MADRID, Nov 5 (Reuters) - Spanish oil firm Cepsa is exploring a sale of its chemicals business as it seeks to raise funds to accelerate its transition from fossil fuels to clean energy, two sources with knowledge of the matter told Reuters. Cepsa is working with Citi to identify possible bidders for the unit which is valued at up to 3 billion euros ($3.47 billion), the sources said, cautioning that discussions are at a preliminary stage and no deal is certain. The Madrid-based company, which is owned by Abu Dhabi state fund Mubadala and private equity firm Carlyle, hired former Shell executive Maarten Wetselaar as its new chief executive in January with a mandate to accelerate implementation of the company’s energy transition strategy and offer “more differentiated and sustainable energy solutions” to its customers. If successful, the sale would unlock funds to finance Cepsa’s push into renewable energy while part of the proceeds would be returned to shareholders, one of the sources said. Cepsa and Citi were not immediately available for comment. Cepsa said on Thursday that its chemicals business had generated core earnings of 355 million euros in the nine months to September, a 39% rise compared to last year. The unit makes chemical components for the IT, cosmetics and automotive industries among others and has production plants in Canada, Brazil, Germany and China. Cepsa is expected to sound out interest from both private equity funds and European chemicals firms including Germany’s Evonik and Switzerland’s Ineos, the sources said. Bain Capital and Cinven clinched the largest chemicals deals of 2021 with the $4.7 billion purchase of Lonza’s specialty ingredients business in February. Megadeals in the chemicals space totalled roughly $115 billion in 2019, according to a PwC study, but faced a slowdown last year because of the COVID-19 pandemic. “The recovery of the global economy from COVID-19 will drive increased activities in chemicals M&A for the remainder of 2021,” said Craig Kocak, a deals partner at PwC in the United States. ($1 = 0.8654 euros) (Reporting by Andres Gonzalez, editing by Pamela Barbaglia and Susan Fenton)