Vietnam nears deal for KPI, Idemitsu refinery jv

HANOI, Feb 20 (Reuters) - State oil group Petrovietnam is moving closer to an agreement with Idemitsu (5019.T) and Kuwait Petroleum International to form a joint venture to build Vietnam's second refinery, the 170,000-bpd Nghi Son plant.

"Talks with Idemitsu and KPI are underway and some significant progress has been reached, including some special treatment granted to the foreign investors," an official from Petrovietnam said on Wednesday.

Petrovietnam has said it would grant investors in Nghi Son refinery the right to sell directly to the domestic retail market, which up till now, remains closed to foreign companies.

Crude oil imports for use in the refinery will be exempt from taxes, and so will exports of oil products, the group has said.

It was unclear what shares each investor would hold in the $6-billion refinery, which will use 100 percent foreign crude oil when it is put into operation in 2013.

On Wednesday, state media quoted Petrovietnam officials as saying the consortium would apply for an investment licence from the government in April this year.

Petrovietnam is currently the sole investor in Vietnam's first oil refinery, the 140,000-bpd Dung Quat refinery, which is scheduled to go onstream early next year.

(Reporting by Nguyen Nhat Lam; Editing by Valerie Lee)