Iraq and Japan Sign $380M Basrah Refinery Loan

Iraq’s Minister of Finance, Taif Sami Mohammed, signed a significant loan agreement with the Japan International Cooperation Agency (JICA) to fund the sixth phase of the Basra Refinery Development Project. The signing ceremony, held at the Ministry of Finance headquarters, was attended by Japan’s Ambassador to Baghdad, Matsumoto Futoshi, and JICA’s Deputy Executive Director, Miyazaki Katsura.

The agreement provides a development loan for the establishment of the Factor Cracking Project (FCC), an advanced plant designed to convert residual oil from current production into high-quality petroleum products.

Minister Taif Sami emphasised the importance of the project in advancing Iraq’s oil sector, stating, “This agreement represents a pivotal step towards achieving self-sufficiency in petroleum products. It underscores the government’s commitment to reducing dependence on imports and supporting local production.”

She also highlighted the broader economic benefits, adding, “The project will provide significant opportunities for the Iraqi private sector to contribute to energy development and create job opportunities for our people.” Japanese Ambassador Matsumoto Futoshi expressed his country’s commitment to supporting Iraq’s sustainable development. “The FCC plant is a transformative addition to Iraq’s production capabilities and a testament to the strong partnership between our nations,” he said.

He added, “This cooperation will not only strengthen bilateral ties but also support Iraq’s economic growth and its transition to modernised energy industries.”

The project aims to enhance Iraq’s production of high-quality petroleum derivatives, reducing the reliance on imports and conserving foreign currency reserves. Once operational, it is expected to generate approximately $8 million daily. Key financial terms include a highly favourable interest rate of 0.2% per annum and a 10-year grace period, ensuring financial stability for Iraq. The project is expected to attract foreign investors and modernise Iraq’s energy infrastructure.

With an estimated cost of ¥60.40 billion (approximately $380 million USD), funded under Iraq’s 2024 federal budget and Cabinet Resolution No. 24805, the project is already 93% complete. The Ministry of Oil’s Southern Refineries Company is spearheading its implementation, with civil works set for completion and trial operations expected to commence by mid-2025.

This milestone highlights Iraq’s focus on revitalising its energy sector, fostering international partnerships, and laying the foundation for long-term economic sustainability.

Source: Ministry of Finance