BP chief executive Bob Dudley and Rosneft President Eduard Khudainatov flew into London on Friday to sign the agreement, which allows them to jointly exploit the vast untouched oil and gas resources of Russia's Arctic region.

Dudley hailed the "historic" deal, which has the backing of the Russian and British governments, telling BBC radio: "This is one of the last great unexplored hydrocarbon basins in the world.

"For BP this is an opportunity to work with Rosneft in a country that produces the most oil in the world, in an area that can bring our exploration expertise into play, in something that is the size and prospectivity of the entire UK North Sea."

The deal, which was first announced by Russian Prime Minister Vladimir Putin following a meeting with Dudley in Moscow Friday, comes just nine months after the Gulf of Mexico oil spill, which ravaged BP's finances and its reputation.

BP and Rosneft will explore and develop the latter's three licensed blocks on the Russian Arctic continental shelf -- 125,000 square kilometres, said to contain five billion tonnes of oil and 3,000 billion cubic metres of gas.

They will also set up an Arctic technology centre to focus on safety, the environment and emergency procedures.

But environmental campaigners Greenpeace condemned the deal Saturday, saying BP was "the last company" that should be operating in the region.

"The Arctic is the most fragile environment in the world in which to drill for oil and there can be no confirmation yet that BP has learned the lessons for the Gulf of Mexico disaster," said Greenpeace spokesman Ben Stewart.

"Any company that drills for oil in the Arctic forfeits any claim to environmental responsibility. An oil spill in the cold waters of the Arctic would be catastrophic and extremely difficult to deal with.

"BP is the last company that should be operating there."

The British firm stressed however that it was moving on from the oil spill catastrophe -- and was keen to put its experiences to good use elsewhere.

Dudley, whose predecessor Tony Hayward lost his job over the spill, told reporters that the firm had "learned many lessons over the past year."

Analysts said the deal gives BP a boost in the race to exploit new energy reserves while at the same time reducing its dependence on the United States, where its reputation is in tatters following the oil spill.

The Financial Times noted: "One of the unexpected consequences of last year's oil spill in the Gulf of Mexico is that it has enhanced the prospects for drilling in one of the world's most environmentally sensitive areas."

And BP does this without spending more money, as it continues its drive to sell 30 billion dollars worth of assets to cover its part of the clean-up bill.

Under the share-swap, BP will take a 9.5-percent stake in Rosneft, which will gain a 5.0-percent stake in the British firm. The shares issued by BP are worth about 7.8 billion dollars, while Rosneft's will be similar.

Russia accounts for about one quarter of BP's total production and the firm already has a small stake in Rosneft.

BP also owns half of Russia's third biggest oil producer, TNK-BP, where Dudley served as chief executive for five years until he was expelled by BP's Russian partners during a shareholder dispute in 2008.

In Washington, Democratic congressman Edward Markey, who sits on a committee on natural resources, called for the deal to be examined to see how it affects BP's US operations and if it had national security implications.

However, John Hopfmeister, formerly president of Royal Dutch Shell, downplayed fears over the deal.

"This is not Russia managing BP. It is not Russian oversight over BP's managerial decisions in the United States or anywhere else in the world," he told the BBC.

"What's important in this deal is Mr Dudley drawing a line under the Gulf of Mexico incident and moving BP on into the future... where Arctic development is a very important part of hydro carbon exploration."

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