BP Plc will pay a record $18.7 billion to resolve claims by the U.S. and five states along the Gulf of Mexico related to the 2010 oil spill. The payments will be spaced out over as long as 18 years, according to the preliminary agreement. A record $5.5 billion will cover federal penalties under the Clean Water Act, topping the previous high of $1 billion. Louisiana, Mississippi, Alabama, Florida and Texas will also receive payouts for harm done in the worst offshore spill in U.S. history.
“This agreement will resolve the largest liabilities remaining from the tragic accident,” BP Chief Executive Officer Bob Dudley said in a Thursday statement. “For the United States and the Gulf in particular, this agreement will deliver a significant income stream over many years for further restoration of natural resources and for losses related to the spill.”
The settlement comes on top of at least $28 billion BP has already spent on response, clean-up and compensation. It also exceeds by almost $3 billion the $43.8 billion the company set aside for fallout from the spill. Shares gained 3.7 percent to 434.70 pence at 2:45 p.m. in London as investors welcomed news that the company had reached an agreement. A verdict in the Clean Water Act case was pending with a potential fine of as much as $13.7 billion.
Under the agreement, BP will pay $5.5 billion over 15 years. The company’s cumulative pre-tax charge will rise by about $10 billion at the end of the first quarter, BP said. The three-month catastrophe was the biggest offshore spill in U.S. history. It began with the Macondo well blowout and destruction of the Deepwater Horizon rig.
Eleven men died in the explosion. The agreement is the “largest settlement with a single entity in American history,” U.S. Attorney General Loretta E. Lynch said. The agreement in principal will be subject to public comment before court approval, she said in a press release.