The agreement paved the way for co-operation between the two parties in Viet Nam's oil sector, Dau Tu (Investment) newspaper reported.

JX Nippon Oil & Energy Corp, Japan's largest oil firm, was reportedly looking at the Nam Van Phong oil refining petrochemical complex project and the petrol and oil retail market.

Nguyen Van Khanh, a representative from Petrolimex, was quoted by the newspaper as saying a month ago that JX Nippon Oil and Energy Corp could become a major partner of Petrolimex in the Nam Van Phong project, and that the negotiations were expected to be concluded this year.

The Nam Van Phong refinery project in the central Khanh Hoa Province got a nod from the government in 2008. It has an estimated capital of US$4.4 billion to $4.8 billion. Petrolimex was assigned to set up the project and call for investments.

The construction of the project was initially scheduled to start in 2011, and it was to become operational at the end of 2013. However, the project missed the deadline and the total estimated capital was hiked to $8 billion.

Currently, only the ongoing Nghi Son oil refinery has foreign partners. The government allowed foreign partners to set up distribution only after the plant was put into operation, with the condition that the minimum capital contribution from the Vietnamese side was 51 per cent.

According to the newspaper, Petrolimex could issue additional shares to its foreign partner to reduce the State's stake.

Petrolimex, with a charter capital of VND10.7 trillion ($504.7 million), operates under a joint stock company model after launching an IPO in July 2011, with the State holding a 94.99 per cent stake. Petrolimex's market share in the petrol and oil market ranges between 48 per cent and 55 per cent.

In August, Reuters reported that JX Nippon Oil & Energy Corp was looking at building refineries and petrol stations in Indonesia and Viet Nam, seeing the two markets as the most promising locations for investment amid declining fuel consumption at home. 

VNS/VNN