The market yesterday gave a warm welcome to BP’s £10 billion deal with Russian oil giant Rosneft 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 TNK-BP.

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

The companies will work together to explore the Russian Arctic continental shelf in an area of the South Kara Sea covering around 125,000 square kilometres – one of the world’s last remaining unexplored basins.

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.

The cheer surrounding the Russian deal sent BP’s shares jumping to a fresh eight-month high at one stage before easing back.

Analysts at Goldman Sachs said: “Obviously the area will require years to explore, will be very challenging and is unlikely to generate any production before the end of the decade.