BP shares up after Rosneft exploration deal

Shares in BP rose two per cent following the share swap and arctic exploration deal that the London-based oil major signed with Russia's largest oil producer Rosneft late on Friday.

Analysts said the deal with state-controlled Rosneft opened up massive reserves in the arctic, a region they said was believed to contain one fifth of the world's undiscovered oil.

It also showed that BP's talent for cutting innovative deals survives after last year's Gulf of Mexico oil spill raised questions about the company's tolerance of risk.

"This is a unique opportunity for BP to gain access to a prospective new frontier area, where direct access as a non-Russian company would not have been possible," analysts at Goldman Sachs said in a research note.

BP agreed on Friday to form a joint venture with Rosneft to develop three massive offshore exploration blocks Rosneft owns in northern Russia.

As part of the deal, which comes four months after BP plugged a blown-out well in the Gulf of Mexico that caused the United States' worst ever oil spill, BP will swap a 5 percent stake in itself for a 9.5 per cent stake in Rosneft.