TOKYO (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.