BP to Pay Over $20b Fine for 2010 Oil Spill

BP to Pay Over $20b Fine for 2010 Oil SpillBP to Pay Over $20b Fine for 2010 Oil Spill

British oil and gas firm BP will pay more than $20 billion in fines to resolve nearly all claims from its deadly Gulf of Mexico oil spill five years ago, marking the largest corporate settlement of its kind in US history, Attorney General Loretta Lynch said.

The agreement, first outlined in July, adds to the $43.8 billion BP had previously set aside for criminal and civil penalties and cleanup costs. The company has said its total pretax charge for the spill is now around $53.8 billion.

The total penalties Lynch announced on Monday sounded higher than the $18.7 billion deal reached to this summer, in part because she included $1 billion in restoration work BP had agreed to long beforehand, Reuters reported.

The announcement Monday includes $700 million for injuries and losses related to the spill that are not yet known, $232 million of which were announced earlier. It also adds $350 million for the reimbursement of assessment costs and $250 million related to the cost of responding to the spill, lost royalties and to resolve a False Claims Act investigation, according to a consent decree filed by the US Justice Department.

The fines, to be paid to the federal government, five Gulf Coast states and hundreds of municipalities over 18 years, will fund environmental restoration and economic development programs to address the worst offshore spill in US history.

"This agreement will launch one of the largest environmental restoration efforts the world has ever seen," Lynch said.

The spill fouled around 2,090 kilometers of coastline and dumped more than 3 million barrels of crude into the sea, hurting fishermen and prompting overhauls of safety rules and emergency plans in one of the world's most prolific offshore oil basins.

The core of the agreement includes $7.1 billion for natural resource damages, $5.5 billion for Clean Water Act fines, and $4.9 billion in payments to states.

The Macondo well blowout and the fire on the Deepwater Horizon drilling rig on April 20, 2010, killed 11 workers.

Federal and state officials formally filed the settlement on Monday and it should be approved by a US District Court in Louisiana soon.

In the past, BP has paid for liabilities by shedding assets, eroding about one-fifth of the earnings base it had before 2010. Its smaller size among the bigger oil majors has made it vulnerable to potential takeovers, analysts have said.

BP has effectively settled all big claims from the spill. Previous settlements included a fund originally set at $7.8 billion to compensate individuals claiming economic harm from the spill.