ADNOC DAC Strategy, $500 M Occidental JV for 500, 000 TPA, and 2 International Projects (2023 to 2025)

DAC Project Adoption, ADNOC’s Shift From Domestic Pilots to Global Commercial Scale

In 2025, Abu Dhabi National Oil Company (ADNOC) executed a decisive strategic shift in its approach to Direct Air Capture (DAC), moving from small-scale domestic feasibility assessments to large-scale, international commercial deployment through key partnerships. This pivot is designed to acquire operational expertise and de-risk the technology in mature markets before committing major capital within the UAE, positioning the company as an active participant in the global carbon management value chain.

ADNOC’s Early-Stage Domestic Exploration

Between 2021 and 2024, ADNOC‘s engagement with DAC was characterized by cautious, early-stage exploration within its domestic ecosystem. The primary example is Project ACE in Fujairah, a feasibility study exploring the combination of DAC with CO₂ mineralization. This initiative indicated an interest in alternative carbon storage pathways beyond conventional geological sequestration but remained in the research and development phase, signaling a period of technical evaluation rather than commercial commitment.

The 2025 Pivot to International Scale

The year 2025 marked a fundamental change in strategy, defined by the pursuit of megaton-scale projects abroad. This new direction allows ADNOC to gain hands-on experience in markets with established policy incentives and experienced operators. This approach contrasts with the technology-first path of pure-play DAC developers like Sirona Technologies or the strategic realignment seen at companies like GE Vernova after project cancellations. By partnering on large facilities, ADNOC is building transferable capabilities for its long-term decarbonization goals.

• The cornerstone of the 2025 strategy is the landmark partnership with US-based Occidental Petroleum to co-develop a major DAC hub in South Texas, designed to capture 500, 000 tonnes of CO₂ annually.
• Beyond the US, ADNOC expanded its international portfolio with involvement in the development of a 1 million tonne per annum (Mtpa) DAC and storage project in Kenya, demonstrating a multi-regional carbon management strategy.
• This international deployment model allows ADNOC to leverage existing policy mechanisms, such as the U.S. 45 Q tax credit, to mitigate financial risk while building technical and operational knowledge.

UAE Ranks Third in Global Announced DAC Project Capacity
The UAE has committed to 1.00 Million Tonnes of CO2 capture capacity from announced Direct Air Capture (DAC) projects, positioning it as a significant global player, though still behind the United States (8.71 Mt) and Kenya (1.05 Mt) in planned capacity.

Global DAC Landscape Reveals Emerging Market Momentum
The substantial DAC projects in the UAE and Kenya, alongside the US dominance, highlight a diversifying global commitment to carbon removal. This signals growing investor confidence and potential for regional policy incentives (e.g., carbon credits, decarbonization mandates) to accelerate DAC adoption beyond traditional Western markets.

(Source: International Energy Agency — via Direct Air Carbon Capture Technology Market Size Report 2026-2030)

$500 M Texas Investment, ADNOC’s Capital Deployment for DAC

ADNOC’s 2025 financial strategy in DAC is defined by targeted, high-value capital injection aimed at acquiring technical and operational expertise, rather than funding broad-based, early-stage research and development. The company is leveraging its financial strength to co-invest in commercially viable projects, effectively paying a strategic tuition to accelerate its entry into the carbon removal market.

Strategic Capital as a Knowledge Accelerator

The most significant financial move is the potential investment of up to $500 million into the South Texas DAC facility. This capital, deployed through its investment arm XRG, is not a passive financial stake but a means to secure a role in the joint venture’s development and operational phases. This provides ADNOC direct insight into the complexities of large-scale DAC project execution, from supply chain management to the monetization of carbon credits under the U.S. 45 Q tax incentive structure. This is a core part of the company’s broader pivot to new energy systems, which also includes major initiatives in hydrogen and offshore wind.

• The investment provides access to Occidental‘s subsidiary, 1 Point Five, and its experience with Carbon Engineering’s liquid-solvent DAC technology, bypassing years of internal development.
• By investing in a project within a jurisdiction with mature carbon market policies, ADNOC minimizes the policy and market risk associated with its first major DAC venture.
• This approach of learning-by-investing is a calculated method to build the institutional knowledge required for future large-scale deployments in the UAE and other regions.

Table: ADNOC Key DAC Investment Initiative (2025)

ADNOC’s 2 Key Carbon Management Partnerships (2023 to 2025)

ADNOC’s 2025 strategy is anchored by critical partnerships that address the entire carbon management value chain, extending beyond capture technology to include transportation and permanent storage. These collaborations are structured to ensure that as ADNOC develops its DAC capabilities, it simultaneously secures the downstream infrastructure necessary for a viable, large-scale carbon removal business.

Building an End-to-End Value Chain

The alliance with Occidental provides access to proven DAC technology and project development expertise, while a separate agreement with Malaysia’s Petronas addresses the vital need for secure, long-term CO₂ storage. This dual focus demonstrates a comprehensive and pragmatic approach to building a new business vertical.

• The partnership with Occidental, initiated in 2023 and formalized for the Texas project in 2025, is the central pillar for acquiring capture technology and operational know-how.
• The 2025 agreement with Petronas to explore offshore CO₂ storage capabilities is a crucial step in building out the downstream part of the value chain, ensuring a permanent sink for captured carbon.
• Together, these partnerships form a strategic framework that allows ADNOC to control key elements of the DAC-to-sequestration process, mitigating dependency on third parties for critical infrastructure.

Table: ADNOC Key Carbon Management Partnerships

US vs. UAE, ADNOC’s Geographic Strategy for DAC

ADNOC is executing a deliberate “learn abroad, deploy at home” geographic strategy for its DAC initiatives, prioritizing market entry in regions with favorable policies and established partners before scaling up domestic operations. This approach mitigates early-stage technology and market risks while building a foundation of expertise for future deployment in the UAE.

Prioritizing Mature Markets for Initial Deployment

Prior to 2025, ADNOC‘s focus was almost exclusively on the UAE, with exploratory studies like Project ACE. The strategic calculus shifted in 2025, with North America becoming the near-term center of gravity for commercial-scale deployment.

• The United States, specifically Texas, was selected for ADNOC‘s first major DAC investment due to the mature regulatory environment, the presence of an experienced partner in Occidental, and significant financial incentives provided by the 45 Q tax credit.
• In parallel, ADNOC is advancing its interests in other regions, such as the 1 Mtpa DAC project under development in Kenya, indicating a flexible and opportunistic global approach to its carbon management portfolio.
• The long-term objective remains the repatriation of the technical and operational expertise gained from these international ventures to develop and operate megaton-scale DAC facilities in the UAE, where a preliminary engineering study with Occidental is already underway.

SWOT Analysis, ADNOC’s DAC Execution Strengths and Market Risks

ADNOC’s strategic pivot into large-scale DAC is supported by its significant financial strength and existing energy infrastructure, but it also creates new dependencies on partners and exposes the company to project execution risks inherent in nascent technology sectors. The 2025 shift from domestic R&D to international commercial projects has reshaped its risk and opportunity profile.

Table: SWOT Analysis for ADNOC’s DAC Initiatives

ADNOC 2026 Outlook, The Texas DAC Project as a Catalyst

The successful execution of the South Texas DAC hub with Occidental Petroleum will be the most critical determinant of the pace and scale of ADNOC‘s future DAC investments. The performance of this first commercial-scale project will serve as the primary validation point for its “learn abroad, deploy at home” strategy and will dictate the speed of capital allocation towards its domestic and international carbon management ambitions.

• If this happens: The South Texas project meets its projected cost and carbon capture targets on schedule through 2026. Watch this: ADNOC will likely accelerate the timeline for a final investment decision on the planned 1 Mtpa DAC facility in the UAE, moving it from a feasibility study to a fully funded project.
• If this happens: The project experiences significant delays or cost overruns, challenging the economic model even with 45 Q credits. Watch this: ADNOC may diversify its technology portfolio by seeking new partnerships with other DAC providers or pivot to allocate more resources to alternative pathways like its CO₂ mineralization pilots.
• These could be happening: The proactive agreement with Petronas to secure offshore storage signals that ADNOC is already building out the downstream value chain. This indicates a high degree of confidence in its capture strategy and suggests the company is planning for success in its partnership with Occidental.

The questions your competitors are already asking

This report covers one angle of ADNOC’s commercial strategy for direct air capture. The questions that matter most depend on your work.

• Commercial direct air capture technologies
• US 45Q carbon capture tax credit details
• Other national oil company carbon capture projects
• Carbon storage and mineralization project status

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