BP’s partners in the TNK-BP joint venture – billionaires Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik – have also agreed to sell their 50% stake to Rosneft for about $28bn (£17bn).
At the same time BP is expected to agree a deal this week that will see the British oil giant take a 10-15% stake in Rosneft plus cash in exchange for its half of TNK-BP.
Spokesmen for BP, Rosneft and AAR – the consortium of billionaires – declined to comment.
If the deals go ahead Rosneft will become by far the world’s biggest publicly traded oil company, producing 4.5m barrels of oil a day.
It will also bring an end to BP’s troublesome relationship with the billionaires, which forced Bob Dudley, BP’s chief executive, to resign as head of the venture and flee Russia during a bitter row in 2008.
Igor Sechin, Rosneft’s chief executive and a former deputy prime minister of Russia and close associate of President Putin, flew to London on Wednesday, sources said, to seal the deal with executives in advance of BP’s sale auction deadline, which expires at 9am on Thursday.
Sechin’s visit comes after Russia’s current deputy prime minister Arkady Dvorkovich told reporters in Moscow that Rosneft had signed a deal to buy AAR’s stake in TNK-BP.
However, Dvorkovich cautioned that agreement will require government approval. Rosneft could pull out of the deal to buy AAR’s stake while snapping up BP’s.
Analysts said the deal will be beneficial to Putin politically, as it will allow the state to benefit from BP’s expertise but not allow the British company a controlling interest.
“This strengthens Putin’s national champion,” Iain Armstrong, an analyst at Brewin Dolphin, told Bloomberg. “BP will stay in Russia, but perhaps in a more limited way. The Russian oil industry is in a big state of flux.”
Analysts speculated that Rosneft was planning to buy BP’s stake in shares rather than cash because it does not have enough available capital to buy out both AAR and BP’s stakes at the same time.
It was also pointed out that a large cash windfall for BP may be seized upon by US authorities, who are still negotiating with BP over compensation for 2010’s Gulf of Mexico oil spill disaster.
Last year AAR rejected a $32bn offer for its half from BP and Rosneft. That came after the billionaires blocked a $7.8bn share swap and exploration deal between Rosneft and BP. Relations deteriorated further, with Fridman quitting as TNK-BP’s chief executive in May 2012.
The following month BP put its stake in the joint venture up for sale. BP, which is in the process of tidying up its global assets, has been in talks with both AAR and Rosneft about a sale.
TNK-BP hasn’t paid dividends on any income this year because it has lacked a full board since December. Management recommended a $4.1bn interim dividend on 2012 profits, according to documents seen by Bloomberg. The board may decide to pay the dividend in the next few weeks.
BP’s shares closed up 3.75% to 451.7p.