Discussions have also been held with the National Iranian Oil Company for a similar stake in Hindustan Petroleum Corporation and Bharat Petroleum Corporation.
The government officials said Saudi Aramco and NIOC could be given board representation also.
Discussions were held with Aramco president and chief executive officer Abdallah S Jum'ah and senior NIOC executives during Petrotech 2005 held earlier this month. NIOC already holds about 14 per cent equity in Chennai Petroleum.
The proposal would not violate the policy forbidding privatisation of profitable PSUs since the policy allowed for changes in equity structure as long as the government retained a majority holding, he said.
The officials said the companies could pick up stakes to the extent that it did not trigger the Takeover Code that made an open offer mandatory for firms taking interest beyond a limit. The companies can buy shares from the existing shareholders like the foreign institutional investors or small investors.
In IOC's case, the government is even open to allowing ONGC to sell a part of its 9.11 per cent stake to Saudi Aramco in a negotiated deal.
The Saudi government-owned Saudi Aramco and the Iranian firm had sought equity participation in the domestic oil majors, they said, adding the government felt that such "strategic alliances" was in the long-term energy security interest of the country since both Saudi Arabia and Iran would continue to be India's biggest source of oil and gas.
Saudi Aramco supplies one-fourth of India's over 90 million tonnes of crude oil requirement while Iran exports over 11 million tonnes crude oil annually.
