L&T Energy GreenTech Limited, a wholly owned subsidiary of Indian engineering and construction major Larsen and Toubro, has entered into a long term partnership with Japanese trading house ITOCHU Corporation for the supply of green ammonia. Under the terms of the agreement, the Indian company will supply ITOCHU with 300,000 tonnes of green ammonia per annum on a captive long term take or pay basis, sourced from a production facility being developed at Kandla in the Indian state of Gujarat. The arrangement is one of the largest bilateral green ammonia supply commitments disclosed between Indian and Japanese parties to date and provides both a demand anchor for a major Indian clean fuel project and a dedicated supply base for Japan's maritime decarbonisation plans.

The take or pay structure is the commercially significant feature of the deal. Under this type of contract, the buyer commits to paying for an agreed volume of product regardless of whether it physically takes delivery of the full quantity. For a project developer, take or pay contracts provide the revenue certainty required to secure project finance on competitive terms. For an offtaker such as ITOCHU, the structure ensures priority access to supply in what is expected to become a tight global green ammonia market as maritime decarbonisation accelerates. The agreement therefore converts an earlier development stage relationship into a bankable commercial foundation.

 

The Signing Ceremony and the Organisational Footprint of the Deal

 

The long term agreement was signed by Derek M Shah, Chief Executive Officer and Managing Director of L&T Energy GreenTech, and Hiroyuki Tsubai, Executive Vice President, Member of the Board and President of the Machinery Company at ITOCHU Corporation. The signing took place at ITOCHU's headquarters in Tokyo and was attended by Masahiro Okafuji, Chairman and Chief Executive Officer of ITOCHU Corporation, S N Subrahmanyan, Chairman and Managing Director of Larsen and Toubro, and Subramanian Sarma, Deputy Managing Director and President of L&T. The presence of the most senior leadership on both sides reflects the strategic weight that the two companies are placing on the transaction.

The agreement builds on a Joint Development Agreement that the two companies signed in July 2025. The progression from joint development to a firm long term supply contract within approximately one year represents a relatively rapid commercial advancement for a green ammonia project, particularly one involving cross border offtake. In the broader market, many green hydrogen and green ammonia projects globally have struggled to move from memoranda of understanding into firm supply contracts because of price uncertainty and evolving regulatory frameworks. The signing of a binding take or pay arrangement places the L&T and ITOCHU partnership in a more advanced category than most comparable projects currently under development.

 

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How the Kandla Project Fits Into the Wider Green Hydrogen Strategy

 

The production facility supplying the agreement is planned at Kandla in Gujarat, a location that offers a combination of renewable energy availability, port infrastructure and access to international shipping routes. Positioning the facility at a coastal export hub is essential because green ammonia is primarily an internationally traded commodity rather than one consumed near the point of production. The Kandla site will therefore be developed with integrated production, storage and export logistics, enabling the delivered product to reach maritime fuelling centres at competitive cost.

The project also aligns with India's National Green Hydrogen Mission, which was launched to establish the country as a leading exporter of green hydrogen and derivatives such as green ammonia and green methanol. By securing long term offtake from a major Japanese buyer, L&T Energy GreenTech is demonstrating a commercial pathway for the Mission's export ambitions, which is significant because the economic case for large scale green hydrogen production in India depends heavily on access to international demand. Japan, Korea and parts of Europe are currently the three largest addressable markets for green ammonia imports, and Japanese trading houses are expected to play a central role in aggregating demand and organising shipping logistics.

 

ITOCHU's Strategy for Green Bunkering Across Maritime Trade Routes

 

For ITOCHU, the offtake volume will support a rapidly expanding bunkering business focused on green ammonia as an alternative marine fuel. The company's strategy is to develop a global green ammonia ecosystem across key maritime trade routes, with Singapore identified as a critical node. Singapore is one of the world's largest bunkering hubs and has been actively working to position itself as an early centre for ammonia bunkering as the shipping industry begins to adopt alternative fuels in response to International Maritime Organization decarbonisation targets. Supplies from Kandla are expected to support ITOCHU's bunkering operations in Singapore and at other locations over time.

The underlying market context is that international shipping is under increasing pressure to reduce its greenhouse gas emissions, with the IMO having adopted a strategy that targets net zero emissions from international shipping by or around 2050. Green ammonia is one of the leading candidate fuels for this transition, alongside green methanol and, over the longer term, hydrogen. Ammonia offers the advantage of higher energy density relative to compressed hydrogen and existing infrastructure knowledge because the compound is already widely used in the fertiliser industry. The remaining challenges are primarily related to safety handling, engine availability and port infrastructure, all of which are now the subject of active commercial development.

 

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Commercial Significance for Both Companies

 

From L&T's perspective, the agreement strengthens the commercial foundation of its green ammonia platform and provides a reference transaction that can be used to support further project financing and capacity expansion. Subramanian Sarma, Deputy Managing Director and President of Larsen and Toubro, described the deal as a significant step in translating the company's clean energy ambitions into large scale bankable projects. The ability to secure long term demand from a reputable global partner is particularly valuable because it reduces the marketing and offtake risk that has historically been one of the largest obstacles to green hydrogen and derivative project finance.

For ITOCHU, the partnership provides a reliable and scalable supply base that underpins its broader ambition to expand in marine fuel bunkering. Hiroyuki Tsubai of ITOCHU described the establishment of a stable supply of green ammonia as critical to accelerating the use of the fuel in shipping, and indicated that the arrangement would allow the company to expand its bunkering business and support the shipping industry's transition to low carbon operations. In the competitive landscape among Japanese trading houses, securing a dedicated supply base of this scale is strategically important because several of the major Japanese trading companies are pursuing similar positions in the emerging green ammonia market.

 

A Data Point for the Wider Indo Japan Clean Energy Corridor

 

The wider significance of the deal is its contribution to what is emerging as an Indo Japan clean energy corridor. India has the renewable resources and land availability required to produce green hydrogen and ammonia at competitive cost, while Japan has the demand, the capital and the international trading infrastructure required to absorb the output. Bilateral agreements of this nature effectively knit those complementary positions into operational supply chains. The 300,000 tonne per annum commitment will serve as an early reference point for subsequent transactions, both in terms of pricing and in terms of contractual structures.

Over a longer horizon, the arrangement also contributes to one of the central strategic objectives of the global energy transition, which is the establishment of a functioning international market for low carbon fuels. The maritime sector is expected to be one of the first industries where a clear commercial pathway for green ammonia consumption is established, and projects that can provide reliable volumes at predictable cost will shape the structure of that market. If the Kandla project is successfully delivered and the offtake relationship performs as anticipated, the L&T and ITOCHU partnership has the potential to become a template for further investment decisions across the Asia Pacific region.

 

Source: LarsenToubroNews