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U.S. lifts ban blocking BP from new government contracts

BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012. REUTERS/Alexander Demianchuk/Files
BP logo is seen at a fuel station of British oil company BP in St. Petersburg, October 18, 2012. REUTERS/Alexander Demianchuk/Files

HOUSTON (Reuters) - The U.S. government lifted a ban on Thursday that excluded BP from new federal contracts, after the British oil major filed a lawsuit saying it was being unfairly penalized for its 2010 Gulf of Mexico spill.

The Environmental Protection Agency and BP said they reached an agreement ending the prohibition on bidding for federal contracts on everything from fuel supply contracts to offshore leases after the company committed to a set of safety, ethical and corporate governance requirements.

Shares of BP traded in the United States rose about 1 percent to $48.09 after the close of regular trading on the New York Stock Exchange, a sign investors were hopeful the company could now try to grow its U.S. offshore operations.

"It's time to let them out from the doghouse. Let's let them get back to work," said Mike Breard, energy company analyst with Hodges Capital Management in Dallas.

The government hit BP with the suspension in November 2012, citing its "lack of business integrity," after the Deepwater Horizon oil rig explosion killed 11 workers and gushed million of barrels of oil into coastal waters, the worst offshore oil disaster in U.S. history.

The ban only affected new contracts, not existing deals, and BP filed last August to overturn it.

BP is one of the largest suppliers of fuel to the U.S. government, including to the military, holding contracts worth more than $1.34 billion.

It is also a significant holder of leases in the U.S. Gulf of Mexico, which has seen a surge in new crude production following the Macondo oil well blowout.

The last lease sale BP participated in was in June 2012, when they acquired deepwater leases. They also bought 11 leases in the December 2011 sale, the first post-Macondo auction.

Despite the settlement with the EPA, BP is still paying out millions of dollars to settle damage claims from Gulf residents in a contentious process that BP has said is being mismanaged by the administrator, Louisiana lawyer Patrick Juneau.

BP has provisioned about $42 billion in charges related to the spill.

The case was BP Exploration & Production Co et al v. McCarthy et al, U.S. District Court, Southern District of Texas, No. 13-02349.

(Reporting by Ayesha Rascoe in Washington and Anna Driver and Kristen Hays in Houston; writing by Terry Wade, editing by G Crosse)

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