Adnoc will acquire a 35 per cent equity stake in oil major ExxonMobil’s proposed blue hydrogen and ammonia production facility in Texas as the Abu Dhabi-based energy company boosts its presence in the US.

The project, set to be the “world’s largest” of its kind, will be capable of producing up to 1 billion cubic feet daily of blue hydrogen, with about 98 per cent of carbon dioxide removed, and more than 1 million tonnes of low-carbon ammonia per year, Adnoc said in a statement on Wednesday. The final investment decision is projected for 2025, with operations expected to begin in 2029.

"This strategic investment is a significant step for Adnoc as we grow our portfolio of lower-carbon energy sources and deliver on our international growth strategy,” said Dr Sultan Al Jaber, Adnoc managing director and group chief executive.

Blue hydrogen is primarily produced from natural gas through a process known as steam reforming, which involves combining natural gas with steam. This process generates hydrogen as the main product, while carbon dioxide is produced as a by-product.

The plant, which will be located in Baytown, will have access to “cheap” gas from the US Gulf Coast via pipelines, Michele Fiorentino, executive vice president of low carbon solutions at Adnoc, told The National on Wednesday.

Mr Fiorentino said that about half of the facility's production will be utilised by ExxonMobil for its own operations as "captive demand". While part of the remaining half will be sold in the Gulf Coast, where there is a well-established hydrogen network, about one million tonnes of ammonia will be shipped to either European or Northeast Asian markets, he added. Discussions are already under way with possible buyers, he said.

“A big off-taker is going to be North-east Asia – Japan and South Korea are keen to decarbonise their energy systems, and so they're looking at ammonia … to reduce the carbon footprint of their coal-fired [power] plants,” Mr Fiorentino said.

Ammonia co-firing involves substituting part of the coal used in power plants with ammonia and burning the low-carbon fuel with coal to produce electricity.

“There are obligations on the overall refining system in Europe to reduce their carbon footprint and other hard-to-abate sectors are looking at hydrogen as a way to decarbonise,” Mr Fiorentino said.

Adnoc’s latest agreement follows its acquisition of a 11.7 per cent stake in phase one of NextDecade’s Rio Grande liquefied natural gas export project in Texas.

“This is the second [deal] in a relatively short period of time. The US remains an interesting geography from our perspective, whether it's on the gas side or on the low carbon solution side,” Mr Fiorentino said. “We remain very receptive to investment opportunities that really make financial sense in the region.”

Adnoc is making substantial investments in carbon capture and establishing a hydrogen supply chain, which is seen as crucial for abating emissions in industries such as shipping and steel manufacturing.

The company is building a one million tonnes-per-year low-carbon ammonia production plant at the Ta'ziz industrial ecosystem and chemicals hub in Ruwais, Abu Dhabi.

Adnoc has also shipped several demonstration cargoes of low-carbon ammonia to customers in Asia and Germany. In December, the company teamed up with Japan’s Mitsubishi Heavy Industries to explore potential opportunities in green hydrogen and ammonia value chains.

The companies will also study the deployment of carbon management technology, the state-run energy company said at the time.

The market for clean hydrogen expected to top the value of the liquefied natural gas trade by 2030 and grow to $1.4 trillion per year by 2050, Deloitte said in a report last year.

Green hydrogen, which is produced using renewable energy such as solar and wind, is projected to help drive the bulk of the growth, the report said.