Suadad Al-Salhy, Baghdad
Japan is investing heavily in Iraq’s oil and energy sectors in a bid to revive the country post-war.
Southern Iraq’s Basra Refinery has become the fourth energy megaproject that the Japan International Cooperation Agency (JICA) has funded in order to enhance the refinery’s capacity and improve the quality of oil products.
Iraq is one of the largest oil-producing countries in the world, but its refineries are operating below capacity due to war, neglect, and the absence of strategic planning over the last three decades.
The country has been importing gasoline from global markets to sustain the transport and electricity sectors.
Iraq’s Oil Ministry designed a plan last year to develop refineries and increase their capacity to reach 900,000 barrels per day by 2022.
Lack of financial liquidity, and corruption in government institutions, are among the biggest challenges faced by Baghdad to secure the required funds.
Japan has been a major contributor in this domain, and Iraq’s government relies on it to implement the ministry’s plan.
Japan provides long-term loans with fixed and low annual interest rates. In April, the Iraqi government agreed to borrow $3.6 billion from Japan to finance several projects to develop the oil and energy sectors.
The Basra Refinery Development Project (Phase II) is one of the largest of these projects.
In June, JICA approved a loan agreement with Iraq’s government of up to 110 billion yen ($1.2 billion) for the project.
The Japanese Embassy in Baghdad described it as “one of the largest amounts provided by the government of Japan for one yen-loan project in the Middle East and North Africa.”
Iraq’s state-owned South Refineries Co. said in a statement: “This project to construct Iraq’s first-ever Fluid Catalytic Cracking (FCC) Complex will increase the domestic production of the high-value added oil products, promote the transfer of refining technologies from Japan and help save valuable foreign currencies to import huge amount of fuels.”
It added: “The project is expected to pave the way for energizing private sector involvement in the downstream of Iraq’s energy industry and provide economic opportunities for the people of Iraq, especially in Basra.”