Yen Loan “Basra Refinery Upgrading Project (IV)” (Exchange of Notes)

  1. On 28 December 2022, Mr. MASAMOTO Kenichi, Charge d’ Affaires ad interim at the Embassy of Japan in the Republic of Iraq, and H.E. Ms. Taif Sami, Minister of Financeof the Republic of Iraq, have signed and exchanged notes concerning the provision of yen loan for “Basra Refinery Upgrading Project (IV)” in Baghdad. The new loan amounts to 120 billion Japanese Yen, approximately 1,200 million US dollars.
  2. Overview of the project
  3. The project is to upgrade the existing Basrah Refinery by installing a new plant called Fluid Catalytic Cracking (FCC) Complex, which can convert residual oil from the existing plants into high-value oil products. It will be the first-ever FCC complex in Iraq.
  1. The project aims to increase the quality of oil products and to close the gap between supply and demand. In addition, the new plant will ease the environmental burden by introducing Light Gas Oil Hydro Desulfurization Unit (LGOHDT) with technology transfer.
  2. Once the project is implemented, Basra refinery will be the first ever FCC complex in Iraq that produces high value - added petroleum products such as gasoline and diesel, which will be in line with international environmental standards.
  1. It is expected that the project leads to (i) saving foreign currencies spent on importing huge amount of fuels, improving trade/current accounts and reducing fiscal deficit, (ii) providing economic and employment opportunities for the people of Iraq, especially in Basra through and after the project, (iii) modernizing the Iraq’s energy industry and paving a way to attract private sector in Iraq’s energy sector, (iv) reducing air pollution by reducing sulfur content in the oil products in accordance with the international standards.