BP agrees mega deal with Russia's state oil company

BP's shareprice has went up since the deal was announced. Photo: ITV News

The British oil company BP has just ended weeks of nudges and winks and has confirmed its mega deal with Rosneft, the Russian oil company.

In transactions worth more than $50 billion, (more than £30 billion), they will have nearly a fifth of the company and have agreed two seats on the firm's board.

But it is not just any company. Rosneft is Russia's state oil company, so the agreement binds BP to the Kremlin, which now has much tighter control over Russia's enormous oil trade than twenty years ago when the British firm went into the country.

It means that BP can untangle themselves from the troublesome dealings they had with a group of oligarchs with whom they had shared ownership of their Russian business, TNK-BP.

The deal buys out the billionaires and folds BP's half of that company into Rosneft.

It may be a relief to be free of some of those relationships, but having to contend with the Kremlin is hardly likely to be trouble free. But the share price has nudged up, giving an instant verdict that while it may be complicated, it is a good deal.