THE market gave a warm welcome to BP’s £10bn deal with Russian oil firm Rosneft yesterday following Friday’s news of an Arctic exploration alliance.

Shares in BP rose two per cent in the first day of trading since the groundbreaking deal was announced, despite reports of opposition from BP’s partners in their existing Russian joint venture TNKBP.

The alliance will see BP take an additional 9.5 per cent stake in Russian governmentowned Rosneft, while Rosneft will take a five per cent stake in the London-based firm.

The companies will work together to explore the Russian Arctic continental shelf in an area of the South Kara Sea covering about 125,000 square kilometres (48,263 square miles) – one of the last remaining unexplored basins in the world.

It will give BP access to a new territory, while Rosneft will gain from BP’s expertise in deep-water drilling.

But there were reports of a backlash from co-owners of TNK-BP, with speculation they were examining whether the Rosneft deal breaches their agreement to only pursue new opportunities in Russia through the venture.

Experts at Collins Stewart said there may also be political opposition in the US and that doing more business in Russia will increase BP’s risk profile in the eyes of many investors.

They added: “While this deal could prove to be a major long-term positive for BP, we think it raises a host of issues, both positive and negative.”

They estimate that, while there could be tens of billions of barrels of oil in the region, any reserves would take a long time to tap because of its remote location.

It also emerged yesterday that BP has been given its first-ever oil exploration permits off the Australian coast.

However, the country’s government warned that the London- based energy company will have to demonstrate higher safety standards than it had applied in the Gulf of Mexico oil disaster before it is allowed to drill.

BP holds stakes in the Northwest Shelf and Gorgon natural gas fields in Western Australia state but has never before applied for its own offshore exploration permits in Australia.

Resources and Energy Minister Martin Ferguson announced that BP has been awarded four of seven offshore exploration permits approved by the government as part of an annual tender process.

BP will be allowed to explore to depths exceeding 15,000ft off the coast of South Australia state.

Oil companies are facing increased scrutiny in the US, after the explosion and spill at BP’s Deepwater Horizon rig in the Gulf of Mexico killed 11 workers on April 20 last year and caused massive environmental damage.

“The permits awarded to BP follow an extensive assessment and due diligence process that examined the technical and financial competence of BP to undertake the proposed work programme in accordance with the stringent requirements of Australian legislation,” Mr Ferguson said.

“Additional conditions have also been attached to these permits, emphasising the need for oil field best practice behaviour by the operator.”