Energy giant BP has finalised details of a deal to create Russia's third biggest oil and gas company.
It was announced as Vladimir Putin and Tony Blair attended a joint energy conference to boost trade ties between the two countries.
It makes BP the world's second largest private sector oil and gas producer.
BP is to pay £3.67 billion for a 50% stake in a joint venture with investment groups Alfa Group and Access-Renova (AAR). It will produce at least 1.2 million barrels of oil a day.
The new company brings together existing Russian firms Sidanco, in which both parties already have a stake, and TNK - owned by AAR.
BP added that discussions are continuing on whether to include the stake taken in Slavneft as part of the deal. If so BP will make an extra payment.
BP's chief executive Lord Browne said: "This is one important element in the process of strategic renewal within BP.
"On the basis of the progress made to date I believe we can complete the transaction over the summer and then begin to deliver the tremendous value potential which we see."
Production from the assets due to make up the new company has already risen by 10% this year.
The deal still requires European, Russian and Ukrainian regulatory approval.