According to a report in Saturday's Financial Times, BP hopes to reach a deal with U.S. authorities under which it would pay less than $15 billion to settle all criminal and civil penalties arising from the 2010 Deepwater Horizon oil spill.

Citing a person familiar with the matter, the same report said that the Department of Justice (DoJ) wants $25 billion. It added that talks were accelerating and a deal could be reached before the Democratic party's convention in September.

Citi analysts said in a note that even the $15 billion figure was at the upper end of its $5 billion to $19 billion expectation.

However, in January, Martijn Rats, head of European oil research at Morgan Stanley, said a deal at $20 billion to $25 billion was likely. On Monday, Nomura analysts described a $15 billion settlement as "neutral".

BP and the DoJ both declined to comment at the weekend.

Eleven people were killed in the Deepwater Horizon explosion on April 20, 2010, and 4.9 million barrels of oil spewed from the mile-deep Macondo well in by far the worst U.S. offshore oil spill.

"This press report serves as a timely reminder of the current uncertainties investors face in valuing BP," the Citi note said.

Those uncertainties include BP's planned exit from TNK-BP. Citi said: "We think par value of a sale would be around $25 billion, but litigation from its AAR partners could see that sum reduced."

TNK-BP, Russia's No.3 oil producer, has earned BP huge profits but has long been plagued by legal battles between BP and its Russian partners, the AAR consortium of billionaires. BP put its 50 percent stake on the market on June 1.

"These (the Russian sale and the spill payment talks) both represent significant sinks of value," the Citi note said, "and although we have long argued BP has good valuation support around a number of metrics, we fear the market remains too complacent on both issues."

Citi maintained its neutral stance on the stock and target price of 435 pence. BP shares were up 2.2 percent at 418 pence in morning trading on Monday. Nomura also maintained its neutral stance and its price tag of 500 pence.

(Reporting by Andrew Callus; Editing by David Goodman)

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