Exxon Mobil (XOM.N) has signed a long-term agreement to supply 250,000 metric tons of low-carbon ammonia annually to Japanese trading house Marubeni (8002.T), the U.S. oil producer said on Wednesday, representing Exxon's first signed customer agreement for its planned hydrogen facility in Baytown, Texas.
The agreement is a step forward in Exxon's effort to build the world's largest low-carbon hydrogen facility at its Baytown refining and chemical complex, which has experienced delays.
Hydrogen, which can be produced from natural gas, is a clean fuel that produces water when it is burned, while ammonia can be used as a carrier for hydrogen, allowing it to be shipped in liquid form. Carbon dioxide from the production of hydrogen will be captured and stored underground, the company said.
"This is another positive step forward for our landmark project,” said Barry Engle, president of low carbon solutions at Exxon, in a statement.
The customer agreement with Marubeni is contingent on whether Exxon makes its final investment decision to move forward with the Baytown hydrogen facility. Exxon said it expects to make that decision this year, which depends on favorable government policy and regulatory permits.
Marubeni will also take an equity stake in Exxon's Baytown hydrogen facility, the companies said. An Exxon spokesperson declined to specify the percentage of the stake.
