British Petroleum (BP) signed an agreement with Russia's state-controlled oil producer Rosneft on Friday evening, under which BP will swap 5 percent of its stock, valued at 7.8 billion US dollars, for 9.5 percent of Rosneft.

The agreement also allows BP to explore three blocks in Russia's Arctic Ocean that BP said could contain billions of barrels of oil and gas.

"This is a historic moment for BP, for our industry and I believe for Russia and the wider world of energy globally," said Bob Dudley, who became BP's chief executive last October, at the signing ceremony in central London.

This is the first significant equity-linked parternership between a major international oil company and a major national oil company, Dudley added.

"Vladimir Putin, the Russian prime minister, told us today in our meeting in Moscow it is an alliance based on mutual advantage and recognition of the great strengths that bring each of us together in our cooperation," said Dudley.

The signing ceremony came hours after Dudely met Russia's prime minister Vladimir Putin at his Moscow residence.

BP had an existing 1.2-percent stake in Rosneft before this deal, after BP spent 1 billion dollars on the shares during Rosneft's initial pubilic offering in July 2006.

When asked whether BP is "turning to the east" after the disaster in the Gulf of Mexico, Dudley said the discussions with Rosneft had been going on for a number of months and "are not a reaction to anything in the US"

With exploration in the Gulf of Mexico still at a standstill and with no new wells drilled since the accident last April, the deal is generally seen as BP shifting its sights to the east.

There has been a rising prospect for BP to pay a some 20-billion-dollar compensation fund for the well explosion at the Gulf of Mexico, since US officials concluded this week that the root causes of the disaster were repeated failures of management on the part of BP and some other companies involved.