Japan has agreed to lend Iraq money to repair an oil refinery. Japan sees Iraq as a future source for its oil and gas.
Japan's Trade Ministry says it will lend Iraq $17.5 million to upgrade a refinery in Basra.
Iraqi Oil Minister Hussain al-Shahristani is visiting Japan this week. He says some of the future oil output from that refinery, as well as liquefied petroleum gas, will head to Japan.
"We in Iraq are committed to be[ing] the strategic suppliers of Japanese oil and liquified petroleum gas needs in the long term. We are not exporting enough for the time being, but this is only transitional. Our increased production will be directed to the Asian markets," said al-Shahristani.
Al-Shahristani says Iraq's oil production has returned to the level seen before a U.S.-led military force invaded in March 2003 to oust Saddam Hussein. He says his country hopes to double output to six million barrels a day in about six years by developing new fields with international oil companies.
Giant oil companies from Japan, China, the United States and other countries hope to be able to do business in Iraq in the coming years.
Japanese Foreign Ministry spokesman Tomohiko Taniguchi acknowledges that energy- poor Japan will have tough competition in the Iraqi oil market.
"With the emergence of many hugely populated powerful economies, such as India and China, some in Japan are expressing that, in the long run, there may be a difficulty for Japan's economy to procure oil as easily it has continued to do," he said.
Japan's efforts to secure oil for its future have suffered recently, with a Japanese company losing its controlling stake of an oil-field project in Iran.
Japanese hopes of buying natural gas and oil from Russia also are hitting roadblocks - new policies in Moscow and competition from China.
There also are also problems in the Middle East, where Japan gets most of its oil. Saudi Arabia reportedly is cutting deliveries to Japan by as much as eight percent.