Oil giant BP has announced it plans to sell 50% of its share in TNK-BP to Russian oil and gas firm Rosneft for cash and shares.

Under the agreement, the UK firm will get $17.1 billion (£10.7 billion) in cash and 12.84% stake in Rosneft. BP intends to use $4.8 billion (£3 billion) of the money to purchase a further 5.66% share of the Russian firm from its Government.

TNK-BP is Russia’s third largest oil producer, employs around 50,000 people and operates in nearly all of the country’s major regions. The average daily production of TNK-BP last year was 1.987 million barrels of oil equivalent per day.

Carl-Henric Svanberg, BP’s Chairman said: “This is an important day for BP. Russia is vital to world energy security and will be increasingly significant in years to come. Russia has also been an important country for us over the past 20 years. Rosneft is set to be a major player in the global oil industry… We consider that this is a deal which will deliver both cash and long term value for BP and its shareholders. It provides us with a sustainable stake in Russia’s energy future and is consistent with our Group strategy.”

On completion of the proposed agreement, BP expects to hold 19.75% of Rosneft shares, including its existing holding of 1.25% and would receive $12.3 billion (£7.7 billion) in cash.