The Nghi Son refinery, which is due to start operating by 2017 in Thanh Hoa province, about 200 kilometres (125 miles) south of Hanoi, will turn Kuwaiti oil into petrol and other petroleum products.
It will be able to process 10 million tonnes of crude oil a year, the government said.
State-owned PetroVietnam will own a 25.1-percent stake in the joint venture while Japan's Idemitsu Kosan and Kuwait Petroleum International will each hold 35.1 percent. Mitsui Chemicals of Japan will own the remaining 4.7 percent.
Speaking at the signing ceremony, Vietnamese Prime Minister Nguyen Tan Dung hailed the project as "very important" for the communist country's economic and social development, according to a government statement.
Vietnam has offshore oil reserves but still spends several billion dollars each year to import petroleum products to feed its growing economy.
A ground-breaking ceremony for the Nghi Son refinery was held in May 2008 but the project has suffered a number of delays.
It is still unclear when construction will start, an official from PetroVietnam told AFP, asking not to be named.
The country's first refinery Dung Quat -- which cost around $2.5 billion and has a capacity of 6.5 million tonnes of crude a year -- opened in central Vietnam in 2009 after lengthy delays.
PetroVietnam has said that it hopes the two refineries would satisfy 65 percent of the nation's oil and gas needs. It is also preparing for a third refinery project in southern Ba Ria-Vung Tau province.
