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US disaster could cost BP more than $18bn. Reuters

British oil major BP has been allowed to compete for US government contracts again, lifting a ban which had been in place since the 2010 Gulf of Mexico oil spill.

The company signed an agreement with the US Environmental Protection Agency (EPA) to settle all matters related to the suspension, debarment and statutory disqualification of BP following the Deepwater disaster, according to a company statement.

The agreement allows BP to enter into new contracts with the US government including new Deepwater leases in the Gulf of Mexico. The agreement applies to all of the suspended and debarred BP entities, including BP Exploration & Production Inc., BP p.l.c. and certain affiliated companies, the company said.

"After a lengthy negotiation, BP is pleased to have reached this resolution, which we believe to be fair and reasonable," said John Mingé, chairman and president of BP America.

"Today's agreement will allow America's largest energy investor to compete again for federal contracts and leases."

Under the agreement, which will be effective for five years, BP has agreed to a set of safety requirements in its operations. The company also agreed to comply with ethical and corporate governance requirements.

The requirements are apart from those contained in the remedial order stemming from BP's 2012 Plea Agreement with the US Department of Justice and Final Judgment Order with the US Securities and Exchange Commission.

As part of the agreement, BP will dismiss its lawsuit against the EPA in federal court in Texas.

An explosion on BP's Deepwater Horizon rig on 20 April 2010, which killed 11 workers, resulted in one of the worst environmental disasters in history.

After the disaster, the EPA suspended BP from entering any new contracts with the government.

BP has lost out on billions of dollars worth of contracts after the ban and it filed a lawsuit against the EPA in August 2013, seeking an injunction of the agency's suspension, which had prevented BP from entering into new federal contracts, receiving grants, or any other transactions.

BP has been a major supplier of fuel to the US military and was barred from federal contracts worth $1.9bn (€1.4bn, £1.2bn) in 2013. The contracts were with the Defense Logistics Agency, which supports the US Army, Navy, Air Force, Marine Corps, and other federal agencies with logistics, acquisition and technical services.