Three foreign firms, including Japan's Nippon Oil & Energy Corp, Petroleos de Venezuela and another from South Korea, have been in talks to buy the stake, the official said, confirming state media reports, but gave no further details.

"The sale of 49 percent stake was aimed at raising funds for investment, upgrading and expanding the plant's capacity," Chief Executive Nguyen Hoai Giang of the Binh Son Refining and Petrochemical Co, which runs the $2.2-billion refinery, was quoted as saying by the official Liberation Saigon daily.

The refinery wants to expand capacity by 54 percent to 10 million tonnes, or 200,800 barrels per day, he said.

The stake sale would also attract other investors, he said, adding that the refinery operator wished to pick a partner as soon as possible.

Asked if SK Energy, South Korea's largest crude oil refiner, wholly owned by SK Innovation, was interested in the Vietnamese refinery, a SK Innovation spokesman, Eom Ik-hoon, said: "We are considering it but nothing has been decided."

A spokesman of JX Nippon, Japan's biggest oil refiner, said the company was considering investing in Dung Quat, but had yet to take a decision.

EXPANSION PLAN

The 6.5-million-tonne-per-year refinery is in the central coastal province of Quang Ngai, 880 km (550 miles) south of Hanoi.

Expansion would raise its output to meet 40 to 45 percent of annual domestic demand for oil products, from 30 percent now.

Petrovietnam, the refinery's sole investor, aims to start expanding Dung Quat from this year to 2017. The expansion plan would take at least until the end of this quarter to complete, Giang told Reuters in early January.

Dung Quat began operations in May 2010, processing crude oil from Vietnam's main oil field of Bach Ho. It has been expanding to use crude from other origins, such as Malaysian sweet crude oil, for production.

Last month PV Oil, Vietnam's state oil marketer, signed contracts to buy 1.2 million barrels of Brunei crude oil from Brunei Shell Petroleum, the first such import from Brunei, to feed the refinery.

Rising domestic demand for oil products, coupled with Vietnam's policy to avoid dependence on imports partly to help narrow the country's trade deficit, requires Petrovietnam to expand Dung Quat and draft two more oil refinery projects.

Petrovietnam has asked Binh Son to ensure the expanded refinery becomes operational in 2018, the plant operator said.

Japanese engineering firm JGC Corp is advising Binh Son on the expansion.

Even though Dung Quat has been running at full capacity, Vietnam imported 10.65 million tonnes of oil products in 2011, up 11.2 percent from a year earlier, government statistics show.

By Ho Binh Minh - Reuters - March 13, 2012