The wide-ranging deal will grant Rosneft access to three projects in North America, where Exxon is developing hard-to-recover reserves in West Texas, the Canadian province of Alberta and in the Gulf of Mexico.
The two companies will also seek to transfer know-how from those projects to develop Rosneft's own vast reserves of tight oil trapped in non-porous rocks like shale at three of its biggest fields in Western Siberia.
Today really is a historic day ... it marks the beginning of a new and broader relationship between our companies, Exxon CEO Rex Tillerson told a signing ceremony hosted by Prime Minister Vladimir Putin at his Novo-Ogaryovo residence outside Moscow.
Exxon, the largest listed oil firm in the world, struck an initial partnership with Rosneft last August to search for oil in three blocks of Russia's Arctic Kara Sea previously estimated by Rosneft to hold 36 billion barrels of recoverable reserves.
Those offshore riches are larger than Exxon's entire reserve base at the end of last year, which totalled 24.9 billion barrels of oil and its natural gas equivalent.
Exxon and other Western oil companies have struggled to grow production and add reserves as state-owned oil companies assert more rights to their country's resources.
Finalising that preliminary deal was contingent on Russia introducing a new tax regime that would make it economically viable for oil companies to shoulder the huge up-front costs of offshore exploration.
Putin last week supported reforms to offshore taxation that would eliminate export duties and lower Mineral Extraction Tax, clearing the way for Monday's signing.
The new regime will potentially provide the certainty needed to attract foreign investment into the Russian offshore, analysts at Bank of America Merrill Lynch, led by Karen Kostanian, wrote in a note earlier on Monday.
Rosneft President Eduard Khudainatov said he had written to four Russian oil companies - Lukoil
Rosneft shares earlier rose by 1.8 percent before giving up their gains as Russian stocks weakened late in the session.
CLOSING OUT THE DEAL
For Exxon the partnership secures an Arctic prize that was coveted by British oil major BP
It also marks a turnaround for Exxon, which scaled back its involvement in Russia after its attempt to buy into Yukos - then the country's largest oil firm - was thwarted by the arrest in 2003 of Yukos owner Mikhail Khodorkovsky.
Khodorkovsky was jailed for fraud and tax evasion, Yukos was bankrupted by back-tax claims and Rosneft snapped up its prime assets at auction to become Russia's largest oil firm.
Allen Good, an oil analyst with Morningstar who follows Exxon, said the deal underscores the U.S. oil company's need to chase increasingly costlier barrels of oil. He also cautioned of political risk.
I guess they are taking on a little bit more risk by getting in bed with Russia, Good said. Once you take away the project's execution risk, Russia will always be a question.
Even so Exxon, because it is known for its operational excellence, is probably the right company for the Arctic project, Good said.
The partners confirmed they would invest $3.2 billion (2 billion pounds) initially to search for oil in the Arctic and Black Sea in a venture to be two-thirds owned by Rosneft and a third by Exxon.
Russian Deputy Prime Minister Igor Sechin, an architect of the deal, said investments in the three Arctic Kara Sea blocks could eventually run to $200-$300 billion, and in the Black Sea to as much as $50 billion.
Sechin also said Exxon should be able to book the offshore reserves on a pro-rata basis as minority partner in the exploration joint venture.
Seismic work will begin in the Arctic blocks this year with a view to drilling a first exploration well in 2014. In the Black Sea, seismic survey work should be completed by mid-year and first exploration drilling in 2014-15, the firms said.
Russia, the world's largest oil producer, needs to develop its offshore energy riches to meet its long-term goal of sustaining output at above 10 million barrels per day as flows from its oil-producing heartland of Western Siberia slow.
Analysts caution, however, that commercial offshore production is years - and possibly decades - away and applying to Russia the modern recovery methods that have boosted on-shore U.S. oil production of late could prove to be a quicker win.
Under the deal, Rosneft will gain 30 percent stakes in three projects in North America: The first project is developing tight oil in West Texas, the second covers 20 deepwater blocks in the U.S. Gulf of Mexico and the third is exploiting shale oil in Canada's province of Alberta.
Seeking to apply that know-how in Russia, the partners will conduct a feasibility study into developing an estimated 1.7 billion tonnes of tight oil at Rosneft's large Prirazlomnoye, Mamontovskoye and Priobskoye fields in Western Siberia.
The Exxon-Rosneft deal marks a personal milestone for Sechin as Putin - elected as president last month - prepares to form a new administration.
Outgoing President Dmitry Medvedev is expected to take on the role of prime minister in a job switch with his mentor Putin. Medvedev has a history of conflict with Sechin, whom he ousted as Rosneft chairman last year.
Sechin, who has been close to Putin for two decades, could cement his bid to stay on with the Exxon-Rosneft deal, although a move to one of the security structures that report directly to the Kremlin has also been mooted. He will join a briefing for analysts on the deal on Wednesday in New York.
(Additional reporting by Melissa Akin and Gleb Bryanski, and Anna Driver in Houston; Writing by Douglas Busvine; Editing by Peter Graff, Melissa Akin and Phil Berlowitz)