Saudi Aramco has confirmed its interest in acquiring a controlling stake in SABIC. The state-owned oil and gas group said it is engaged in very early stage discussions with the Public Investment Fund (PIF) to take a strategic interest in the Saudi chemicals giant.

The Saudi government, through the PIF, owns a 70% stake in SABIC – the rest of the shares are listed on the Saudi Stock Exchange.

Consistent with the company’s strategy of rebalancing its portfolio by moving further downstream and into the petrochemical sector in particular, Aramco said has been evaluating a number of acquisition opportunities, both local and global, adding that it has no plans to acquire any of SABIC’s publicly held shares.

According to Bloomberg news agency, Aramco is already lining up banks to raise funds for a deal, which could value the stake at about $70 billion, according to people familiar with the matter. SABIC is said to have a market value of just over $100 billion.

Speaking to TV channel Al Arabiya on Jul. 20, Aramco’s CEO Amin Nasser, said a stake in SABIC would make Aramco less vulnerable to volatile oil prices and would be positive for its revenue. He added that the talks are likely to delay Aramco’s initial public offering (ipo), something that has been speculated for several months.

First mooted around two years ago, the timing of the proposed ipo has been continually pushed back. Aramco originally hoped that the listing of a 5% stake on both the Saudi Tadawul and an international exchange would raise around $100 billion for further investment as the Kingdom diversifies away from oil under its Vision 2030 strategy.

Last month, the Saudi oil minister said the timing of an IPO was “not critical,” although he added that it would be “nice” if the flotation happened in 2019. In his interview with Al Arabiya, Nasser said Aramco is ready for the initial offer and timing remains subject to the state’s decision. However, observers are said to be voicing doubts that the ipo will ever happen.

One of the major hurdles appears to be the Kingdom’s $2 trillion valuation of Aramco, which experts believe is unlikely to be achieved. Bloomberg reported that analysts including Sanford C. Bernstein & Co. and Rystad Energy have suggested that a figure closer to $1 trillion appears more realistic.