A Russian government-owned firm will own a 5 per cent stake in BP as part of a "groundbreaking" global alliance.
The UK oil giant will own 9.5 per cent of Rosneft's shares in the share swap which will see the companies work together in exploring potentially lucrative reserves in the Arctic.
BP chief executive Bob Dudley hailed the agreement as "a new type of relationship" which could open up "one of the world's last remaining unexplored basins".
Igor Sechin, Russia's deputy prime minister, said: "Global capital and Russian companies are clearly ready to invest in world class projects in Russia; and Russian companies are quickly emerging at the forefront of the global energy industry."
Mr Dudley said: "This unique agreement underlines our long-term, strategic and deepening links with the world's largest hydrocarbon-producing nation."
"We are very pleased to welcome Rosneft as a strategic partner and major shareholder in the BP Group."
The move suggests that BP now intends to focus more towards interests in the east, following a torrid year in North America.
Mr Dudley's past dealings with Moscow have not been without difficulty. In 2003 Mr Dudley was appointed chief executive of TNK-BP, a joint venture between BP and Russian partners. But the project was to lead to an acrimonious dispute in which BP's oligarch partners accused Mr Dudley of "violating Russian laws".
He left Russia in June 2008 and within months had stepped away from TNK-BP.