(Bloomberg) -- Saudi Aramco started talks to buy a 10% stake in China’s Hengli Petrochemical Ltd. as it looks to secure a long-term market for its oil.

State-owned Aramco and the Chinese company signed an initial agreement to explore a potential transaction, according to a statement from the Saudi company. No financial details or a timeline were provided. The 10% stake in Hengli, based in the Chinese port city of Dalian, has a market value of $1.5 billion based on its current share price.

Chinese energy demand has contributed to oil’s gain this year as the country’s industries recover from a longer-than-expected slowdown following the coronavirus pandemic. Aramco, which is also seeking similar deals with two other Chinese companies and has closed one transaction, has been looking to tie up supply contracts to go with the agreements.

Read More: Aramco’s China Deals Show Oil Demand’s Future: Energy Daily

Saudi Arabia sees demand for petrochemicals used to make goods such as plastics continuing to rise over the coming decades, even as oil’s use in transportation is likely to wane with the global energy transition. Hengli operates a 400,000 barrel-a-day refinery that has integrated petrochemical units along with other facilities in China.

Last year Aramco announced a plan to buy a stake in Rongsheng Petrochemical Co. in its largest ever foreign acquisition. It’s also been in talks for stakes in Shandong Yulong Petrochemical Co. and Shenghong Petrochemical. The company also has a joint venture with China that runs a refinery on Saudi Arabia’s Red Sea coast which supplies diesel and other fuels to Europe. 

“We continue to explore new opportunities in important markets, as we seek to progress in our liquids-to-chemicals strategy,” Mohammed Al Qahtani, president of Aramco’s downstream business, said in the statement. Aramco wants more deals in Asia, including in India and China, to expand its business and secure long-term buyers for its crude, Al Qahtani said in an interview in January.

The deals also provide opportunities for Aramco’s trading arm to do more business by sourcing barrels for the refineries and often having access to a share of the products for sale.

Aramco’s moves also comes as its competitor in neighboring United Arab Emirates is also chasing mega deals. Abu Dhabi National Oil Co. has made a $12 billion offer for German chemical company Covestro AG and is also in talks with OMV AG to create a $30 billion plastics giant by merging two of their units.

--With assistance from Matthew Martin.

(Updates with details throughout.)

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