Alfa-Access-Renova, a consortium of billionaires who own half of TNK-BP, plan to make the offer through TNK-BP itself, which will use debt and its $5 billion of cash to finance the buyout, according to a source with knowledge of AAR's plans. AAR will submit the bid by Oct. 17, after which date BP is free to consider third-party offers.

"They are absolutely confident of being able to raise the money," said the source. "The price has not yet been determined, they are right at the start of the process, but it will be all cash."

BP put its half-share of TNK-BP Ltd., which in turn owns 95% of the listed TNK-BP Holding, on the block at the start of June, saying it had received unsolicited approaches for the business. AAR responded with an offer to buy half of BP's holding for $10 billion or to sell its stake in TNK-BP to BP for shares. BP snubbed both plans and on July 24 opened talks with OAO Rosneft, which said it was interested in buying BP's entire stake.

"BP's preference will likely remain Rosneft, as they are still very keen to remain in Russia so the deal has to have a strategic component, for example, participation of BP in the Arctic shelf development," said Credit Suisse Group's oil and gas analyst Kim Fustier. "BP's proposal to appoint a Russian to its board as part of an alliance with Rosneft" seems to corroborate that view."

The Sunday Times reported Sunday, Sept. 23, that BP is considering making the appointment to help it negotiate the complex political and personal alliances that dictate much of what happens in Russia's boardrooms. BP declined to comment.

Rosneft is planning to offer BP a 12.5% stake and $10 billion to $15 billion in cash in return for its TNK-BP stake, Russian papers, including Kommersant, reported last week. BP CEO Bob Dudley and chairman Carl-Henric Svanberg last week told Russian president Vladimir Putin that BP saw a long-term future in Russia and would like to invest in Rosneft.

BP expects to receive an offer from Rosneft "sometime in October," according to a source close to the British oil company.

AAR is hoping that an all-cash bid will tempt BP, which, like many oil majors, is raising cash to fund investment in prospective oil and gas fields. The London-based company has sold about $33 billion of assets since 2010, though much of that cash has been set aside to fund cleanup and compensation funds following the disastrous oil leak at one of its Gulf of Mexico oil wells in April 2010.

Doubts remain about AAR's ability to raise cash for the bid, particularly if Moscow puts pressure on lenders not to back a counterbid to state-controlled Rosneft.

"It could be more about politics than ability to raise finance," said Fustier.

Raising $15 billion of new debt would push TNK-BP's total debt to beyond $26 billion. The Russian company's most recent accounts noted $4.9 billion of "current debt" and $6.07 billion of long-dated debt at the end of June.

There is also a question mark over the price of AAR's bid. The $20 billion figure is based on both AAR's bid of $10 billion for half of BP's stake in TNK-BP and the indicative value of Rosneft's reported offer. BP may, however, consider its stake is worth more, in cash, than $20 billion. BP and Rosneft last year offered AAR $32 billion for its half-share of TNK-BP.

TNK-BP accounts for about 30% of BP's production and reserves, while its roughly $3.8 billion in annual dividends equates to about 20% of the British company's earnings.

"BP has a sales process underway and that process remains confidential," said BP spokesman Toby Odone.

Shares in BP traded Wednesday morning at 443.15 pence ($7.19), down 2.85 pence, or just under 1%. The wider FTSE 100 index was down more than 1%.