Under a decision by Deputy Prime Minister Trần Hồng Hà, the operator of the refinery - Bình Sơn Refining and Petrochemical Joint Stock Company (BSR) - will provide $503 million from its equity and the remaining from loans.

The company, a subsidiary of state-owned PetroVietnam, will set up and put into operation additional technology workshops for the processing of crude oil with higher sulfur content in accordance with the “Euro 5 standard”.

Dung Quất Oil Refinery in central Quảng Ngãi Province. VNA/VNS Photo Huy Hùng

The 10.6ha refinery will be expanded by 41ha, and is scheduled to be finished in the first quarter of 2028.

The expansion was approved in 2014 but was postponed by problems related to the design, appraisal, approval process and capital mobilisation.

PetroVietnam and the company had sought permission to adjust the scale, required technology and progress of the expansion.

The capacity target was adjusted down to 171,000 barrels a day from 192,000, and investment was lowered by $540 million to $1.26 billion.

Construction of the country's first refinery located in Dung Quất Economic Zone started in 2005 and it started producing refined oil products for sale in 2010.

It produces 6.5 million tonnes of crude oil products each year, meeting around 35 per cent of Việt Nam’s total demand.

Việt Nam is currently home to two operational oil refineries. In addition to Dung Quất, the Nghi Sơn Refinery and Petrochemical LLC located in the northern province of Thanh Hóa is the country’s latest and largest refinery.

The $9 billion refinery is co-owned by state-run PetroVietnam, Kuwait Petroleum Europe B.V. (KPE) and Japan’s Mitsui Chemical and Idemitsu Kosan Co.