaysia together," Descalzi said.

The asset combination will likely focus on Indonesia's Kutai Basin, where Eni's portfolio includes developments in the Northern and Gendalo-Gandang hubs, which hold substantial gas reserves.

"The new company will have a strong regional impact on gas production, bringing additional energy, infrastructure and employment for the benefit of both Indonesia and Malaysia," Eni said in a statement.

The new company, based on existing gas production, is expected to develop its projects without burdening the balance sheets of Petronas and Eni, while paying dividends to its parent companies.

"The whole idea of having this as a combination is to have an independent entity created in order to be self-financed," Mohd Jukris Abdul Wahab, executive vice-president and CEO - upstream at Petronas, said at the conference.

This venture is part of Eni's "satellite" strategy under which the Italian group has created several spin-offs centred around specific businesses and has supported their growth to make them independent. In a similar transaction, Eni teamed up with BP in Angola to create their Azule Energy joint venture.

Eni and Petronas will share assets in order to have a 50:50 proportion in the new company.

Petronas has said it was looking to include oil and gas projects in Indonesia's Kutai Basin in the planned new company, proposing to swap interests for its assets in Malaysia and Indonesia with Eni's blocks there.

However, Petronas said it would exclude Indonesian assets recently awarded to the company, such as the Binaiya and Serpang blocks.

(Additional reporting by Francesca Landini in Milan; Writing by Emily Chow and Francesca Landini; Editing by Tom Hogue, Clarence Fernandez, Rashmi Aich and Tomasz Janowski)