DUBAI (Reuters) - JPMorgan JPM.N and Morgan Stanley MS.N have been picked to advise on Saudi Aramco's plan to buy a controlling stake in petrochemical maker SABIC 2010.SE, several sources familiar with the matter said.

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Aramco aims to buy such a stake, possibly taking the entire 70 percent holding owned by Saudi Arabia’s sovereign wealth fund, two of the sources familiar with the matter told Reuters earlier on Monday.

Late last week, Aramco IPO-ARMO.SE confirmed a Reuters report that it was working on the possible purchase of a "strategic stake" in Saudi Basic Industries Corp (SABIC) 2010.SE from the Public Investment Fund (PIF), Saudi Arabia's top sovereign wealth fund.

Aramco wants to develop its downstream business as the government prepares to sell up to 5 percent of the company, which is the world’s largest oil producer. Boosting its petrochemicals portfolio further could help to attract investors for the initial public offering.

JPMorgan and Morgan Stanley had already been among the advisers assisting Aramco on its IPO.

Aramco’s initial thinking is to buy the full stake owned by the PIF, but if that fails to materialise Aramco could end up with a stake in SABIC of more than 50 percent, making it a majority owner, two of the sources said.

No final decision has been made on the size of the stake as discussions are at a very early stage, they added.

Aramco, JPMorgan and Morgan Stanley declined to comment.

The PIF did not respond to a request for comment on the size of the stake sale.

Riyadh-listed SABIC, the world’s fourth-biggest petrochemicals company, has a market capitalisation of 385.2 billion Saudi riyals ($103 billion).

The potential acquisition would affect the time frame of Aramco’s planned IPO set for later this year, the state oil giant’s chief executive, Amin Nasser, said in a TV interview on Friday.

Aramco plans to boost investments in refining and petrochemicals to secure new markets and sees growth in chemicals as central to its downstream strategy to cut the risk of an oil demand slowdown. [L8N1TE423]

Aramco plans to raise its refining capacity to between 8 million and 10 million barrels per day, from around 5 million bpd now, and double its petrochemicals production by 2030.

Aramco pumps around 10 million bpd of crude oil.