The 16-billion dollar deal, dubbed 'Bolshoi Petroleum' by the British media, was based on swapping a 5% stake in BP for a 9.5% stake in Rosneft.
But the $16-billion deal collapsed after BP and Rosneft made a cash-and-stock offer to buy out the Russian co-owners of TNK-BP, the Russian wing of British Petroleum.
TNK-BP is represented by the Alfa-Access-Renova (AAR) consortium. AAR represents a quartet of Russian billionaires who own half of TNK-BP.
The four billionaires who own half of TNK-BP were willing to sell their stake in return for shares in BP and Rosneft, enabling them to maintain a presence in the Russian oil sector, according to sources close to the parties quoted by Reuters.
BP and Rosneft had been prepared to pay more than $30 billion for the Russian partners' stake, AFP reported.
Reportedly, AAR had obtained a court injunction against the Rosneft deal, claiming it violated their TNK-BP agreement.
While Rosneft has other suitors to plumb the Arctic depths with, BP's fortunes have been struck a serious blow, the Moscow News comments.
A blow for BP
Now it looks like the door to the Arctic is closed for BP, and Rosneft is now looking for new partners for its Arctic projects, an unnamed source told AFP.
Sources cited by Reuters name Exxon, Chevron, Shell and Chinese firms as potential partners to explore the three Kara Sea blocks earmarked for the BP venture.
"Unless Rosneft decide to continue with negotiations, which is very unlikely, they will go back to the proposals they received during January through to March from Exxon, Shell and Chevron. Chinese and Indian guys have also expressed interest," Julia Novichenkova, an oil and gas analyst at Uralsib Capital, told the Moscow News.
But Reuters quoted BP sources as saying that the company still hoped to buy out its oligarch partners in TNK-BP, with whom it has long had a fractious relationship. This would reportedly remove a key risk that has weighed on BP's shares in recent months and at other times.