France's Total Eyes New China Tie-Up

French energy giant Total SA has reached an agreement with China's Sinopec on a joint venture for shale gas and refining, the Wall Street Journal reported Monday.

The U.S. daily also quoted Total's chief executive Christophe de Margerie as saying that Chinese authorities now own a stake of two percent in the French company.

It said Total reached a pact with China Petrochemical Corp., or Sinopec, to search for and produce shale gas, a potentially lucrative market tapping natural gas trapped in rock formations.

Total also is in talks for the right to market fuel and petrochemicals in China produced by a planned refinery complex in the country's south, de Margerie was quoted as saying.

The CEO, who plans to meet with Chinese government and company officials this week, said that China's State Administration of Foreign Exchange, which holds the nation's vast foreign-exchange reserves, now owns two percent of Total.

He said he would welcome fresh investments, including possibly from sovereign wealth fund China Investment Corp.

"If CIC wants to take more, we don't have any problem," de Margerie told the daily. "It is good for a company to have a historical partner in your share capital."

Last Tuesday, Kuwait Petroleum Corp and Total signed a memorandum of understanding to be partners in a Kuwait-China oil refinery joint venture.

The joint venture, in partnership with China's Sinopec, will develop a refinery with a processing capacity of 300,000 barrels per day, in addition to a petrochemical complex, Total said in a statement on the sidelines of the International Energy Forum in Kuwait.

The complex to be built in Zhanjiang, in China's southern Guangdong province, will process Kuwaiti crude oil.