Vietnam has given final approval to PTT, Thailand’s state-owned oil and energy company, to build a 20 million tonne-per-year refinery and petrochemical project in the central Binh Dinh province. Future expansion plans may boost refinery throughput to 30 million tonnes per year.

This would be PTT’s first refinery outside of Thailand.

Vietnam’s Prime Minister Nguyen Tan Dung, who met with PTT Chairman Piyasvasti Amranand on Dec. 20, 2014, said that Vietnam will create favourable conditions for the project such as offering various tax incentives. Analysts have said that the success of the refinery depends on these tax incentives because of the magnitude of the project. The estimated cost of the refinery is USD22 billion.

Investors in the project will be exempt from paying corporate tax in the first four years of operation. The rate will gradually increase from 5% for the next nine years and 10% for two years after that. The normal corporate tax rate is 22%.

Vietnam is also abolishing import duties for the crude oil for the project, and has agreed to negotiate the tax for any exports from the refinery. Currently, the country does not export any oil products, because its only refinery, Dung Quat, only supplies about 30% of its refined petroleum products’ demand.

Once built, the refinery and petrochemical complex will produce two million tonnes per year of aromatics and 2.9 million tonnes per year of olefins. Half of the products from the oil refinery—mostly diesel fuel—will serve the domestic market, and LPG and naphtha from the refinery will be used as feedstock for the petrochemical plant.

The project is scheduled to be complete by 2021, according to a PTT spokesperson.

PTT Pcl Ltd is Thailand’s largest energy company. It owns stakes ranging from 27% to 49% in four out of the six refineries in Thailand.