Japan and Iraq agreed Tuesday that Tokyo will extend financial and technical support for oil and natural gas projects in the war-ravaged country, which intends to expand oil production capacity to 2 million barrels per day next year, a Japanese official said.

Visiting Iraqi Oil Minister Ibrahim Bahr al-Ulum and Economy, Trade and Industry Minister Toshihiro Nikai signed a joint statement in which Tokyo pledged to consider financing three oil and gas projects in Iraq with yen loans, and train in Japan 1,000 Iraqi engineers in the energy sector for two years from 2006.

Japan is the first country to seal a detailed accord on oil and gas projects with Iraq after the war, the official said.

Tokyo has pledged to resume fresh government loans to Baghdad by the March 31 end of the current fiscal year and to extend up to $3.5 billion in such loans to Iraq by 2007.

Nikai told a news conference that the joint statement will be "a basis for strengthening bilateral ties." Upon a request by al-Ulum, Nikai said he agreed to head a joint steering committee with the oil minister that will be set up to coordinate the bilateral projects.

The committee will meet at least once a year, according to the joint statement.

The three projects concern the collection of liquefied petroleum gas and the rehabilitation and expansion of crude oil export and refinery facilities in Basrah, southern Iraq, according to the joint statement.

Oil production capacity at the Basrah refinery, which has eight units, is 170,000 barrels per day, but its operating ratio has declined to 50 percent due to aging and damage, an official of the Natural Resources and Energy Agency said.

The Iraqi minister hopes that up to 30 percent of the envisaged yen loan worth up to $3.5 billion will be allocated to these projects, the official said.

Japan has offered up to 100 million yen for one feasibility study for the projects since early this year, the official said.

As for the engineers, Japan has accepted 88 since 2004 and trained them in drilling technology and oil deposit analysis, he said.

During the meeting, al-Ulum asked Nikai that Japanese companies supply spare parts for Iraqi plants. Nikai said Tokyo will come up with plans by the end of January, according to the document.

Al-Ulum is on a two-day visit with Iraqi Prime Minister Ibrahim al-Jaafari that started Monday.

Japan and Iraq had been studying possible cooperation on energy projects in the country since spring, he said.