HANOI -- Vietnamese Prime Minister Nguyen Tan Dung gave the green light late last week for the 27 billion U.S. dollars oil refinery project in Vietnam's coastal Binh Dinh province, with investment from the Petroleum Authority of Thailand (PTT).

However, local experts and industry leaders have expressed reservations about the project's feasibility.

Local online VNExpress on Monday quoted Ho Quoc Dung, Deputy Chairman of Binh Dinh People's Committee, as confirming that a memorandum of understanding (MoU) was signed in March 2013 between officials of Binh Dinh province and their Thai partners after three years of negotiations.

The project will be the largest of this kind and the biggest recipient of foreign direct investment (FDI) in the country to date.

Specifically, the refinery will be built in Nhon Hoi economic zone, which has good infrastructure, a low-cost labor force and the lowest land rental in the region, as evaluated by PTT.

The zone also has a deep-water sea port and is located along the national north-south trade route that connects Vietnam with overseas markets.

Construction of the refinery is expected to begin in 2016 and will be operational by 2020. The plant is designed to turn out 30 million tons of oil products annually.

Crude oil for the project will be imported from the Middle East, Africa, and South America to feed the plant, which is set to produce more than 20 types of products mainly for export. Under the MoU, PTT will contribute as much as 60 percent of the project' s total investment, and the remaining amount will come from domestic and international investors.

According to Ho Quoc Dung, PTT is a strong group having total assets of more than 150 billion U.S. dollars, ranking among the world's top 100 financial giants. PTT's annual revenue reached over 80 billion dollars, and it earns nearly 3.5 billion dollars in profits.

Dung added that in its strategy for development, PTT sets goals to build an oil refinery in the region to enhance its competitiveness.

The group made several surveys in Vietnam, Malaysia and Myanmar before it decided to choose Nhon Hoi economic zone in Vietnam's central Binh Dinh province as refinery site. Head of the Ministry of Planning and Investment's Economic Zones Management Department Vu Dai Thang said that while the project was very large given the current difficulties facing the economy, the MPI regularly evaluated the viability of the project.

Meanwhile, the Vietnam National Oil and Gas Group (PVN) claimed that the Nhon Hoi project may cause an imbalance in the country's supply and demand of oil.

Currently, the Dung Quat Refinery in central Quang Nam province supplies 30 percent of the domestic consumption of oil and gas, while in the coming years other projects, including the Nghi Son Refinery in central Thanh Hoa province, Vung Ro Rfinery in central Phu Yen province, and Van Phong Refinery in central Khanh Hoa province, will be put into operation.

The Nhon Hoi Refinery project is not included in the master plan for development of the country's oil and gas industry, said PVN, adding that the project's more than 20 billion dollars must be mobilized from the outside partners while PTT is in charge of only 5 billion dollars and that will make the project hardly feasible.

Chairman of the Vietnam Energy Association Tran Viet Ngai shared local online VNExpress' view that currently Vietnam does not need any more oil refinery. Also, in the context of current global economic difficulties, it is hard to mobilize such huge investment from foreign investors to the project.

Binh Dinh province is emerging nationwide as an attractive destination for foreign direct investors. In the first four months of this year, the province attracted 1 billion U.S. dollars in FDIs, ranking among the top three localities with the most FDIs registered capital so far this year, according to the Ministry of Planning and Investment.