Occidental Petroleum, a US-based producer of oil and gas has agreed to buy technology supplier Carbon Engineering for U$1.1bn to help with the development of several carbon capture sites.

The oil producer is targeting the construction of approximately 100 plants using direct air capture (DAC) technology to draw CO2 directly from the atmosphere, before storing it underground or to manufacture useful products including concrete and aviation fuel. At present, DAC technology is in its commercial infancy, and many companies believe that millions of dollars in investments are required to ensure that the technology is economically viable and capable of producing profits.

“This is not a huge deal for Occidental, but we think it adds to near-term leverage and heightens concerns over cash burn at (Occidental’s) Low Carbon Ventures division,” said the Roth MKM brokerage firm.

Three almost equal payments will be made, with the first due at closing – expected to take place before the end of 2023.

Recently, the U.S. Department of Energy revealed that sites in Texas and Louisiana would receive U$1bn in federal grants, and a portion of this will be used to fund Occidental’s 30 proposed DAC plants in Kleberg County in Texas.

“The acquisition enables Occidental to catalyze broader development partnerships for DAC deployment in the most capital efficient and valuable way,” commented Vicki Hollub, CEO, Occidental.

Occidental has worked with Carbon Engineering on DAC deployment since 2019.