The Japan International Cooperation Agency (JICA) has signed a loan agreement with the Iraqi government to support the upgrade of the Basrah Refinery, one of the country's largest oil refineries. The project aims to upgrade the existing oil refinery and install a new fluid catalytic cracking (FCC) complex.

The latest tranche of the official development assistance (ODA) loan amounts to 32.7 billion yen (US$292 million). JICA had previously provided ODA loans for the Basrah Refinery Upgrading Project, with a first tranche amounting to 43.4 billion yen signed in 2012 and a second 110 billion yen tranche signed in 2019.

Although Iraq has the fifth largest proven oil reserves globally, it depends heavily on imports for its domestic needs for oil products, such as gasoline and diesel.

Many of the oil refining facilities in Iraq are currently out of service, or operate below their design capacities due to a series of conflicts the country has faced. The first installation of an FCC Complex in Iraq will allow the country to produce oil products that meet international environmental standards and also to contribute to economic and social reconstruction by strengthening the oil sector, which dominates Iraq’s economy. The project also aims to help the country achieve Sustainable Development Goals 7 (affordable and clean energy) and 9 (industry, innovation and infrastructure).

The Special Terms for Economic Partnership (STEP) will apply to the ODA loan for this project, and Japanese technology, including advanced technical know-how and engineering skills will be utilized at the FCC Complex being constructed. STEP refers to terms for promoting the visibility of Japanese aid through a transfer of outstanding Japanese technology and expertise to developing nations.

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.