As part of the deal, which comes four months after BP plugged a blown-out well in the Gulf of Mexico that caused the United States' worst ever oil spill, the British company will swap a 5% percent stake in BP for a 9.5% stake in Rosneft.
The blocks, in the Kara Sea, are the size and have the prospectivity of the UK North Sea, the companies said, implying a 60-billion-barrel prize.
Chris Huhne, UK secretary of state for energy and climate change, welcomed the "groundbreaking" deal and called it "good news for Europe, for the UK's energy security and worldwide".
But the deal immediately raised concerns about US economic security from American lawmakers and criticism from environmentalists.
US Congressman Edward Markey, who is the top Democrat on the House Natural Resources Committee, immediately called for a review of the deal by US regulators to see whether it affects the national and economic security of the United States. He noted that in 2009 BP was the top petroleum supplier to the US military.
And Republican Congressman Michael Burgess, who is on the House Energy and Commerce Committee, also said the deal "deserves some analysis and scrutiny" by the government's Committee on Foreign Investment in the United States given BP's ownership of critical oil assets in the US.
Environmental group Greenpeace, noting the fragility of the Arctic, also lashed out.
"Now BP has bought its way into the Arctic by the back door. It seems the company learned nothing last year in the Gulf of Mexico," Charlie Kronick of Greenpeace said in a statement.
Unloved project structure
The Rosneft joint venture will not own the oil blocks but merely a right to develop them, echoing a structure Gazprom agreed with France's Total SA and Norway's Statoil for the development of the Shtokman gas field.
Yet little progress has been made on Shtokman, which sits in the Barents Sea, since the deal was signed in February 2008, partly due to weak gas prices.
Oil companies traditionally dislike structures that deny them ownership of reserves as it limits the upside from high oil and gas prices. Nonetheless, BP's track record suggests it can make a success of them, even where others think otherwise.
BP says Russian oil taxes - which give the government 90% of the upside on oil prices above $30/barrel - makes developments in Russia's Arctic waters uneconomic.
The government has said it will review taxes to foster investment, which is key to avoiding a big drop in Russian oil and gas production and a subsequent fall in government revenue.
BP CEO Robert Dudley said the deal could pave the way for further opportunities in the Russian Arctic and for downstream co-operation in European refining.
BP's reputation in the United States could also be further damaged by the deal. It has already been questioned by US congressmen. And its experience in Russia shows deals often do not offer the upside envisaged.
(EurActiv with Reuters.)