Press Release

On 4 October 2021, Japan International Cooperation Agency (JICA) and the Government of Iraq signed a loan agreement at Ministry of Finance in Baghdad. The ODA (Official Development Assistance) loan amounting to JPY 32,700 million (approximately USD 300 million) will be used for Basrah Refinery Upgrading Project. The loan agreement was signed by Mr. Khalid S. Murad, Director General of Public Debt Department, Ministry of Finance and Kei Toyama, Chief Representative of JICA Iraq Office, in the presence of Mr. Shu Nakagawa, Chargés d'Affaires ad interim of Iraq.

The agreed loan named "Basrah Refinery Upgrading Project (III)"is the third tranche for Basrah Refinery Upgrading Project, one of the mega projects known in the region, with the concessional terms: the interest rate of 0.20% and the repayment period of 40 years including 10-year grace period. For the same project, JICA previously concluded three loan agreements for (i) the engineering services in the amount of JPY 2,079 million, (ii) the first tranche in the amount of JPY 42,435 million and (iii) the second tranche in the amount of JPY 110,000 million.

The entire project aims to increase the quantity and quality of oil products including gasoline, diesel and kerosene, by installing a new refining plant called Fluid Catalytic Cracking (FCC) Complex in Basrah Refinery, which is one of the biggest oil refineries currently operational in Iraq. Iraq has the world's fifth-largest proven oil reserves and is currently OPEC's second-largest producer. Nevertheless, most of the existing refineries in the country have been shut down or decreased their production capacity, suffered from damages and deterioration in the previous decades of conflicts. While the ongoing reconstruction efforts in liberated areas and the revitalization of socio-economic activities across the country have prompted, huge demand for fuel, Iraq has no choice but to import the significant amount of oil products from neighboring countries.

Against this backdrop, this project is placed as a high priority in line with the White Paper of the Government of Iraq to increase the volume of the high-value added oil products, hence energizing private sector involvement in the downstream of Iraq's energy industry and provide economic opportunities for the people of Iraq. The new plant will also reduce sulfur content in the products in accordance with the international environmental standards. Furthermore, the project contains a component for vocational training with a view to providing Iraqi workers with necessary skills for the construction and the operation of the refinery plant, thereby contributing to enhancing capacity of local people.

The South Refineries Company contracted with Japan Gasoline Company (JGC), a Japanese engineering company, in October 2020, which has the extensive expertise in the sector.

JICA is a development aid agency under the Government of Japan. It provides ODA in the forms of technical cooperation, grant and ODA loan worldwide. JICA has signed 32 ODA loan agreements, total amount of which is JPY 863 billion (equivalent to USD 7.8 billion), with Iraqi Government for economic and social infrastructure projects and programs since 2008. The Agency has also provided the grant-based training programs for more than 9,500 Iraqi officials as well as several technical cooperation projects since 2003.

(Picture provided by JGC)

(Picture provided by JGC)