BP agrees to $18.7bn deal over oil spill

For the following 87 days, the company struggled to plug the leak as the well spilled over 3.19 million barrels of oil into the gulf.

It said the agreement would settle all USA federal, state and local claims for the Gulf of Mexico disaster, with payments spread over 18 years. In addition, the London-based oil giant is freer to embark on new ventures now that it is finally able to provide shareholders with a clearer cost picture.

BP chief executive Bob Dudley said: “This is a realistic outcome which provides clarity and certainty for all parties”. But now it faces a sustained period of low oil prices and the possible unwanted attentions of firms that might see BP as an even more alluring takeover target now that it is smaller and weaker, and has dealt with most of its spill claims.

The agreement — potentially the largest environmental settlement in US history — is “an unprecedented opportunity to accelerate and expand the response to the devastating harm caused by the spill, and to build lasting resilience into the essential ecosystems of the Gulf”, a group of national and local environmental organizations said in a joint press release. It remains unclear how much BP will end up paying under a 2012 settlement with individuals and businesses claiming spill-related losses. “It’s definitely a win for BP. No company can really do well when you have such a big litigation issue hanging over it”.

The broad outlines of the deal were described in Thursday’s court filing, but a confidentiality order is keeping the fine print under seal.

“This is an incredibly significant step in our efforts to make the Gulf Coast whole in the wake of the largest environmental disaster in our nation’s history”.

Investors cheered the move, pushing BP shares up 5 per cent in midday trading in the U.S. yesterday.

BP has 18 years to pay the settlement and most of it is tax-deductible. In light of this, BP said the government and the states could jointly demand an acceleration of payments if the company were acquired. Plugging the leak took months while Americans watched live video of the flowing oil via an underwater “spillcam”. Criminal charges also may be filed against BP in the future. BP must pay $7.1bn to compensate for damages to natural resources, also to the United States government as well as five states located on the Gulf.

BP appealed that ruling, which set the stage for the possible multibillion-dollar Clean Water Act penalty.

As part of the agreement in principle, Florida would receive at least a total of $3.2 billion.

“This could be game changer”, said Gaetz, a Republican from Niceville.

Claims by others left out of the settlement may be a “tough sell to a judge or jury”, Mr Sabino said.

The agreement announced Thursday involving the federal government, Gulf states and BP awaits final approval by a federal judge.