Japanese trading house Sumitomo Corp is linking up with Oshima Shipyard to design and build an ammonia-fuelled bulker.
Sumitomo has a long-standing commercial relationship with Oshima and is a major shareholder in the shipbuilder.
Ammonia emits no CO2 when combusted and is considered a next-generation fuel for thermal power generation and shipping.
The company intends to build the ship to promote the decarbonisation of the industry in line with International Maritime Organization regulations.
"After the completion of the bulk carrier, Sumitomo Corp will own and operate it, thereby helping users of the ship’s transportation service to reduce their greenhouse gas emissions across their supply chains," Sumitomo said.
The ship will be 81,000 dwt, 229 metres long with a 32.26 metre beam.
Since March last year, Sumitomo has been working to build an ammonia fuel supply chain in Singapore.
Singapore's Keppel Corp and Sumitomo earlier announced they are teaming up to explore the feasibility of introducing ammonia bunkering into Singapore within the next couple of years.
The companies said they will accelerate the development of an ammonia bunkering vessel with the aim of starting commercial operations in the mid-2020s.
Sumitomo is working with the Singapore government to establish regulations and operational guidelines for ammonia as a fuel.
"Sumitomo is implementing initiatives for the entire ammonia supply chain of the maritime industry, such as developing an ammonia-fuelled ship and making ammonia fuel available at ports, thereby contributing to the decarbonisation of the industry," Sumitomo said.
The company is aiming to become carbon neutral in 2050.
Oshima is expanding its shipbuilding business through the acquisition of Mitsubishi Heavy Industries' Koyagi Shipyard.
It plans to complete the acquisition by the end of this current financial year and is recruiting ahead of ship construction starting at the facility in 2023.
Oshima has now acquired the shipbuilding dock and wharf as part of the handover.
