UPDATE 2-CNPC to ink fuel, equity deal with Malaysia refinery

(Adds CNPC equity participation to come later)

KUALA LUMPUR/BEIJING, July 15 (Reuters) - CNPC, China's top oil firm, is to invest in a $10 billion refinery project in Malaysia, though not immediately, and has agreed to take its oil products for 20 years, the Malaysian company said on Wednesday.

The 350,000 barrel-per-day refinery, to be built in Kedah in northwestern Malaysia, is still awaiting its environmental approval, expected in September.

Developed by Malaysian private firm Merapoh, construction is due to begin later in the year and completion is slated for 2013-2014. The deal would solidify CNPC's overseas expansion in the downstream oil sector after PetroChina (0857.HK) (601857.SS), CNPC's listed arm, got approval from Beijing last month to buy a stake in Nippon Oil's (5001.T) Osaka refinery and acquired a 45.5 percent stake in Singapore Petroleum Co for $1.02 billion in May.

"CNPC will take up equity in the project," Merapoh Chairman Nazri Ramli told a press conference in the Malaysian capital, although he later added that the stake would not be taken right at the start of the venture.

Nazri said that two private equity firms, Hong Kong Beijing Star Ltd and Winson Investment Ltd, had already raised the money to buy 40 percent each of Merapoh, the refinery license holder, and that Merapoh's management would hold the rest.

South Korea's SK Engineering and Construction [SKEC.UL] has been appointed contractor for the project, Merapoh said. (Reporting by Julie Goh in KUALA LUMPUR and Jim Bai and Chen Aizhu in BEIJING; Editing by Ben Tan)