BP seeks to settle Gulf of Mexico oil spill claims for under $15 billion: report

British oil and gas giant BP Plc is hoping to settle all criminal and civil penalties and damages arising from the 2010 Deepwater Horizon explosion for under $15 billion, less than the $25 billion demanded by the US federal authorities,  the Financial Times yesterday reported, citing a person familiar with the matter.

The paper said that the deal could be reached before the Democratic Party convention in September.                  

On 20 April 2010, BP's Deepwater Horizon rig blew up and killed 11 rig workers. The incident caused approximately 4.9 million barrels of crude oil to spill into the Gulf of Mexico resulting in colossal damage to the environment and inhabitants of the region.

The disaster became the biggest oil spill in the history of the US, eclipsing the 1989 Exxon Valdez oil tanker spill in Alaska that spewed between 260,000 to 750,000 barrels of crude oil near Prince William Sound's Bligh Reef.

BP faces claims by the US government under various acts and laws, which could result in the London-based oil giant paying fines totalling billions of dollars. BP also faces claims from several Mexican Gulf states as well as its drilling partners.

BP estimates that the cost of the proposed settlement, expected to be paid from a $20-billion trust it set up to provide immediate relief to those whose livelihoods were affected, would be approximately $7.8 billion. This includes a BP commitment of $2.3 billion to help resolve economic loss claims related to the Gulf seafood industry.