BP To Pay Out £12bn For Deepwater Horizon Oil Spill Explosion

BP To Pay Out £12bn For Deepwater Horizon Oil Explosion That Killed 11 Workers
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Oil giant BP said it had reached an £12bn legal settlement in the US to cover the Deepwater Horizon explosion and oil spill that killed 11 workers five years ago.

It said the agreement would settle all US federal, state and local claims for the Gulf of Mexico disaster, with payments spread over 18 years.

On the eve of 20 April 2010, a gas release led to an explosion on the Deepwater Horizon oil rig, which was conducting exploration work on a well for BP in the Gulf of Mexico. The fire burned for 36 hours before the rig sank, with hydrocarbons leaking into the Gulf, along with millions of gallons of oil, before the well was able to be closed.

It is considered the largest accidental marine oil spill in history, with the total oil spilt estimated at 210 million gallons. In November 2012, BP settled federal criminal charges with the US department of justice, pleading guilty to 11 counts of manslaughter, two misdemeanors and a felony count of lying to congress.

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Deepwater Horizon oil explosion
Gulf Oil Spill(01 of24)
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FILE - In this Wednesday, April 21, 2010 file photo, oil can be seen in the Gulf of Mexico, more than 50 miles southeast of Venice on Louisiana's tip, as a large plume of smoke rises from fires on BP's Deepwater Horizon offshore oil rig. An April 20, 2010 explosion at the offshore platform killed 11 men, and the subsequent leak released an estimated 172 million gallons of petroleum into the gulf. U.S. District Judge Carl Barbier ruled Thursday, Sept. 4, 2014, in New Orleans, La., that BP acted recklessly and bears most of the responsibility for the oil spill. The ruling exposes BP to about $18 million in civil fines under the Clean Water Act. (AP Photo/Gerald Herbert, File) (credit:ASSOCIATED PRESS)
Gulf Oil Spill Trial(02 of24)
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Crude oil is seen bubbling between roots from marsh grass along the shoreline of Bay Jimmy, which was heavily impacted by the Deepwater Horizon oil spill, in Plaquemines Parish, La., Friday, Sept. 27, 2013. The methods that BP employed during its 86-day struggle to stop oil gushing into the Gulf of Mexico will be the focus of a trial resuming Monday, Sept. 30, 2013 in New Orleans, in the high-stakes litigation spawned by the worst offshore spill in the United States. (AP Photo/Gerald Herbert) (credit:ASSOCIATED PRESS)
One Year Anniversary Of BP Oil Spill Approaches(03 of24)
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BARATARIA BAY, LA - APRIL 13: A sand berm built to capture oil from the BP spill is seen in Barataria Bay April 13, 2011 in Barataria Bay, Louisiana. Barataria Bay and its fragile wetlands was one of the hardest hit areas in the aftermath of the Deepwater Horizon rig explosion which killed eleven crew members. 206 million gallons of oil eventually spilled into the Gulf of Mexico until the BP well was finally sealed. April 20th marks the one-year anniversary of the worst environmental disaster in U.S. history. (Photo by Mario Tama/Getty Images) (credit:Mario Tama via Getty Images)
Gulf Oil Spill(04 of24)
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The Development Driller III, which drilled the relief well and pumped the cement to seal the Macondo well, the source of the Deepwater Horizon rig explosion and oil spill, is seen in the Gulf Of Mexico, off the coast of Louisiana, Saturday, Sept. 18, 2010, on the day the cementing was completed. (AP Photo/Gerald Herbert) (credit:ASSOCIATED PRESS)
Gulf Oil Spill Anniversary(05 of24)
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FILE - In this Saturday, July 31, 2010 file picture, a ribbon of oil lines marsh grass at low tide in a cove in Barataria Bay on the coast of Louisiana. An April 20, 2010 explosion at the BP Deepwater Horizon offshore platform killed 11 men, and the subsequent leak released an estimated 172 million gallons of petroleum into the Gulf of Mexico. (AP Photo/Patrick Semansky) (credit:Patrick Semansky/AP)
Gulf Oil Spill Dead At Last(06 of24)
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FILE - In this June 17, 2010 file photo, Rep. Steve Scalise, R-La., holds an Associated Press photo taken by Charlie Riedel of an oil-covered pelican, the state bird of Louisiana, as he questions BP CEO Tony Hayward, on Capitol Hill in Washington, during the House Oversight and Investigations subcommittee hearing on "the role of BP in the Deepwater Horizon Explosion and oil spill. Retired Coast Guard Adm. Thad Allen, the federal government's point man on the disaster, said Sunday, Sept. 19, 2010, BP's well "is effectively dead." A permanent cement plug sealed BP's well nearly 2.5 miles below the sea floor in the Gulf of Mexico, five agonizing months after an explosion sank a drilling rig and led to the worst offshore oil spill in U.S. history. (AP Photo/Alex Brandon, File) (credit:Alex Brandon/AP)
Gulf Oil Spill Anniversary(07 of24)
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FILE - In this June 15, 2010 file photo, a member of Louisiana Gov. Bobby Jindal's staff wearing a glove reaches into thick oil on the surface of the northern regions of Barataria Bay in Plaquemines Parish, La. An April 20, 2010 explosion at the BP Deepwater Horizon offshore platform killed 11 men, and the subsequent leak released an estimated 172 million gallons of petroleum into the Gulf of Mexico. (AP Photo/Gerald Herbert, File) (credit:Gerald Herbert/AP)
Gulf Oil Spill Dead At Last(08 of24)
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FILE - In this June 12, 2010 file photo, crude oil from the Deepwater Horizon oil spill washes ashore in Orange Beach, Ala. Retired Coast Guard Adm. Thad Allen, the federal government's point man on the disaster, said Sunday, Sept. 19, 2010, BP's well "is effectively dead." A permanent cement plug sealed BP's well nearly 2.5 miles below the sea floor in the Gulf of Mexico, five agonizing months after an explosion sank a drilling rig and led to the worst offshore oil spill in U.S. history. (AP Photo/Dave Martin, File) (credit:Dave Martin/AP)
Gulf Oil Spill Wetlands(09 of24)
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FILE - In this June 12, 2010 file photo, brown pelicans and seagulls are seen at a rookery near an absorbent boom soaked with oil from the Deepwater Horizon spill in Barataria Bay near East Grand Terre, La. Two months after a drilling rig explosion triggered the nation's worst offshore spill, scientists are concluding that wetland damage is severe in some spots, especially in reedy swamps at the Mississippi's mouth. But they say it's confined mostly to outer edges of islands topped with marsh grasses and mangrove bushes. (AP Photo/Eric Gay, File) (credit:Eric Gay/AP)
Gulf Oil Spill Dead At Last(10 of24)
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FILE - In this June 9, 2010 file photo, a worker uses a suction hose to remove oil washed ashore from the Deepwater Horizon spill in Belle Terre, La. Retired Coast Guard Adm. Thad Allen, the federal government's point man on the disaster, said Sunday, Sept. 19, 2010, BP's well "is effectively dead." A permanent cement plug sealed BP's well nearly 2.5 miles below the sea floor in the Gulf of Mexico, five agonizing months after an explosion sank a drilling rig and led to the worst offshore oil spill in U.S. history. (AP Photo/Eric Gay, File) (credit:Eric Gay/AP)
Gulf Oil Spill Settlement(11 of24)
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FILE - In this Sunday, June 6, 2010 file photo, a small oil-covered fish floats on the water's surface at Bay Long off the coast of Louisiana following a deadly April 20, 2010 explosion at the BP Deepwater Horizon offshore platform. The subsequent leak released an estimated 172 million gallons of petroleum into the Gulf of Mexico. BP argued Wednesday, Sept. 24, 2014, in New Orleans, that a flawed funding formula in the settlement is giving money to businesses for questionable claims, and they should be forced to return it. But U.S. District Judge Carl Barbier says a deal is a deal. His ruling thwarts BP's latest attempt to control its soaring liability from the spill, which may be nearing $50 billion. (AP Photo/Charlie Riedel, File) (credit:Charlie Riedel/AP)
Gulf Oil Spill Anniversary(12 of24)
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FILE - In this Friday, June 4, 2010 file picture, tourists watch as workers clean oil from the sand along a 700-yard long strip of oil that washed up on the beach in Gulf Shores, Ala. An April 20, 2010 explosion at the BP Deepwater Horizon offshore platform killed 11 men, and the subsequent leak released an estimated 172 million gallons of petroleum into the Gulf of Mexico. (AP Photo/Dave Martin) (credit:Dave Martin/AP)
Gulf Oil Spill Anniversary(13 of24)
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FILE - In this Sunday, May 9, 2010 file picture, an oil-soaked bird struggles against the side of the HOS Iron Horse supply vessel at the site of the BP Deepwater Horizon oil spill in the Gulf of Mexico off the coast of Louisiana. An April 20, 2010 explosion at the offshore platform killed 11 men, and the subsequent leak released an estimated 172 million gallons of petroleum into the gulf. (AP Photo/Gerald Herbert) (credit:Gerald Herbert/AP)
Oil Spill in Gulf of Mexico - May 06(14 of24)
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Gathered concentrated oil burns during a controlled oil fire in the Gulf of Mexico, USA on May 06, 2010 The U.S. Coast Guard working in partnership with BP PLC, local residents, and other federal agencies conducted the 'in situ burn' to aid in preventing the spread of oil following the April 20 explosion on Mobile Offshore Drilling Unit Deepwater Horizon. Photo by Justin E. Stumberg/DOD via ABACAUSA.COM (credit:Justin E. Stumberg/ABACA USA)
Gulf Oil Spill(15 of24)
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With a sheen of oil as far as the eye can see, the sun rises as the Joe Griffin arrives at the rig explosion site carrying the containment vessel which will be used to try to contain the Deepwater Horizon oil, Thursday, May 6, 2010. (AP Photo/Gerald Herbert) (credit:Gerald Herbert/AP)
Gulf Oil Spill(16 of24)
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With a sheen of oil as far as the eye can see, the Joe Griffin arrives at the rig explosion site carrying the containment vessel which will be used to try to contain the Deepwater Horizon oil, Thursday, May 6, 2010. (AP Photo/Gerald Herbert) (credit:Gerald Herbert/AP)
Gulf Oil Spill Halliburton(17 of24)
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FILE - In an April 21, 2010 file photo, the Deepwater Horizon oil rig burns after a deadly explosion in the Gulf of Mexico. Anthony Badalamenti, who was the cementing technology director for Halliburton Energy Services Inc., was charged Thursday Sept 19, 2013, with destroying evidence following BPs 2010 oil spill in the Gulf of Mexico. (AP Photo/Gerald Herbert, File) (credit:Gerald Herbert/AP)
Gulf Oil Spill Investigation(18 of24)
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FILE - This April 21, 2010 file photo shows the Deepwater Horizon oil rig burning after an explosion in the Gulf of Mexico, off the southeast tip of Louisiana. Federal investigators are pushing back against criticism they aren't doing enough to keep companies involved in the Gulf oil spill away from any hands-on role in the forensic analysis of a key piece of equipment that failed to keep crude from entering the sea. (AP Photo/Gerald Herbert, File) (credit:ASSOCIATED PRESS)
Louisiana Oil Rig Explosion(19 of24)
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In this Wednesday, April 21, 2010 aerial file photo taken in the Gulf of Mexico, more than 50 miles southeast of Venice on Louisiana's tip, the Deepwater Horizon oil rig is seen burning. The oil platform that burned for 36 hours after a massive explosion sank into the Gulf of Mexico on Thursday, April 22, 2010, the U.S. Coast Guard said. (AP Photo/Gerald Herbert, File) (credit:ASSOCIATED PRESS)
APTOPIX Louisiana Oil Rig Explosion(20 of24)
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In this aerial photo taken in the Gulf of Mexico more than 50 miles southeast of Venice on Louisiana's tip, the Deepwater Horizon oil rig is seen burning Wednesday, April 21, 2010. (AP Photo/Gerald Herbert) (credit:ASSOCIATED PRESS)
Louisiana Oil Rig Explosion(21 of24)
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In this aerial photo taken in the Gulf of Mexico more than 50 miles southeast of Venice on Louisiana's tip, the Deepwater Horizon oil rig is seen burning Wednesday, April 21, 2010. (AP Photo/Gerald Herbert) (credit:ASSOCIATED PRESS)
Louisiana Oil Rig Explosion(22 of24)
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** RE-TRANS WITH ALTERNATE CROP ** In this aerial photo taken in the Gulf of Mexico more than 50 miles southeast of Venice on Louisiana's tip, the Deepwater Horizon oil rig is seen burning Wednesday, April 21, 2010. (AP Photo/Gerald Herbert) (credit:ASSOCIATED PRESS)
Gulf Oil Spill Transocean(23 of24)
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FILE - In this April 21, 2010 file aerial photo, the Deepwater Horizon oil rig burns in the Gulf of Mexico. The Justice Department has reached a $1.4 billion settlement with Transocean Ltd., the owner of the drilling rig that sank after an explosion killed 11 workers and spawned the massive 2010 oil spill in the gulf. On Thursday, Jan. 3, 2013, two people with knowledge of the negotiations say Switzerland-based Transocean would pay the money to resolve the department's civil and criminal probe of the company's role in the Deepwater Horizon disaster. (AP Photo/Gerald Herbert, File) (credit:ASSOCIATED PRESS)
Louisiana Oil Rig Explosion(24 of24)
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In this aerial photo taken in the Gulf of Mexico more than 50 miles southeast of Venice on Louisiana's tip, the Deepwater Horizon oil rig is seen burning Wednesday, April 21, 2010. (AP Photo/Gerald Herbert) (credit:ASSOCIATED PRESS)

The agreement is with federal authorities as well as the states of Alabama, Florida, Louisiana, Mississippi and Texas. It also covers more than 400 local government bodies.

BP chairman Carl-Henric Svanberg said: "Five years ago we committed to restore the Gulf economy and environment and we have worked ever since to deliver on that promise.

"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."

BP said this agreement would add around £6.4 billion to the £28.1 billion of charges BP had already set against the disaster.

BP said the rough breakdown of the new agreement will see it pay £3.5 billion to the US Government under the Clean Water Act over the next 15 years.

It will pay £4.5 billion to the five Gulf states over the next 15 years to cover natural resource damages.

The oil explorer will pay a further £3.1 billion to the five Gulf states to settle economic and other claims.

Finally, BP will pay up to £640 million to resolve claims made by more than 400 local government bodies. It said the first of these payments is due to begin in around 12 months.

BP chief executive Bob Dudley said: "This is a realistic outcome which provides clarity and certainty for all parties.

"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."