An investment fund controlled by the Chinese Government has built a €1.8 billion (£1.4 billion) stake in Total, the world's fourth-biggest publicly traded oil company.

The State Administration of Foreign Exchange (Safe), which manages most of China's $1.65 trillion (£830 billion) of foreign exchange reserves, is understood to have acquired 1.6 per cent of Total's shares in a number of transactions starting late last year.

A spokeswoman for the Paris-based oil company declined to identify the fund for “confidentiality reasons” but said that its stake remained less than 5 per cent. Total would be obliged to declare its identity if its holding exceeded that level.

She added that Total, which employs 95,000 people and has operations in more than 130 countries, is in regular contact with the fund and said that the stakebuilding was an encouraging sign because it underscored investor confidence in Total's strong profit outlook.

Safe, which operates under the auspices of the Chinese central bank but is a separate entity from the country's sovereign wealth fund, the China Investment Corp, traditionally has invested in more conservative assets, such as US Treasury bonds.

In recent years it has adopted a more aggressive stance and channeled some of its investments into higher-risk assets.

Richard Savage, the head of energy research for Mirabaud, the Swiss bank, said that the Chinese stake-building effort was likely to represent a strategic holding rather than the start of any attempt to take control of Total.

Chinese demand for oil is expected to increase from 7.1 million barrels per day in 2006 to 11.1 million bpd by 2015, according to the International Energy Agency.

The largest shareholders in Total are Groupe Bruxelles Lambert and CNP, both owned by Albert Frère, the Belgian investor.

Together, the companies hold 5.3 per cent of the oil group's shares.

About 88 per cent of Total's shareholders are institutional investors, with 8 per cent held by individuals.

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