BP has signed a $16 billion (Dh58.76bn) deal with Rosneft, the Russian state-controlled oil producer, in an historic agreement that puts a share of the private oil giant in the hands of a foreign government-run organisation for the first time.
"This historic agreement creates the first major equity-linked partnership between a national and international oil company," BP said. The deal will give the state-controlled Russian oil company a 5 per cent stake in BP and allow the UK oil giant to jointly explore and develop parts of the Russian Arctic. BP will get 9.5 per cent of Rosneft's shares in the transaction and access to an oil-rich swathe of Russia's South Kara Sea. Shares on both sides of the deal are valued at about $8bn.
The deal will shape BP's future as it seeks to reduce its dependence on its large US asset portfolio at a time when its reputation with western investors has been tarnished after the Gulf of Mexico oil spill last year.
The deal will make BP Rosneft's single largest shareholder.
BP and Rosneft have agreed to explore and develop three oil and gas blocks on the Russian Arctic continental shelf. The licences cover an area of 125,000 sq km in the South Kara Sea, which geologists believe contains significant undiscovered oil and gas deposits.
"This is an area roughly equivalent in size and prospectivity to the UK North Sea," BP said.
Vladimir Putin, the Russian prime minister, estimated the area's potential resources at 5 billion tonnes, or more than 36 billion barrels, of oil and 10 trillion cubic metres of gas.
"These are serious figures that need further confirmation, but they are quite realistic and I hope that these estimated resources will become proven reserves," the Russian state-owned Itar-Tass news agency reported Mr Putin as saying yesterday.
He also said Moscow would create a favourable tax regime for the South Kara project and would support other large-scale joint developments by BP and Rosneft off the coast of Russia and internationally.
As their initial collaborative step, BP and Rosneft are to establish an Arctic technology centre in Russia that will work with Russian and international research institutes.
Bob Dudley, chief executive of BP, said the alliance with Rosneft would strengthen BP's ties with Russia, the world's biggest oil and gas exporter.
Eduard Khudainatov, the president of Rosneft, said the deal had taken "just a few months" to negotiate and had "significantly moved forward" the implementation of Russia's offshore oil strategy.