Saudi Aramco, the biggest oil company in the world, has entered into discussions with Hengli Group Co., Ltd. regarding the potential acquisition of a 10% stake in Hengli Petrochemical Co., Ltd.

The state energy major on Monday said the companies signed an MoU regarding the proposed transaction.

The acquisition aligns with Aramco’s strategy to expand its downstream presence in key high-value markets, advance its liquids-to-chemicals program, and secure long-term crude oil supply agreements, it added.

The deal is subject to due diligence and required regulatory clearances.

Hengli Petrochemical, a controlled subsidiary of Hengli Group, owns and operates a 400,000 barrel per day of refinery and integrated chemicals complex in Liaoning Province, China, and several plants and production facilities in Jiangsu and Guangdong Provinces.

Mohammed Y. Al Qahtani, Aramco Downstream President, said: “This MoU supports our efforts to grow our global downstream footprint. We continue to explore new opportunities in important markets, as we seek to progress in our liquids-to-chemicals strategy. We look forward to forging new partnerships and are excited by the prospect of expanding our presence in the important Chinese market.”

Aramco has been ramping up its China presence in a string of deals in refining and petrochemicals with Chief Executive Amin Nasser saying earlier this year that demand for oil is healthy and growing in China.

(Writing by Brinda Darasha; editing by Seban Scaria)