The project would be among the biggest foreign direct investments on record in the energy-hungry nation, where a lack of facilities has forced Asia's third-largest crude oil reserves holder to import 70 percent of its demand for fuel and oil products.

"It (PTT) will establish a joint venture with (Saudi) Aramco, while the issue right now is that there is no Vietnamese counterpart," said Man Ngoc Ly, head of the Nhon Hoi economic zone in the central province of Binh Dinh, where the project will be developed.

"The two firms will ensure 50 percent in capital each, and if there is a Vietnamese counterpart joining the project, they will spare the funding room for the Vietnamese side," Ly added.

He said the provincial authority will grant the licence as soon as the firms complete administrative procedures to establish a joint venture in Vietnam, which would likely take place no later than February, Ly said.

PTT has said each of the two firms plans to own 40 percent of the project in Binh Dinh province, with the Vietnamese government holding the remaining stake.

PTT said construction of the oil refinery could begin in 2016 and it was expected to start operations in 2021.

Vietnam's Prime Minister Nguyen Tan Dung has approved the project, which is designed to refine 20 million tonnes of crude oil annually, or 400,000 barrels per day, the government said in a report on its website late last week.

The refinery's capacity may be raised to 30 million tonnes per year in 2021 while the total investment could expand to $30 billion, the government report said.

Vietnam now has just one working refinery and petrochemical complex Dung Quat, which refines 6.5 million tonnes of crude oil per year, and is due to increase the processing capacity to 10 million tonnes of crude annually by 2021.

The country has planned two other refineries, each with a capacity of 10 million tonnes of crude per year. They are scheduled to start operations in 2017 and 2020, respectively.

Reuters - December 22, 2014