BP is to pay a record US$18.7 billion settlement to cover claims brought by the US government and five US states effected by the Deepwater Horizon.
The US$18.7 billion figure was handed to BP by the US Department of Justice as part of claims brought using the US ‘Clean Water Act’.
Along with the federal government, claims were also made by the US states Alabama; Florida; Louisiana and Mississippi, as pervious claims and compensation didn’t cover and damage or loss of business within their jurisdiction .
The 2010 Deepwater Horizon disaster claimed the lives of 11 and resulted in over 125 million gallons of crude oil being released into the Gulf of Mexico. Much of the oil ended up ashore and caused devastation to wildlife both onshore and offshore, with a large knock on effect to local business.
The agreement has been drawn up to provide a contiualed stream of payments to affected parties offer the course of 18 years rather than one lump.
Under the agreement, BP will:
Pay the US a civil penalty of $5.5bn under the Clean Water Act – over 15 years.
Pay $7.1bn to the US government and five Gulf states including Florida, Alabama, Mississippi and Louisiana over 15 years for natural resource damages.
A total of $4.9bn will be paid over 18 years to settle economic and other claims made by the five Gulf Coast states.
Up to $1bn will be paid to resolve claims made by more than 400 local government entities.
The US$18.7 billion settlement doesn’t include and claims or compensations already made between BP and individuals. BP has said that the current cost of the cleanup, claims and compensation stands around US$29 billion not counting the latest settlement.
It is hoped that this will start to draw a line under Deepwater Horizon, and allow BP to start to move on.
The global markets seemed to think along theses lines , with BP’s share price jumping 4.5pc to 438.35p after the settlement was announced.
BP’s chief executive Bob Dudley said “This is a realistic outcome which provides clarity and certainty for all parties,”
Dudley continued, ”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.”
“When concluded, this will resolve not only the Clean Water Act proceedings but also the Natural Resource Damage claims as well as other claims brought by Gulf States and local government entities.”