Updates May 23 story with Aramco no comment in paragraph 5

By Federico Maccioni, David French and Yousef Saba

DUBAI/NEW YORK, May 24 (Reuters) - Saudi state oil giant Aramco is exploring potential asset sales to free up funds, two people with knowledge of the matter said, as it pursues an international expansion and weathers lower crude prices.

Aramco 2223.SE is the world's largest oil-producing company and the main source of Saudi state revenue. The firm will slash dividend payouts by nearly a third this year as lower oil prices hit its income.

The company has asked investment bankers to pitch ideas for how to raise funds from its assets, the people said.

They declined to say which assets could be sold or name the banks involved.

Aramco declined to comment.

Aramco is looking to improve efficiency and cut costs, according to two other people with knowledge of the matter, and an option under consideration would be asset sales, one of them said. The four sources declined to be named because they are not authorised to speak to media.

Aramco is the engine of the Saudi economy and its sprawling business includes units for aviation, construction and sports. It has retained majority stakes during previous asset sales such as its deals around its pipeline infrastructure.

The Saudi government is putting pressure on its industries to improve profitability amid low crude prices and as it spends its hydrocarbon wealth on new sectors to cut reliance on oil.

The kingdom faces a widening budget deficit with the International Monetary Fund saying Riyadh needs a price of oil of over $90 per barrel to balance its books compared to prices of around $60 per barrel in recent weeks.

Aramco has in recent years made a push to grow its global footprint, including investing in Chinese refineries, Chilean fuel retailer Esmax ESMAX.O and U.S.-headquartered LNG firm MidOcean.

The Saudi company said last week it signed 34 preliminary deals potentially worth up to $90 billion with U.S. firms following President Donald Trump's visit to the kingdom.

(Reporting by Yousef Saba, Federico Maccioni in Dubai, David French in New York, editing by Anousha Sakoui, Maha El Dahan, Louise Heavens and Tomasz Janowski)

((Yousef.Saba@thomsonreuters.com; +971562166204; https://x.com/YousefSaba))