TOKYO, Sept 13 (Reuters) - Japanese trading house

Mitsubishi ( MSBHF ) said on Friday it has reached a preliminary

agreement to buy a stake in and offtake low-carbon ammonia from

ExxonMobil's ( XOM ) hydrogen facility in Texas.

Part of its decarbonisation drive, Japan is aiming to

increase usage of hydrogen and its derivative, ammonia, for

co-firing at power plants, usage in the steel and automobile

industries and other areas.

Mitsubishi ( MSBHF ) said that ExxonMobil's ( XOM ) facility was expected to

produce up to 1 billion cubic feet (bcf) per day of hydrogen,

which would have about 98% of CO2 removed, and more than 1

million tons of low-carbon ammonia per year.

The final decision was expected next year with startup of

the facility in 2029, Mitsubishi ( MSBHF ) said, without disclosing the

size of the stake it was willing to buy or how much ammonia to

offtake.

Mitsubishi ( MSBHF ) planned to partner with Japanese oil refiner

Idemitsu Kosan ( IDKOF ) for joint equity and ammonia offtake

which was expected to be used in Japan for power generation,

process heating and other industrial activities, it added.

Earlier this year, Idemitsu Kosan ( IDKOF ), Mitsubishi Corp ( MSBHF ) and Swiss

firm Proman agreed to study a fuel ammonia production project in

Louisiana.

Idemitsu aims to build an ammonia import terminal using the

existing infrastructure at the Tokuyama plant in western Japan

and supply more than 1 million tons of low-carbon ammonia by

2030 to industrial buyers, including in the chemicals and steel

sectors.

Mitsubishi ( MSBHF ), in turn, is considering turning a part of its

liquefied petroleum gas (LPG) terminal in Namikata in western

Japan into an ammonia terminal and supply low-carbon ammonia for

various industrial applications.

"We are excited to be closely collaborating with ExxonMobil ( XOM )

to develop low-carbon hydrogen and ammonia supply chains that

will bridge the United States and Japan," Masaru Saito,

environmental energy group chief executive with Mitsubishi ( MSBHF ), said

in the statement.