ADNOC DAC Strategy, $500 M Occidental JV, 500, 000 Tonnes Capacity, and 2 Major Projects (2025)

DAC Commercial Scale Strategy, ADNOC Leverages International JVs for Domestic Growth

In 2025, Abu Dhabi National Oil Company (ADNOC) executed a strategic pivot from domestic, point-source carbon capture to an international, partnership-led model designed to acquire Direct Air Capture (DAC) expertise and de-risk market entry. This approach uses targeted overseas investments as a learning platform to accelerate the development of a domestic carbon management industry in the United Arab Emirates.

• Prior to 2025, ADNOC’s carbon capture activities were centered on projects like Al Reyadah, which captured CO₂ from industrial processes. The year 2025 marks a definitive shift toward DAC, which removes CO₂ directly from the atmosphere.
• The cornerstone of this new strategy is the May 2025 agreement with Occidental to evaluate a joint venture for a DAC hub in South Texas. The project, with a potential ADNOC investment of up to $500 million, targets a 500, 000 tonnes-per-year facility, allowing ADNOC to gain operational experience in a mature regulatory market with incentives like the U.S. 45 Q tax credit.
• In parallel, ADNOC is cultivating a domestic ecosystem through a February 2025 preliminary engineering study with Exxon Mobil for a separate DAC facility in the UAE. This dual-track approach diversifies technology exposure and builds indigenous capabilities.
• ADNOC is also exploring next-generation sequestration pathways through a pilot project in Fujairah that combines DAC with CO₂ mineralization, a process that permanently stores carbon in rock formations. This portfolio approach balances deployment of commercially-ready technology with research into innovative, long-term solutions for the Direct Air Capture market.

Key Factors Shaping the Carbon Capture Market

This chart outlines the primary drivers of the carbon capture market, providing essential context for understanding the landscape in which ADNOC is formulating its commercial-scale DAC strategy.

(Source: Coherent Market Insights)

$500 M DAC Investment, ADNOC’s US Partnership with Occidental Signals Global Ambition

ADNOC’s 2025 capital allocations demonstrate a firm commitment to establishing carbon management as a core business vertical, anchored by a significant potential investment in its first international DAC project. These financial moves are structured to fund both immediate project development and a long-term strategic transition.

• The most direct signal is the potential investment of up to $500 million from ADNOC‘s investment arm, XRG, into the South Texas DAC Hub. This represents a substantial financial commitment to a single carbon removal project, validating the technology’s strategic importance to the company.
• This specific project investment is supported by a broader initial allocation of $23 billion that ADNOC has earmarked for a portfolio of low-carbon initiatives, including carbon capture, electrification, and hydrogen. This large fund provides the financial capacity to pursue multiple large-scale decarbonization projects simultaneously.
• Looking further ahead, ADNOC’s board approved a five-year capital expenditure plan of $150 billion for 2026-2030. This massive budget ensures that the company’s long-term growth strategy, which explicitly includes advancing low-carbon solutions, is fully funded.

Occidental Sets Key Carbon Reduction Targets

This chart provides context on ADNOC’s key partner in its US venture, Occidental, by detailing its own carbon reduction goals, underscoring the strategic alignment for ADNOC’s global ambitions.

(Source: CarbonCredits.com)

Table: ADNOC Low-Carbon and DAC Investment Commitments (2025)

ADNOC 2 Major DAC Partnerships, Occidental and Exxon Mobil Deals (2025)

In 2025, ADNOC built its DAC strategy around foundational partnerships with two U.S. energy majors, creating a multi-faceted approach that accelerates technology learning curves for both international and domestic projects. These alliances are structured to mitigate risk by diversifying exposure to different DAC technology systems and operational models.

• The May 2025 agreement to evaluate a joint venture with Occidental is ADNOC‘s most significant move, providing direct access to Occidental’s subsidiary 1 Point Five, a leader in deploying commercial-scale liquid-solvent DAC technology. This partnership is a vehicle for importing proven operational knowledge.
• Complementing the Occidental venture, ADNOC partnered with Exxon Mobil in February 2025 to begin a preliminary engineering study for a DAC facility located within the UAE. This collaboration focuses on building domestic capabilities and adapting DAC technology to the region’s specific environmental conditions.
• Beyond large-scale DAC, ADNOC engaged in a pioneering pilot project in Fujairah with technology provider 44.01 and partners including Masdar. This project tests an alternative CO₂ removal pathway through mineralization, indicating a strategy that includes investing in earlier-stage but potentially disruptive technologies.

Table: ADNOC DAC and CCUS Strategic Partnerships (2025)

US vs. UAE, ADNOC’s Dual-Geography DAC Expansion Strategy

ADNOC‘s 2025 geographic strategy for DAC is a calculated, two-front approach that utilizes the established U.S. market as a launchpad for its first commercial-scale project while simultaneously preparing the UAE to become a future hub for carbon management. This model is designed to maximize learning and mitigate risk before committing to massive domestic infrastructure.

• The year 2025 marks ADNOC’s first major international expansion in the DAC sector, a departure from its historical focus on domestic carbon capture projects.
• The primary international focus is the United States, specifically Kleberg County, Texas, through the joint venture evaluation with Occidental. This location offers significant advantages, including a mature regulatory environment with financial incentives and access to Occidental’s planned CO₂ transport and storage infrastructure.
• Simultaneously, domestic UAE activities are advancing on two fronts: a preliminary engineering study for a large-scale DAC plant with Exxon Mobil and an operational pilot in Fujairah testing CO₂ mineralization in local peridotite rock formations.
• This dual-geography strategy allows the U.S. project to serve as a real-world testbed, generating operational data and de-risking technology choices that will inform the larger, subsequent deployment of DAC infrastructure within the UAE.

MENA Power Generation Heavily Reliant on Fossil Fuels

By showing the MENA region’s heavy reliance on fossil fuels, this chart provides the rationale for the UAE-based part of ADNOC’s dual-geography strategy, explaining the domestic imperative for decarbonization.

(Source: Middle East Institute)

DAC Technology at Commercial Scale, ADNOC Focuses on TRL 7-9 Systems

In 2025, ADNOC‘s technology strategy for DAC bypassed early-stage research in favor of partnerships that provide direct access to near-commercial systems, primarily focusing on technologies at Technology Readiness Levels (TRL) 7 through 9. This pragmatic approach prioritizes deployment and learning with proven systems while maintaining a small portfolio of earlier-stage, high-potential options.

• The partnership with Occidental for the Texas hub grants ADNOC access to a liquid-solvent DAC technology. This system is among the most mature in the industry and is already being deployed at a commercial scale, representing a TRL 8-9 technology.
• The collaboration with Exxon Mobil in the UAE likely provides exposure to advanced solid-sorbent DAC materials, another leading technology pathway that is considered to be at TRL 7-8 and ready for commercial demonstration.
• The project’s implied capital expenditure of approximately $1, 000 per ton of capacity ($500 million investment for 500, 000 tons) serves as a key commercial data point, grounding the project in economic reality despite wide-ranging academic cost estimates for DAC.
• In contrast, the Fujairah pilot with 44.01 explores mineralization, a TRL 6-7 technology. This demonstrates a balanced portfolio strategy: deploying mature technologies for immediate scale while exploring next-generation solutions that could offer long-term advantages like permanent storage.

CO2 Capture Capacity to Grow, Still Falls Short

The chart highlights the significant gap between projected CO2 capture capacity and climate goals, justifying ADNOC’s strategic focus on commercial-scale (TRL 7-9) technologies to address this shortfall.

(Source: CarbonCredits.com)

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

ADNOC’s 2025 DAC strategy capitalizes on its significant financial strength and ability to forge strategic partnerships, positioning it to become a leader in the emerging carbon management market. However, this ambition is exposed to the high costs and technological uncertainties inherent in the nascent DAC industry.

• Strengths are rooted in ADNOC‘s robust balance sheet, exemplified by its $23 billion low-carbon investment fund, and its ability to partner with technology leaders like Occidental and Exxon Mobil to acquire expertise rapidly.
• The primary Weakness is a current lack of in-house operational experience with DAC technology, creating a dependency on its partners for project execution and performance.
• Key Opportunities include gaining a first-mover advantage in the Middle East’s CCUS sector and developing a new, potentially lucrative business vertical built on carbon removal credits and services.
• Significant Threats remain, including the high cost of DAC technology and the volatility of global carbon prices and policy support, which could challenge the economic viability of its large-scale projects.

Corporate Buyers Signal Demand for DAC Credits

This chart illustrates a key market opportunity—strong corporate demand for DAC credits—which is a critical component of a SWOT analysis for ADNOC’s DAC strategy.

(Source: CarbonCredits.com)

Table: SWOT Analysis for ADNOC’s DAC Initiatives (2025)

2026 FID, ADNOC’s Critical Milestone for its Texas DAC Project

The single most important signal to monitor in the next 12 to 18 months is the Final Investment Decision (FID) on the South Texas DAC Hub. This event will formally commit capital, transition the project from evaluation to execution, and serve as the ultimate validation of ADNOC‘s strategy to use international ventures to build its carbon management capabilities.

• If this happens: ADNOC and Occidental announce a positive FID for the Texas facility.
• Watch this: The immediate flow of capital from ADNOC’s XRG into the joint venture, the announcement of Engineering, Procurement, and Construction (EPC) contract awards, and the signing of the first carbon removal offtake agreements for the project’s capacity.
• These could be happening: A successful FID in Texas would likely accelerate the timeline for the domestic DAC project with Exxon Mobil, as the de-risked business model and operational learnings are transferred to the UAE. Watch for the public release of the preliminary engineering study results.

The questions your competitors are already asking

This report covers one angle of ADNOC’s strategy to build a domestic DAC industry through international partnerships. The questions that matter most depend on your work.

• What is actually happening with the ADNOC-Occidental DAC hub in South Texas since the May 2025 announcement?
• ADNOC investments and funding. Is the $500 million Occidental JV on track to meet its 500,000 tonnes-per-year target?
• ADNOC’s activities in the UAE. Is the preliminary engineering study with Exxon Mobil progressing toward a full-scale domestic DAC deployment?
• What are the opportunities for DAC technology suppliers in the emerging UAE carbon management market?

This report does not answer these. Enki Brief Pro does.

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