BP freed for further Rosneft co-operation By Andrew Callus and Douglas Busvine LONDON/MOSCOW (Reuters) - BP (BP.L) took a step towards closer ties with Russia's Rosneft (ROSN.MM) as its existing partners in the oil-rich country dropped their opposition to the tie-up in exchange for what sources said was a $325 million payoff. BP and AAR, the holding company of a group of Soviet-born businessmen and co-owner of their TNK-BP (TNBP.MM) venture which is being sold to Rosneft, said they had agreed to end the legal battles that have paralyzed the planned deal. The two sides declined to comment on any financial terms but sources familiar with the situation revealed the payment to Reuters. Both sides had last month decided divorce was the best solution to their long-running differences and agreed to sell TNK-BP to Rosneft in a $55 billion transaction. The deals - which in a broader context point to increasing state control of Russia's energy assets under President Vladimir Putin - will make Rosneft the dominant producer in the world's number two oil exporting country and will give BP a 19.75 percent Rosneft stake. Until the agreement, however, BP had been unable to discuss any other kinds of co-operation because of a legal wrangle taking place in London. Now it will be able to discuss the secondment of BP engineers, exploration projects and other co-operation deals with its new partner, including the potential revival of plans to explore together in the Russian Arctic. "Today's agreement allows both AAR and BP to move forward and focus on the future," said David Peattie, head of BP Russia. "BP will be able to concentrate on the sale of our interest in TNK-BP to Rosneft and on working more closely with them as we develop the next stage of BP's long involvement in Russia," Peattie said. Arbitration taking place in London under the auspices of a Swedish court had focused mainly on a claim by AAR that BP breached a shareholder agreement making TNK-BP its sole vehicle in Russia, when it first tried to strike a deal with Rosneft last year, although BP has also brought claims against AAR. AAR CEO Stan Polovets described the settlement as a win-win for both parties. "The settlement enables BP and AAR to focus on issues that are most important at this stage - closing our respective transactions with Rosneft and ensuring that TNK-BP continues to operate at world-class levels during the transition period that lies ahead," Polovets said.