SINGAPORE : Dutch tank storage company Vopak has signed an initial agreement with Japan’s IHI Corporation to explore the development and operation of ammonia terminals, as they expect demand for the low-carbon fuel to grow amid energy transition.

The companies will lean on their experience in building ammonia storage tanks and terminals to focus on developing large-scale ammonia storage terminals that will allow for economical distribution of the fuel, the companies said in a joint statement on Tuesday.

They, however, did not disclose any financial details.

IHI, Japan’s leading manufacturer of ammonia storage tanks, is developing technology for large-scale ammonia receiving terminals using large liquified natural gas (LNG) storage tank technology.

Vopak has ammonia storage operations in China, Saudi Arabia, Singapore, Malaysia and in the U.S.

“As demand for ammonia continues to grow, we recognise the need to rationalise terminal operations and strengthen price competitiveness in order to meet this demand,” said Jun Kobayashi, IHI’s board director and managing executive officer.

The memorandum of understanding (MoU) also includes the conversion and supply of other hydrogen derivatives both in Japan and abroad, the companies said.

Ammonia, which is mainly used in fertilisers, is touted as an alternative clean fuel to decarbonise power and shipping sectors. It is also a carrier for hydrogen, another low-carbon fuel.