Saudi Aramco is preparing to sell its first riyal-denominated shariah-compliant bonds later this year and is working with a group of four local and international banks on the deal.

The hydrocarbons giant, which aims to invest $334bn over the next 10 year across the value chain of oil and gas sector, will use the proceeds to funds its expansion activities however, it is not known how much the company plans to raise through its debut offering. The Islamic bonds could be followed by a dollar-denominated issue, according to reports.

Aramco has been in talks with local and international banks to help it raise funds through bonds. The company has selected four banks including appointed HSBC, Riyad Capital, NCB Capital and Alinma Investment for the deal which could be launched before the end of first half of 2017, according to a report by US news agency Bloomberg.

The move to raise funds follows Riyadh’s own record-breaking debut bond in October which raised $17.5bn. The closest Aramco has come to selling debt in the past is a SR3.75bn ($1bn) sukuk issued by Saudi Aramco Total Refining & Petrochemical Company (Satorp), its joint venture with France’s Total. In 2013, another Aramco JV, Sadara Chemical Company with the US’ Dow Chemical, raised SR7.5bn through a sukuk to finance a chemicals complex.

Aramco’s is preparing to raise funds ahead of its 2018 initial public offering, which slated to be the biggest ever in the world with estimated proceeds of $100bn. Aramco is at the heart of Saudi Arabia’s plans for economic transformation. Riyadh aims to list less than 5 per cent of Aramco shares and transfer ownership of the rest to the kingdom’s Public Investment Fund, which will inflate its size to $2 trillion.

Aramco is already in talks with banks including Goldman Sachs and HSBC for an advisory role on the IPO.