British Petroleum (BP) has finally reached a deal with the United States government by agreeing to hand over $18.7 billion that will settle all federal and state claims against the company's culpability in the 2011 oil spill disaster.

The Wall Street Journal reported that the BP deal still needs the approval of a federal judge before the settlement can be legally recognized.

Like Us on Facebook

In 2010, a BP oil rig, the Deepwater Horizon, exploded and killed 11 workers. The resulting oil spill covered several hundred square miles. The oil spill clean-up took around three months to complete.

Reports indicate that part of the settlement money will be used to pay penalties amounting to $5.5 billion for violation of the Clean Water Act. The four states affected by the spill namely, Alabama, Florida, Louisiana and Mississippi are also to receive a total of $8.1 billion to help them repair the environmental damage brought by the oil spill according to USA Today.

The BBC has reported that the settlement agreement does not shield BP from other civil and criminal suits in relation to the oil spill.

Loretta Lynch, the American Attorney General, said if the BP deal is approved, it will be the biggest amount yet the government will collect from a business entity.

A Chief executive of BP, Bob Dudley, has noted that the deal is "realistic". He said that BP can finally settle the issue and concentrate on its business of providing energy to countries around the globe.

BP stocks climbed by more than 5 percent within hours after the deal with the U.S. government was made public.

According to the terms of the agreement, BP is expected to make an annual payment of more than $1 billion for the next 18 years.

Louisiana is the state that gets the biggest share of the money - almost $7 billion. But its Republican Congressman Garret Graves, has said that BP's payment period is too long.

BP initially fought a long legal battle with the U.S. government concerning the amount of penalties and fines that it should pay. But the company's legal appeal were all turned down by federal courts.

TagsBP, 2010 oil spill, BP settlement, oil spill disaster, BP legal suit, BP Oil Spill Settlement, Deep Water Horizon Oil Spill