BP share price rises after it reaches $18.7bn settlement with US over Gulf of Mexico oil spill
Shares in BP pushed higher this afternoon after it agreed to pay $18.7bn (£12bn) in damage claims over 18 years to the US government and five states over the 2010 Gulf of Mexico oil spill.
The explosion and spill over five years ago killed 11 workers and spewed oil into the Gulf of Mexico for nearly three months afterwards, devastating the coastlines of several states.
BP must pay a record $5.5bn under the Clean Water Act to the United States government over 15 years.
Additionally the oil giant must pay $7.1bn to the United States government and five Gulf States over 15 years for natural resource damages, on top of the $1bn already paid for this.
There's also a total of $4.9bn over 18 years to settle economic and other claims made by the five Gulf Coast states – Alabama, Florida, Louisiana, Mississippi and Texas – as well as up to $1bn to resolve claims made by more than 400 local government entities.
And it's required to hive off $232m to cover any future damages claims relating to natural resources that are unknown at the time of the agreement.
BP has been battling mounting penalties since the disaster happened in April 2010. At the end of last year, the company was still seeking to cap the amount it will have to pay out.
The oil giant has also had to contend with low global oil prices. They fell as low as $45 per barrel in January this year, and are currently trading at around $62 per barrel.
Read more: BP saves £2.6m after it turns out Gulf of Mexico spill was smaller than thought
"Five years ago we committed to restore the Gulf economy and environment and we have worked ever since to deliver on that promise,” said BP chairman Carl-Henric Svanberg.
“We have made significant progress, and with this agreement we provide a path to closure for BP and the Gulf.
"It resolves the company’s largest remaining legal exposures, provides clarity on costs and creates certainty of payment for all parties involved.”
Shares in the company closed up 3.67 per cent to 434.54p per share this afternoon.