British oil giant BP has agreed to pay a $25 million civil penalty to settle charges arising from two oil leaks in Alaska in the spring and summer of 2006.

The penalty, along with an estimated $60 million in improvements in its pipeline infrastructure, was slapped on BP by the US Department of Justice as part of a settlement for spilling more than 5,000 barrels of crude oil from the company's pipelines on the North Slope.

Of the $25 million penalty, $20.05 million will be deposited in the Oil Spill Liability Trust Fund established under the Clean Water Act, while the remaining $4.95 million will be paid to the US Treasury.

Assistant US attorney Ignacia Moreno said that the penalty should serve as a 'wake-up call' to all pipeline operators that they will be held responsible for the safety of their operations and their compliance with the laws including the Clean Water Act and the Clean Air Act.

'Companies like BP Alaska must understand that they can no longer afford to ignore, neglect or postpone the proper monitoring and maintenance of their pipelines,' he said.

The penalty is the largest per-barrel penalty to date for an oil spill, according to the Department of Justice.

In March 2006, BP Alaska spilled approximately 5,054 barrels of crude oil on the North Slope in Alaska, with a second spill of around 24 barrels of crude oil occurring in August of that year.

Investigators from both the US Environmental Protection Agency and the US Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) determined that the spills were a result of BP Alaska's failure to properly inspect and maintain the pipeline to prevent corrosion.

BP Alaska was issued with a corrective action order by PHMSA that addressed the pipeline's risks and ordered pipeline repair or replacement, but when the company failed to fully comply with the terms, the case was referred to the Department of Justice.

In a statement, BP said the agreement is in the form of a consent decree which, if approved, would include compliance with a set of requirements covering Prudhoe Bay pipeline operations and retention of an independent contractor to monitor Prudhoe Bay pipeline operations and report on compliance with the consent decree, in addition to the civil penalty.

However, it stressed that it 'did not admit any liability, nor was there any per-barrel penalty assessed' in the agreement.

The payment could well warn of huge penalties to come from BP's catastrophic Gulf of Mexico spill last year.

The case, which remains under investigation, has already seen BP set aside a $20 billion claims fund.