UPDATE 2-Idemitsu, Mitsui join Vietnam refinery project

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TOKYO, March 27 (Reuters) - Idemitsu Kosan Co (5019.T) and Mitsui Chemicals Inc (4183.T) said on Thursday they had taken stakes in building a refinery in Vietnam which will run on Kuwaiti crude.

Together their stakes will amount to 39.8 percent in the $5.8 billion joint venture to build the refinery with a 200,000 barrels per day (bpd) crude distillation unit.

This marks the first time that a Japanese refiner will build a plant in Asia outside Japan. Domestic oil demand is steadily declining and companies are looking for opportunities overseas.

The Nghi Son refining and petrochemical complex will be the second refinery in Vietnam.

Refiner Idemitsu said it and Kuwait Petroleum International (KPI) will each take a 35.1 percent stake in the venture with capitalisation of $200 million.

Vietnam's state oil firm Petrovietnam will take a 25.1 percent, while Mitsui Chemicals will take the remaining 4.7 percent.

Idemitsu said the venture will aim to procure 70 percent of the funds via project financing, from the Japan Bank for International Cooperation and commercial banks.

The deal will be signed in Hanoi in early April.

Idemitsu said the refinery will process Kuwait's heavy crude oil, but added it was still not decided which secondary units will be constructed.

Vietnam relies almost entirely on imports for its fuel. It plans to complete its first 130,000-140,000 barrels-per-day Dung Quat refinery by 2009.

Nghi Son will start operating in mid-2013, an oil official told Reuters on Wednesday.

Idemitsu said the refinery will feed the Vietnamese market, where demand is growing 5 to 6 percent every year due to rapid economic expansion.

The company also said the petrochemical complex will help Mitsui Chemicals secure aromatic feedstock. (Reporting by Osamu Tsukimori)