BP is on the verge of a deal that will see it take a significant stake in what will be the world's largest publicly listed oil producer.
State-backed Russian energy firm Rosneft is looking to acquire BP's 50% stake in its troubled TNK-BP joint venture in a deal believed to be worth nearly 30 billion US dollars (£18.6 billion), the Financial Times said.%VIRTUAL-SkimlinksPromo%
The cash-and-shares deal would see BP grab a stake of between 10% and 20% in Rosneft, which would become the world's biggest publicly traded oil company, with daily crude output of more than three million barrels, upon completion of the deal.
Meanwhile, Rosneft and the four Russian billionaires who own the other half of TNK-BP - known as Alfa-Access-Renova (AAR) - are understood to have signed a memorandum of understanding that would see Rosneft acquire their stake at a later date.
BP has had a fraught relationship with AAR, although the TNK-BP venture is thought to have earned the British firm 19 billion US dollars (£11.8 billion) in dividends.
A dispute between BP and AAR effectively sank a proposed tie-up between the British supermajor and Rosneft last year, which included Arctic exploration plans.
Rosneft's chief executive Igor Sechin is understood to be in London to meet with BP boss Bob Dudley to finalise the deal before BP's board meets to consider its options.
Shares in BP were 1% higher on hopes the company was finally going to pull off a successful move with the Russians.
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% of its 2011 dividend.