BP was ordered to pay $18.7 billion (£12 billion) as part of a settlement with the US Department of Justice (DoJ) following the 2010 Gulf of Mexico oil spill.
BP has been battling mounting penalties since the disaster happened in April 2010. Over 125 million gallons of oil spewed into the Gulf after an explosion at the Deepwater Horizon oil rig. At the end of last year, the company was still seeking to cap the amount it will have to pay out.
US Attorney General Loretta E Lynch said the BP settlement was the largest to be paid by a single company in US history.
"If approved by the court, this settlement would be the largest settlement with a single entity in American history; it would help repair the damage done to the Gulf economy, fisheries, wetlands and wildlife; and it would bring lasting benefits to the Gulf region for generations to come," she said.
"A significant income stream"
In a statement, Bob Dudley, BP's group chief executive, said: "For BP, this agreement will resolve the largest liabilities remaining from the tragic accident and enable BP to focus on safely delivering the energy the world needs. 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 after BP recently announced that it will reduce its exploration spend following a decline in underlying profits.
The oil giant saw a 20 per cent drop in profits for the final three months of 2014 standing at $2.2 billion, compared to the same period last year. Full year profits were also down by ten per cent to $12.1 billion. This has resulted in BP announcing a reduction its capital expenditure plans which have been revised by $4 billion to $6 billion in 2015.
Falling oil prices have also prompted BP to accelerate its job cuts at its back-office departments in both the US and the UK.
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