British oil giant BP has agreed to sell its 50-percent stake in TNK-BP to Russia's Rosneft for $17.1 billion plus some 13 percent Rosneft's shares.
BP will use $4.8 billion of the money to purchase an additional 5.66 percent stake in Rosneft from the Russian government, bringing BP's total shares in the Russian firm to 18.5 percent.
Russian President Vladimir Putin, who was meeting with Rosneft head Igor Sechin when the deal was announced, said it was not only good news for the Russian energy sector but for "the entire economy."
"This is a very positive signal for the Russian market and for the international energy market," Putin said. "It is yet another confirmation of trust of our partners in the operation conditions within the Russian market."
Sechin also noted Rosneft's deal to acquire the remaining shares in TNK-BP from a consortium of Russian billionaires known as AAR.
Rosneft is buying the other half of TNK-BP from the AAR consortium -- made of Alfa Group, Access Industries, and Renova -- for $28 billion to become the world's largest publicly traded oil group.
ExxonMobil is currently holding that distinction.
Sechin said the agreement makes good sense as it simplifies the decision-making process.
"We of course support the idea of the consolidation of assets under one management," Sechin said. "It is very important for us to have these assets operating under the uniform plan along with Rosneft because only in this case we can achieve considerable synergy that leads to a sharp increase in production efficiency in a number of [oil] fields."
Sechin said Rosneft would benefit from "BP's experience and its track record of implementing the best international practices in Russia."
The Rosneft CEO said he expected the deal to be finalized within six months.
Based on reporting by Interfax and Reuters