Financial News

  • 17 March 2014, 4:12

BP Gets Go Ahead For New US Deals And Wells

Energy giant BP's ban on exploring for oil in the Gulf of Mexico and winning US government contracts has been lifted - nearly four years after the Deepwater Horizon disaster.

The US government announced the end to the ban on the British-based firm after it agreed to changing operational conduct.

The Environmental Protection Agency (EPA) said BP "agreed to safety and ethics improvements" ahead of the ban being lifted.

It is now able to operate within a five-year deal negotiated with the EPA.

The company is allowed to pursue new oil exploration leases in some of the Gulf's deepest regions.

The area became an environmental hot spot after an explosion on the floating Deepwater Horizon oil rig.

Eleven workers died amid a massive oil spill as BP struggled to cap the seabed well - around a mile underwater.

Vast tracts of shoreline were affected, with many traces still remaining, in what was the worst spill in US history.

An estimated 171 million gallons of crude gushed from the well, contaminating coastlines in several states and affecting the livelihoods of thousands.

According to BP, as of February 28 it had paid out $12.9bn (7.7bn) in compensation, including $11bn (6.6bn) to businesses and individuals and $1.47bn (885m) to government.

It has also spent $14bn (8.4bn) in clean-up costs.

"After a lengthy negotiation, BP is pleased to have reached this resolution, which we believe to be fair and reasonable," BP America chairman and president John Minge said.

"Today's agreement will allow America's largest energy investor to compete again for federal contracts and leases."

The agreement means BP must enhance its compliance and corporate ethics, operate by a strict code of conduct and allow specific EPA audits.

Furthermore, company whistle-blowers must not be penalised.

In return, BP said it would withdraw a lawsuit launched against the EPA last year that sought to fight the powerful authority's sweeping contract ban.