Putin hails deal that sees TNK-BP go to Rosneft in $61 billion tie-up

'This is a good, large deal that is necessary not only for the Russian energy sector but also the entire economy'. 

TNK-BP has interests in several Siberian regions, and they will now become part of Rosneft, which - assuming all approvals go through - will be the largest publicly traded oil company in the world. 

Rosneft is initially paying UK oil titan BP $17 billion in cash plus a 12.84% stake in the Russian giant which has also separately agreed an outline deal with the four Soviet-born tycoons in Alfa-Access-Renova (AAR) alliance for the other 50% of TNK-BP. 

The agreement allows for the BP stake to rise to 18.5%.

An earlier deal between Rosneft and BP on Arctic development was vetoed by AAR but Monday's agreement was hailed as 'historic' by Rosneft chief executive Igor Sechin.

Cabinet and other approvals are still needed before the package is fully finalised. 

Sechin said Rosneft 'would benefit from BP's experience and its track record of implementing best international practices in Russia'. 

'Rosneft is a company working to become a global leader in the sector,' said BP's group chief executive Bob Dudley. 

'It is developing its substantial asset base with new technologies and improving its management processes and corporate governance. 

'As a major investor BP looks forward to being able to contribute to Rosneft's success and add value through our participation on the Board.'

TNK-BP is Russia's third largest oil producer, employing some 50,000 people and operating in Tyumen, Khanty-Mansiysk, Yamal-Nenetsk, Novosibirsk and Irkutsk regions.