* Facility would be a record foreign investment for Vietnam
* To have a capacity nearly five times existing refinery -paper
* Planned to be built in Nhon Hoi economic zone
* Construction of the refinery could begin in 2016 (Adds analyst, PTT comments, details)
HANOI/BANGKOK, Nov 26 Thailand's top energy firm, PTT Pcl, is considering plans to build a $28.7-billion oil refinery in central Vietnam, company officials said on Monday, in what would be a record foreign investment in the country.
Vietnam's state-run Tuoi Tre newspaper said the refinery would have a capacity of 660,000 barrels per day (bpd), or almost five times the current capacity of the only existing facility, the Dung Quat refinery.
If the project goes ahead, it would rank among the five biggest refineries in the Asia-Pacific region and leave Vietnam with a surplus of refined oil products, said Alex Yap, an analyst at FACTS Global Energy.
"There are already two other projects in the pipeline. To have a project at this size and this cost, it's very ambitious," said Yap.
Vietnam's domestic demand is only about 400,000 bpd, a third of which is met by its existing refinery, he added.
"Thailand is a net exporter, while Myanmar wants to build a refinery. Yes, they can target the export market, but unless you have a whole market to absorb your products, it will be very competitive," Yap said.
PTT Chief Executive Pailin Chuchottaworn said the project depended on approval from Vietnam's central government and if the company decided to invest, it would import crude to feed the refinery and petrochemical plants, whose output would be sold on the domestic market.
"The project belongs to Binh Dinh province and needs approval from the central government. After that, PTT will decide if we want to invest," Pailin said, adding that it was too early to decide on funding plans.
LONG TIME SEEN FOR COMMITMENT
The government of Vietnam has hired PTT's subsidiary in the country to study the possibility of the refinery project, which has growth potential.
"PTT has not yet decided whether they will invest in the project ... and it should take a long time for PTT to make a commitment," Chief Financial Officer Surong Bulakul told Reuters.
Such an investment would provide a boost for Vietnam, whose government estimates the economy expanded 4.73 percent in the first nine months of this year, down from 5.77 percent in the corresponding 2011 period.
State-controlled PTT said in July its investments in Vietnam would include a refinery and petrochemical complex, as part of its strategy to expand into Southeast Asia.
PTT has reported its pre-feasibility study of the proposed refinery to the government of southern Binh Dinh province, the newspaper said, quoting the management board of the economic zone where the plant is to located.
The proposed facility could be built in Nhon Hoi, about 1,000 km (620 miles) south of Hanoi, according to the board's website. (kktbinhdinh.vn)
Provincial officials have asked PTT to prove its financial capacity and swiftly complete a feasibility study for the two governments. Nhon Hoi has a port with a capacity of 30,000 deadweight tonnes set to be expanded by 2020, the board said.
Construction of the Nhon Hoi refinery could begin in 2016 and the plant is expected to start operating in 2019, pending government approval, the newspaper added.
Vietnam's sole oil refinery, Dung Quat, currently has a capacity of 135,000 bpd, which is expected to nearly double to 240,000 bpd by 2017.
The Southeast Asian country has been planning at least four other refineries to raise its refining capacity to 25 million to 30 million tonnes by 2020.
Vietnam's biggest refinery project so far is its second plant, the 200,000 bpd Nghi Son refinery in the central province of Thanh Hoa, with total estimated investment of $7.5 billion.
Investors in Nghi Son aim to sign the engineering, procurement and construction contract with the contractor in December and start construction soon after.
Nghi Son is a venture among Petrovietnam, Kuwait Petroleum International, Japan's Idemitsu Kosan Co Ltd and Mitsui Chemicals Inc.
Elsewhere, Malaysia's Petronas also plans to build a $20-billion refinery with a capacity of 300,000 bpd in Johor. [ID: nL4E8H82SO] (Reporting by Ngo Thi Ngoc Chau, Pisit Changplayngam in BANGKOK and Florence Tan in SINGAPORE; Writing by Khettiya Jittapong; Editing by Clarence Fernandez)