The two firms also plan to cooperate in product development and maintenance operations.

Nippon Oil has developed with Sanyo Electric Co. (TSE:6764), a fuel cell that runs on hydrogen extracted from liquefied petroleum gas (LPG). It has also developed a kerosene-compatible cell with Ebara Corp. (TSE:6361) subsidiary Ebara Ballard Corp. Both are currently leased under the Nippon Oil brand.

Cumulative sales are projected to reach a market-leading 435 units by the end of the fiscal year, based on figures compiled by the Ministry of Economy, Trade and Industry.

J-Energy now leases LPG fuel cells made by Toshiba Corp. (TSE:6502). With estimated aggregate sales of 63 units at fiscal year-end, the firm will be No. 4 in the market - behind Nippon Oil, Tokyo Gas Co. (TSE:9531) and Osaka Gas Co. (TSE:9532).

In the alliance, Nippon Oil will supply J-Energy with the fuel cells made by Sanyo and Ebara Ballard. Nippon Oil and J-Energy aim to cut costs by leveraging their pooled orders. The arrangement will also expand J-Energy's lineup to include kerosene fuel cells.

J-Energy plans to continue leasing the Toshiba fuel cells for the time being. And in an effort to coordinate inspection and repair services, it will take part in a Nippon Oil development project with a device manufacturer.