FULL DETAILS: Japan signs $388m Loan for Basrah Refinery Upgrade

By John Lee.

The Japan International Cooperation Agency (JICA) signed a $388-million loan agreement with Iraq on Sunday, to provide Japanese ODA loan for the sixth phase of the Basrah Refinery Upgrading Project.

In a statement, JICA said:

"This project aims to improve the quality and productivity of petroleum products, reduce the supply-demand gap, decrease the environmental load, and transfer related technologies, by installing a new fluid catalytic cracking (FCC) Complex with relevant units at Basrah Refinery in Basrah Governorate in the southern part of Iraq, thereby contributing to economic and social reconstruction in Iraq."

In this sector, JICA has so far implemented eight ODA Loan projects with a total approved loan amount of 563.0 billion yen [$3.6 billion]. This includes financing for all previous stages of the Basrah Refinery Upgrading Project, which commenced in 2012.

Japan's JGC Corporation has been the main contractor on the project.

At a separate meeting on Monday, the Undersecretary for Refining Affairs at the Ministry of Oil, Mr. Hamed Younis, said that the project will become operational in mid-2025.

He added that the project will contribute significantly to Iraq's production of refined petroleum products, with the following outputs:

1. Gasoline: Production of 4.5 million liters per day meeting Euro 5 standards.
2. Hydrogenated Diesel (Kerosene): Production of 6.5 million liters per day meeting Euro 5 standards.
3. LPG (Liquefied Petroleum Gas): Production of 300 tons per day.
4. Other Refined Products:
   • White oil, kerosene, and naphtha: Combined production of 3.5 million liters per day.
   • Enhanced fuel oil: Production of 4.5 million liters per day.

More details:

• Project Component
  1. Construction of FCC Complex
  2. Consulting Services
• Maximum Loan Amount
  • 60,040 million Japanese Yen
• Annual Interest Rate
  • Project: 0.2%
  • Consulting Services: 0.01%
• Repayment Period
  • 40 Years
• Grace Period
  • 10 Years
• Procurement
  • Japan Tied
• Executing Agency
  • Ministry of Oil
• Contribution to SDGs
  • Goal 7 (Affordable and clean energy)
  • Goal 9 (Industry, innovation and infrastructure)
• Planned Implementation Schedule
  1. Completion of the Project: December 2025, when the facilities are put into service
  2. Issuing of letters of invitation for consulting services (including detailed design work): already hired
  3. Tendering of announcement of initial procurement package for international competitive bidding on project construction: already procured package for EPC
• STEP
  • Special Terms for Economic Partnership (STEP)* will apply to the Japanese ODA loan for this project, and Japanese technology, Japan's advanced technical know-how and engineering skills will be utilized at the FCC complex being constructed under the project.
  • * STEP refers to special assistance terms for promoting the visibility of Japanese aid through a transfer of outstanding Japanese technology and expertise to developing nations. The main contract is Japan tied and subcontracting is general untied. The main agreement partner must generally be a Japanese company, an overseas subsidiary of a Japanese company, or a joint venture between a Japanese company and the borrowing country where the Japanese company is the lead partner, although under certain conditions a joint venture between a Japanese company (which is the lead partner of the joint venture) and an affiliated company (as accounted under the equity method) of a Japanese company may be the main agreement partner.

Click here to read the full ex-ante evaluation.

(Sources: JICA, Ministry of Oil)