BP nears $16-bn settlement over Gulf of Mexico oil spill: report

The US government and the US states on the Gulf Coast are planning make a $16 billion settlement offer to British oil giant BP Plc to settle civil claims over its massive 2010 oil spill in the Gulf of Mexico, The Wall Street Journal yesterday reported, citing people familiar with the discussions.

The settlement offer would cover potential fines owed by BP under the Clean Water Act, and payments under an environmental evaluation known as the Natural Resources Damage Assessment statute, the report said.

If the the negotiations lead to a settlement, it would avoid a long drawn-out court battle slated to start today in New Orleans, although the trial may start even even as the terms of an out-of-court-deal are hammered out.

The US Justice Department (DoJ) and the five Gulf Coast states include Florida, Texas, Alabama, Mississippi and Louisiana, are seeking penalties for violating the US Clean Water Act and under Natural Resources Damage Assessment statute for damage caused by the oil to beaches, marshes, wildlife and fisheries.

In April 2010, BP's Deepwater Horizon rig exploded killing 11 people and spilling around 4.9 million gallons of crude off the New Orleans coast in the Gulf of Mexico. The oil spill is the largest in history and it took the London-based oil giant four months to cap the well.

BP has already paid or agreed to pay around $37 billion in fines, settlements and cleanup costs, including more than $14 billion on containing and cleaning the spill, around 8.5 billion to Gulf Coast businesses and individuals affected by the spill, a record $4.5 billion in penalties, and billions more to environmental restoration and research.