BP will pay the largest criminal penalty in US history to settle charges and claims arising from the devastating 2010 Gulf of Mexico oil spill, a source close to the case said Thursday.
The amount of the settlement -- reportedly between $3 and $5 billion -- will be announced later in the day, the source told AFP, dubbing it the "largest criminal penalty in US history."
BP declined to confirm the reported deal, but issued a statement earlier Thursday saying it was in "advanced talks" with the US Justice Department and the Securities & Exchange Commission.
BP said the proposed resolutions were not expected to cover federal civil claims, including damages under the Clean Water Act, federal and state natural resources damages claims or outstanding private civil claims.
"Until final agreements are reached, there can be no certainty any such resolutions will be entered into," BP said.
Civil fines and penalties could reach as much as $18 billion if gross negligence is found, experts have said.
BP is also still on the hook for economic damages from the spill, including the cost of environmental rehabilitation.
The BP statement also noted that any settlement would need approval from a federal judge.
The company's reputation was ravaged two and a half years ago after an explosion on the BP-leased Deepwater Horizon rig killed 11 workers and sent millions of barrels of oil spewing into the sea.
The blast on April 20, 2010, sank the rig and unleashed the biggest marine oil spill in the industry's history -- and what was widely acknowledged to be the worst US environmental disaster ever.
It took 87 days to cap BP's runaway well 5,000 feet (1,500 meters) below the waters' surface as it spewed some 4.9 million barrels (206 million gallons) of oil into the Gulf of Mexico.
Environmental group Greenpeace was quick to slam the reported settlement as inadequate.
"This fine amounts to a rounding error for a corporation the size of BP," Greenpeace senior investigator Mark Floegel said.
"Nothing in this proposed settlement gives any oil company incentive to be more careful in future operations. Cutting corners and skimping on safety will still be the rule of the day."
BP reached an agreement to settle claims from fishermen and others affected by the disaster for $7.8 billion earlier this year, but it must also be approved by a federal judge and does not affect claims brought by the government.
The case will likely still go to court.
That's because the British energy giant is hoping to shift some of the cost to its subcontractors, a complex legal question that will likely end up taking years and multiple appeals to resolve.
Several government probes have already criticized BP, rig operator Transocean and Halliburton -- which was responsible for the well's faulty cement job -- for cutting corners and missing crucial warning signs.
Over the past two years, BP has so far sold non-core assets totalling more than $35 billion to help fund massive compensation costs arising from the tragedy. The figure is set to reach $38 billion by late 2013.
Last month, BP posted bumper profits and hiked its shareholder dividend as the energy giant prepared for a new Russia adventure after being rocked by the Deepwater Horizon crisis.
Net profit jumped 7.7 percent to $5.43 billion (4.19 billion euros) in the third quarter, or three months to September, compared to the same part of last year.
BP unveiled a massive strategic deal with Russian state oil firm Rosneft in an attempt to reposition itself after the Deepwater Horizon catastrophe.
Analysts believe that the Rosneft deal could lead to major exploration projects in the Arctic.
BP shares were trading up 0.75 percent at 428.95 pence on the British capital's FTSE 100 index of top companies Thursday but remain down sharply from its pre-spill value when shares were trading over 600 pence.