Oil giant BP today moved closer to salvaging a proposed tie-up with Russian government-owned Rosneft after appeasing a group of angered shareholders.
BP will hand over Arctic exploration rights, included in the original deal, to existing Russian joint venture TNK-BP to secure an £8 billion share swap with Rosneft.
The move comes amid a fierce arbitration process between BP and its partners, a consortium called Alfa Access Renova (AAR), who accused the embattled supermajor of breaching its obligations with TNK-BP.
Rosneft must now approve the handover of the Arctic opportunity, as well as a technical amendment of the share swap terms, for the revised deal to go ahead.
An interim injunction, imposed by arbitrators in Sweden, blocking the deal remains in place until Rosneft give consent.
The deal - hailed by BP as "historic" and "groundbreaking" when it was unveiled in January - would have paved the way for BP and Rosneft to jointly explore the south Kara Sea in the Russian Arctic.
Under the new terms, BP would still stand to benefit from the Arctic exploration as it owns a 50% stake in TNK-BP.
The region is thought to contain more than 60 billion barrels of oil and would have provided a lucrative revenue stream for decades.
For the share swap to proceed, both BP and Rosneft would have to agree that any shares received as a result of the swap would be held for investment purposes only and placed in trust, with voting rights exercised by independent trustees.
The tie-up hit a wall when AAR accused BP of breaking an agreement which obliges both parties to pursue new projects in Russia through TNK-BP.
A statement from AAR said: "We see the Arctic transaction with Rosneft as a great opportunity for TNK-BP and for Russia, which we would like to succeed.
"Today's agreement provides a good way forward for achieving these priorities and opens the way to bring BP's valuable expertise and technology to offshore exploration in Russia."
BP chief executive Bob Dudley will be keen for the deal to pass as he battles to restore the company's reputation in the wake of the Gulf of Mexico oil disaster.
It will also help BP replace lost production from the Deepwater Horizon rig and other assets sold off in the wake of the disaster in April last year.