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Japan to lend 20.2 billion yen for Iraq's oil, agricultural needs
23/10/2006

(Kyodo) _ Japan has decided to provide Iraq with up to about 20.2 billion yen in yen-denominated loans to help improve the country's oil and agricultural sectors, Japanese officials said Monday.

The provision was agreed on at Iraqi Oil Minister Hussain al-Shahristani's meetings with Economy, Trade and Industry Minister Akira Amari and Foreign Minister Taro Aso, both on Monday.

The figure is the latest batch of the up to $3.5 billion worth of yen loans Japan pledged in October 2003 at an international donors' conference in Madrid.

But as oil-related assistance, it is the first one to be extended within the scope of the $3.5 billion pledge.

The loans, with an interest rate of 0.75 percent per annum, are redeemable for 10 years with a 10-year deferment.

One of the projects that will be covered by the yen loans is upgrading a refinery in Basra, southern Iraq, by providing engineering services for a new plant to be built within the refinery to increase the productivity in refining gasoline and other oil products, the officials said.

The yen loans will also be earmarked for a project to upgrade the facilities of the Khor Al-Zubair fertilizer plant in Basra which is suffering from decreasing production capacity due to the plant's aging facilities.

The oil and agricultural sectors are Iraq's key industries.

The Iraqi minister, who is in Japan on a three-day visit since Sunday, indicated to Aso that Iraq is upgrading its oil infrastructure by fixing legislation to make it more conducive for Japanese firms to be involved in oil development projects there, the officials said.

He also said the yen loans are important from the standpoint of Iraq in building a relationship with Japan that assures Japan of a stable, long-term supply of oil, they said.

For resource-poor Japan, which recently agreed to slash a large portion of its concession in Iran's Azadegan oil field, it is vital to secure energy supply sources in various regions.


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