BP''s hopes of making Arctic oil production the key to its recovery from the Gulf of Mexico spill were dealt a severe blow after it failed to secure a $16 billion share swap with Russia''s state-backed Rosneft. BP PLC revealed a midnight deadline for the deal expired after it failed to broker a settlement with its Russian partners in TNK-BP, its existing joint venture in the country, who have objected to the Rosneft deal. The London-based company said that discussions would continue with all the parties, but a Rosneft official said the Russian company will now start considering partnership offers from other overseas oil companies. Huge oil reserves are thought to lie under the Arctic Circle. The initiative ran aground after a quartet of Russian billionaires, BP''s partners in the older TNK-BP venture, won an injunction in the London courts, claiming the new deal violates their own agreement with BP. The shareholders, known collectively as Alfa-Access-Renova, claimed they had the right to a share in all BP operations in Russia. A high-placed source at Rosneft told The Associated Press that the talks had failed on Monday after AAR declined an offer of $32 billion for their 50 percent stake in TNK-BP.