Occidental Petroleum and subsidiary 1PointFive have entered an agreement with XRG, ADNOC's investment company, to evaluate a potential joint venture to develop a direct air capture (DAC) facility in South Texas.

XRG would consider investing up to $500 million for the development of a DAC facility designed to capture 500,000 tonnes of CO2 per year. The agreement was signed by Occidental President and CEO Vicki Hollub and ADNOC Group CEO Sultan Ahmed Al Jaber during U.S. President Donald Trump's visit to the United Arab Emirates.

The announcement follows “significant milestones” in the development of DAC, including Occidental's progress on STRATOS, its first DAC facility in West Texas, Oxy said. The facility is on-track to start commercial operations in 2025. The company is further de-risking its DAC technology and was awarded up to $650 million from the U.S. Department of Energy to support development of the South Texas DAC Hub.

"We are proud to advance our decades-long partnership with ADNOC and XRG on our South Texas DAC Hub, which we believe will deliver game-changing technology to support U.S. energy independence and global goals. Agreements like this, along with U.S. DOE support, demonstrate continued confidence in DAC as an investable technology that can create jobs and economic value in the United States and Texas," Hollub said.

Khaled Salmeen, XRG’s COO, said its longstanding partnership with Occidental continues to drive scalable, high-growth and strategically attractive projects that create long-term sustainable value.

“The U.S. is a priority market for XRG and we look forward to building on this partnership as we continue to invest in strategic projects across the energy value chain," Salmeen said.

Occidental and ADNOC have been discussing opportunities to collaborate on carbon capture, utilization and storage projects in the U.S. and UAE since signing a memorandum of understanding in 2023.

The South Texas DAC Hub, located on the King Ranch in Kleberg County, Texas, will be close to industrial facilities and energy infrastructure along the U.S. Gulf Coast, where CO2 can be transported for use or securely stored in geologic formations. The 165-sq-mile site has the potential to store up to 3 billion tonnes of CO2.

The first DAC facility at the hub is expected to capture 500,000 tonnes of CO2 per year and is currently in the engineering and design stage.

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