US lifts ban blocking BP from govt contracts

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

The US 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 penalised 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 US rose about 1 percent to $48.09 after the close of regular trading on the NYSE, a sign investors were hopeful the company could now try to grow its US 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 US 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 US government, including to the military, holding contracts worth more than $1.34 billion.

It is also a significant holder of leases in the US 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.