Customs and international trade challenges and considerations penetrate the energy and mining industry, all the way from oil and gas’ upstream or downstream activities. It could be to do with importation of capital equipment for drilling or mining purposes, possibly entitled to using duty exemptions. It could be to do with temporary storage of product in bonded facilities. Or perhaps it is the challenge of determining the appropriate importer and import value of products that have been bought and sold ten times while on the high seas. And even though many products may be duty free, customs duties on products such as lubricants and certain metals can be a significant cost, as can the various excise duties that apply to the industry.
At the same time, many countries try to protect their industry as well as safeguard the energy supplies for their populations. This leads to many non-tariff barriers that require careful management and planning. New forms of energy, such as solar and wind energy are promising industries. The significant interest in these has already lead to various trade disputes, with high anti-dumping duties being threatened in the US and EU. Similarly, export restrictions on rare earths have produced some high profile disputes and trade countermeasures to be deployed.
In an industry with as important divers as this, it may be surprising that many of the biggest customs and trade challenges are fairly consistent between countries and sub-industries. Consider how the following questions may apply to your company:
We work with clients on diverse projects asking any of the above questions and more, from the design and implementation of more efficient supply chains and procurement strategies, to on the ground offshore or onshore duty planning strategies.
Our services, tailored to the energy and mining industry, therefore focus on the following
An oil & gas company in China planned to import oil rigs for oil exploitation in the China Sea. The oil rigs were to be used in China and then exported to Vietnam for use oil exploratory activities in its territorial waters. The operation period in Vietnam was temporary. After that period, the rigs would be re-imported into China.
The company asked WMS to elaborate on the various options for importing the oil rigs into China and the duty implications thereof. They also asked us which trade facilitation schemes would be available to export the oil rigs to Vietnam and re-import them into China.
How we helped
WMS conducted a detailed analysis of available options and schemes to import the oil rigs into China. We also highlighted the schemes and procedures available to export the oil rigs to Vietnam temporarily and re-import the oil rigs into China based on China’s customs laws and regulations. This included:
Benefit for the client
The company was able to provide to its management a feasible business solution for their intention to apply this new business opportunity, which included all aspects (costs, lead times impact, duration of schemes, regulatory requirements, etc.) of import trade considerations in order to effectively mitigating potential duty costs and ensuring compliance with China’s customs regulations.
An oilfield service company in Singapore, active throughout Southeast Asia, was looking to restructure and centralise all tools and equipment deployed within the region to manage costs efficiently. The tools and equipment were bought by the oilfield service company from overseas subsidiaries who owned them. They were then leased, possibly back to the same subsidiary. WMS was asked to advise on the customs valuation impact of such leased tools and equipment.
How we helped
WMS conducted a detailed review of the costs in the value chains of the oilfield service company. Based on our knowledge of all relevant legal provisions in the various countries of interest to the company, we determined the most appropriate dutiable values of the tools and equipment, and provided documentary support and strategies to defend the said value as being acceptable for customs valuation purposes if challenged.
The review included:
Benefit for the client
Managing Partner, PwC Asia Pacific Customs and Trade
Tel: +65 9750 7745