LONDON, FEB. 17 -- Saudi Arabia is engaged in serious negotiations with Texaco Inc. to buy about a 50 percent stake in Texaco's extensive U.S. refining operations along the Gulf of Mexico for more than $1 billion, industry sources said today.

The move, if completed, would mark the Saudis' first major overseas refining venture at a time when many members of the Organization of Petroleum Exporting Countries are scrambling to find secure outlets for their crude amid glutted markets.

Texaco officials in New York said it would be "premature to comment on discussions that are being held with potential partners." If it sells off part of its assets, Texaco would be contributing to its bankruptcy restructuring plan, which includes a $3 billion payment to Pennzoil Co.

Officials of Petromin, the Saudi oil holding arm, and Texaco hope to reach a final agreement within a month, sources said.

The sources, including oil executives from the Gulf attending the Institute of Petroleum's annual conference in London this week as well as U.S. oil industry sources familiar with the deal, said the joint venture would involve Saudi Arabia's buying about half the interest in a Southeast U.S. refining network of some 600,000 barrels a day. (Saudi production is about 4.3 million barrels a day.)

Texaco has refineries in Louisiana and Texas.

On Jan. 8, Texaco announced that it was "aggressively moving forward with a restructuring plan involving the sale of ongoing operations and joint ventures" in refining and marketing activities.

Texaco has held discussions with other potential partners about joint ventures, and Saudi Arabia has talked to other companies in the United States and Europe about buying into their refining or marketing operations.

Venezuela and Kuwait are the only members of the 13-nation OPEC cartel that have established major refining operations outside their borders.

But industry analysts said that Saudi Arabia is seeking to follow their lead to become a fully integrated oil producer.

Saudi Arabia's principal motive is to have an assured outlet for its crude oil, said John Lichtblau of Petroleum Industry Research Foundation.

In addition, he said, "it also gives them a lot of information about the markets" and might offset declines in profits from production.

"With Kuwait and Venezuela and now this from Saudi Arabia, we're beginning to see the producers moving to set up the kind of integrated system that was operated by the major oil companies in the 1950s and '60s -- from producing crude to selling petrol," said David M. Gray, senior oil analyst with London brokers James Capel & Co.

Saudi Arabia, the world's largest crude oil exporter, has large refining capacity at home, which is geared for domestic consumption.

The kingdom is said to have been slow to move into refining activities abroad because it feared it did not have the management capability.

Washington Post staff writer Martha Hamilton contributed to this story.