Igor Sechin, President and Chairman of the Management Board of Rosneft and Dinesh Kumar Sarraf, Chairman of OVL and Chairman & Managing Director, Oil and Natural Gas Corp (ONGC) signed a Memorandum of Understanding at the St Petersburg International Economic Forum, in the presence of Russian President Vladimir Putin.
"The Memorandum paves the way for the companies' cooperation in subsurface surveys, exploration and appraisal activities and hydrocarbons production in Russia's offshore Arctic," the Indian firm said in a statement here.
The parties will jointly consider forming a consortium led by Rosneft and involving other partners.
Sechin had visited India in March to expand ties with New Delhi.
His firm had offered OVL a stake in nine offshore oil and gas blocks in the Barents Sea and one in the Black Sea.
Rosneft is also looking at supplying crude oil to Indian refineries.
Moscow is courting India to counter moves by the US and Europe to isolate it for annexing Crimea from Ukraine.
India does not have a firm contract to import crude oil from Russia. It gets a small volumes once in a while from OVL's Sakhalin-1 project in Far East Russia.
Of the blocks offered in the Barents Sea, OVL found five were not lucrative. Of the remaining four, it would like to participate in two. It will decide on the other two once Rosneft makes available data by June.
Rosneft had previously offered ONGC a stake in the Magadan 2 and Magadan 3 exploration blocks in the northern part of the Sea of Okhotsk in eastern Russia, which the Indian firm is studying.
OVL has a 20 per cent stake in the Sakhalin-1 oil and gas field in the Russian Pacific Ocean. Rosneft has a similar stake in the project, which is operated by Exxon Mobil.
OVL had bought Imperial Energy, which has fields in Siberia, for USD 2.1 billion in January 2009. It is keen to get a foothold in the Arctic projects and expand in Siberia and Far East Russia.
"At present, OVL is studying the preliminary data provided by Rosneft for identifying the preferred blocks for participation with Rosneft," an official said.