Correa said that the joint $6.6 billion project by state-run oil firms from both countries will save Ecuador $3 billion in oil imports a year.
Venezuela and Ecuador are the only Latin American members of the Organisation of the Petroleum Exporting Countries.
Chavez said he plans to build other refineries in Brazil and Nicaragua.
"Everything ended up in the United States; that's what the empire and colonialism are all about," Chavez said.
Chavez said his goal was to provide "energy security for all the people in the (South American) continent."
He also proposed building a joint steel plant in Ecuador and help it improve its telephone service.
Correa said Chavez's plans were not motivated by "interest" or a desire to interfere in his neighbours' affairs, but by a feeling of solidarity and his belief in the "Latin American Union".