Japan to aid Iraq in rebuilding oil, gas industry

Eric Watkins
Senior Correspondent

LOS ANGELES, June 27 -- Iraqi Oil Minister Hussain Al Shahristani and Japanese Minister of Economy, Trade, and Industry Akira Amari—voicing concerns over global oil prices—agreed for the two countries to cooperate in a variety of measures aimed at reconstructing Iraq's oil and natural gas industry.

"The two countries confirmed that rebuilding the oil industry and increasing output are important for the stability of crude oil prices, and Japan is ready to fully cooperate to that end," Amari said after meeting with Al Shahristani.

Japan and Iraq will strengthen cooperation in a range of economic fields centering on the energy sector. They said oil and gas development and the reconstruction of existing energy-related facilities are essential for the rehabilitation of Iraq.

Basra refinery upgrade
Japan reconfirmed its commitment to implement development loans it has pledged, including one to help build refinery and export facilities in and around Basra. The 2.1 billion-yen loan to Basra includes installing secondary units such as a fluid catalytic cracker.

In January, the Japan Bank for International Cooperation said it had signed an agreement with Baghdad for as much as ¥182.7 billion to restore war-damaged facilities, including ¥50.1 billion on the oil export facility reconstruction project.

At the time, JBIC said the two countries also agreed to spend ¥36.8 billion for rehabilitation of the Al-Mussaib thermal power plant; ¥30.2 billion for the Iraqi port area rehabilitation project; ¥32.6 billion for rebuilding the power grid; and ¥30.9 billion on other civic rehabilitation and construction projects.

In early June, JBIC signed additional loan agreements totaling ¥57.7 billion for the Basra water supply improvement project and reconstruction of the Kurdistan electric power grid.

Japan's oil and gas firms have reaped rewards from the investments. In April, Inpex Holdings Inc. and three other Japanese companies passed a preliminary screening of potential bidders for Iraqi oil exploration and development.

In addition, Japan Petroleum Exploration Co., Nippon Oil Corp., and Mitsubishi Corp. are among 41 of the 120 applicants to have passed the Oil Ministry's preliminary screening. The 41 include ExxonMobil Corp., BP PLC, and oil and gas companies from China, Russia, and India.

Iraq expressed hope that more Japanese companies will participate in bidding for projects to develop Iraqi oil fields, while Japan offered to train a hundred Iraqi engineers a year during 2009-13.

The Iraqi oil ministry said this week it is planning by the end of the month to announce the first round of tenders to develop its oil and gas fields.

A ministry spokesman said names of the fields, duration of each contract, closing dates for receiving bids, and other details would be made public on June 30.

The oil and gas fields include Kirkuk and Bai Hasan in northern Iraq, as well as West Qurna 1, Zubair, Rumaila, and Missan in southern Iraq. They also said two gas fields—Akkas in western Iraq and Mansoriya in the east—will be included.

Contact Eric Watkins at hippalus@yahoo.com.

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