The fund, known as the L1 Energy Fund, will be seeded with the proceeds of Alfa’s sale of its stake of TNK-BP, which netted it about $14bn when it was sold to Russian oil giant Rosneft in March.
Browne will sit as a member of L1’s advisory board, alongside chairman of BG Group Andrew Gould and former boss of US oil outfit Anadarko Petroleum Jim Hackett.
Alfa Group is owned by Russian billionaire Mikhail Fridman. L1 will be run by his business partner German Khan, who becomes L1’s chief executive.
It is thought the firm is set to use about $10bn in leverage on the vehicle to take it up to the $20bn mark.
Browne led BP between 1997 and 2007. He is currently a partner at energy-focused private equity house Riverstone alongside Hackett.
Browne said: “L1 Energy is well positioned to capitalise on a wide variety of oil and gas opportunities throughout the world.”
L1, which will be based in London and is part of LetterOne Group, will use the cash invest in exploration and production facilities, oilfield services, infrastructure and other energy projects, it said.
Khan added: “We are pleased to have assembled a high-caliber advisory board to be part of our team. They bring a vast breadth of experience and will make an invaluable contribution to developing the business.”
Browne was the driving force behind BP’s decision to snap up half of TNK-BP in 2003.