BP was ordered to pay $20 billion (£13.2 billion) as part of a settlement with the US Department of Justice (DoJ) following the 2010 Gulf of Mexico oil spill.
The oil giant has been battling mounting penalties since the disaster happened in April 2010. Eleven workers were killed and over 125 million gallons of oil spewed into the Gulf after an explosion at the Deepwater Horizon oil rig. The spill affected the shorelines of Texas, Louisiana, Mississippi, Alabama and Florida. 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. It requires court approval to be finalised. "This historic resolution is a strong and fitting response to the worst environmental disaster in American history," she said. She noted the sum would help repair the damage done to the Gulf economy, fisheries, wetlands and wildlife.
BP says deal brings "certainty"
BP spokesman Geoff Morrell said the deal gives "BP certainty with respect to its financial obligations". It settles the largest legal claims pending against BP for the spill.
In July, the Department of Justice and BP announced an agreement for $18.7 billion, but this newest figure includes some payment BP has already made.
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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