BP to pay nearly $21bn to settle world’s largest oil spill

BP to pay nearly $21bn to settle world’s largest oil spill
The US government and BP have finalized a $20.8 billion deal to settle the energy giant’s 2010 Deepwater Horizon oil spill. BP plans to stretch its payment, described as the “biggest in US history,” over 15 years.

“This resolution is strong and fitting,” Attorney General Loretta Lynch said. “BP is receiving the punishment it deserves while also providing critical compensation to the damage to the Gulf region.”

The final agreement comes more than three months after the deal was first announced in July, but still needs to be approved by a federal court.

At the time, BP estimated the damage caused by the Deepwater Horizon disaster at $18.7 billion, while Justice Department officials put the price tag at $20 billion.

Under the deal announced on Monday’s, the difference includes the money that BP has already spent on spill restoration and compensation payments that are still being calculated.

The Department of Justice said in a statement that this is “the largest settlement with a single entity in the department’s history.”

“Building on prior actions against BP and its subsidiaries by the Department of Justice, this historic resolution is a strong and fitting response to the worst environmental disaster in American history,” said Lynch.

The $20.8 billion settlement includes $7.1 billion for natural resource damages, $5.5 billion for Clean Water Act fines, and $4.9 billion in payments to five US states: Louisiana, Mississippi, Alabama, Florida and Texas. Several hundred local governmental bodies will receive up to $1 billion to settle claims for economic damages.

According to BP, the settlement announced on Monday “does not reflect a new settlement or any new money.”

“It covers the same payments – and the same amounts – disclosed by BP when we announced this agreement in July,’’ BP spokesman Geoff Morrell said.

BP plans to pay off its penalty by making payments over the next 15 years. The oil giant had previously estimated that it would pay out more than $1 billion annually over most of this period.

The current deal ends five years of legal battling between the US government and BP. The feds sued BP in December 2010, half a year after an explosion and fire occurred at the BP-licensed Deepwater Horizon Transocean drilling rig in April 2010.

“Five years after one of the worst environmental disasters in our nation’s history, which claimed 11 lives and caused untold damage, we have reached a historic milestone with today’s settlement,” Secretary of Commerce Penny Pritzker said.

The federal lawsuit was followed by civil claims against BP from each of the Gulf States.

More than 3 million barrels of oil seeped into the Gulf of Mexico over a period of nearly three months during the ecological catastrophe, making the spill the largest accident of its kind in petroleum industry history. Around 16,000 miles of coastline were affected and, according to the National Park Service, more than 8,000 animals died as a result.

In April 2014, officials overseeing the cleanup of the Gulf of Mexico proposed 10 new recovery projects with a total cost of $134 million.