BP and Macondo well partner Anadarko have agreed on a $4bn settlement on cleanup costs of the Gulf of Mexico oil spill.
As part of the settlement Anadarko will pay BP $4 bn, less than half the amount it may have been forced to pay in court, and will no longer pursue allegations of gross negligence against BP.
However the deal excludes possible government fines the parties may have to pay.
BP's shares jumped on the news, to trade up 4.8 percent, outperforming a 2.1 per cent rise in the STOXX Europe 600 Oil and Gas index .
"This is good progress," said one dealer.
As a 25 per cent partner in the Macondo well, Anadarko was obliged to pay 25 per cent of the costs of cleaning up the spill, compensating those affected and paying government fines.
It could only avoid this responsibility if it proved BP had been grossly negligent -- something which could, potentially, have added around $18bn to the total amount of fines BP faced.
BP has said the total bill for the oil spill, including government fines, for which it has taken charges of $3.5bn, will be $42bn.
This suggests Anadarko could have faced a total bill of $9.6bn.
BP agreed in May to accept $1.1bn from the third partner in Macondo, Mitsui, to cover its 10 per cent share of cleanup costs.