Venezuela's state oil company PDVSA has started construction of the 100,000b/d Santa Inés refinery in Barinas state, the presidential press office and the ministry of oil and energy said in separate statements.
The US$1.2bn complex is being developed in two phases, the first of which is scheduled to come online in 2011 with initial capacity of 30,000b/d.
The plant's full capacity will be reached in 2014 when the second phase of construction is due to be completed.
The complex will refine crude produced in Venezuela's Barinas and Apure states in addition to oil from the Orinoco heavy crude belt, according to the statements.
A diverse group of products will be produced including regular and high-octane gasoline, LPG, diesel, kerosene, fuel oil and asphalt.
The facility, which includes an industrial park, is being developed to boost economic activity in the states of Apure, Barinas, Mérida, Portuguesa and Táchira.
The complex will include a 100MW thermo plant. Sixty-percent of the power plant's capacity will be used at the refinery and industrial park.
The remaining capacity will be connected to the local grid, according to the oil ministry.
Venezuela's President Hugo Chávez also announced that the nearby 40MW Juan Antonio Rodríguez hydro plant in Barinas state would be reconditioned and modernized.