BP confirms talks over Rosneft deal

The announcement from the UK energy company comes after its board reportedly backed proposals for a sale worth £17bn, paid in a combination of cash and shares in Rosneft.

BP, which formed the TNK-BP joint venture in 2003, stressed that no agreement has yet been reached.

It is thought BP will receive up to £8bn and take a stake of between 15 per cent to 20 per cent in Rosneft.

Rosneft would become the world’s biggest publicly traded oil company after the deal, with daily crude output of more than three million barrels.

It would also end years of wrangling over BP’s Russian joint venture, which is owned with billionaire partners operating as Alfa-Access-Renova (AAR).

BP has had a fraught relationship with AAR, although the venture is thought to have earned the British firm £11.8bn in dividends.

A dispute between BP and AAR effectively sank a proposed tie-up between the British blue chip and Rosneft last year, which included Arctic exploration plans.

Key points thought to be under negotiation are said to be the number of seats BP will be given on Rosneft’s board, with BP likely to take one or two seats.

It is believed that BP chief executive Bob Dudley and David Peattie, the group’s head of Russia, could join the board, while a prominent Russian may also be appointed to BP’s board - such as Rosneft boss Igor Sechin.

But there are concerns of potential legal action from AAR, following its success in scuppering the Rosneft deal with BP last year.

TNK-BP has exploration and production assets as well as downstream marketing operations in Russia and Ukraine, alongside interests in Brazil, Venezuela and Vietnam.

It is the third biggest oil producer in Russia behind Rosneft, which the state controls, and second-placed Lukoil, which is owned by Russian investors. The business accounted for more than a quarter of BP’s production and 90 per cent of its 2011 dividend.