BP says it will not have to increase the $37.2 billion it has set aside to pay for the spill, and analysts say the settlement could allow BP to quickly resolve outstanding claims by states and the federal government.
If approved by a federal court in New Orleans, Friday's deal would settle lawsuits filed by some 100,000 individuals and businesses affected by the spill. They include fishermen who lost work, cleanup workers who got sick and others who claimed harm from the oil giant's April 20, 2010, disaster.
The accident destroyed a drilling rig called the Deepwater Horizon, killed 11 workers, spilled an estimated 200 million gallons of oil and disrupted thousands of Gulf Coast lives. The spill soiled sensitive tidal estuaries and beaches, killed wildlife and closed vast areas of the Gulf to commercial fishing.
The momentous settlement announced late Friday will have no cap to compensate the plaintiffs, though BP PLC estimated it would have to pay out about $7.8 billion, making it one of the largest class-action settlements ever.
The settlement would come out of a $20 billion trust the company had established to pay these types of claims. The trust has $9.5 billion in assets. Whatever remains in the trust after victims are paid out would come back to BP.
The settlement does not resolve state claims against the company or federal fines and penalties that could total $20 billion to $25 billion. BP is also mired in lawsuits with some of its partners in the Macondo project in the Gulf.
Also, individual victims are not required to agree to terms of the settlement and they could choose to bring separate cases.
But analysts say individual claims aren't expected to amount to much, and they now expect BP to be able to move quickly to settle the rest of the claims against it.
"They are clearing the decks for a potential deal with the government that would end this litigation and enable them to move beyond the Gulf oil spill," said David Uhlmann, a University of Michigan Law School professor who served as chief of the Justice Department's environmental crimes section.
Uhlmann called the deal fair for both sides and said it cleared what appeared to be the biggest hurdle to a global settlement in the case. "The only trial I thought we would see in this case is the one that just went away," he said.
Fadel Gheit, an analyst at Oppenheimer & Co., said the settlement shows BP is willing to pay in order to try to put the oil spill behind it. That willingness, he said, will help the company reach deals with governments and other plaintiffs.
BP is the largest oil producer in the Gulf, and it needs to be able to continue to drill for oil there to ensure its future, he said.
"They have been telling the government: 'We'll do whatever it takes. We're just going to pay and get this over with. We want to be back in business,'" Gheit said.
The main targets of litigation resulting from the explosion and spill were BP, Transocean, cement contractor Halliburton Co. and Cameron International, maker of the well's failed blowout preventer. BP, the majority owner of the well that blew out, was leasing the rig from Transocean.
The Justice Department sued some of the companies involved in the ill-fated drilling project, seeking to recover billions of dollars for economic and environmental damage. The department opened a separate criminal investigation, but that probe hasn't resulted in any charges.
The companies also sued each other, although some of those cases were settled last year. In one of the pending lawsuits, BP has sued Transocean for at least $40 billion in damages.
A series of government investigations have spread blame for the disaster.
In January 2011, a presidential commission found that the spill was caused by time-saving and money-saving decisions by BP, Halliburton and Transocean that created unacceptable risk. But the panel also concluded that the mistakes were the result of systemic problems, not necessarily the fault of any one individual.
In September 2011, however, a team of Coast Guard officials and federal regulators issued a report that concluded BP bears ultimate responsibility for the spill. The report found BP violated federal regulations, ignored crucial warnings and made bad decisions during the cementing of the well a mile beneath the Gulf of Mexico.
BP has repeatedly said it accepts some responsibility for the spill and will pay what it owes, while urging other companies to pay their share.
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AP Writer Michael Kunzelman contributed to this story from New Orleans.
