Energy & Mining

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:

  • Who should operate as the registered importer or exporter – me, a 3PL or my customer?
  • Who holds title to (consigned) merchandise when it crosses a border?
  • (How) Can I manage or operate overseas storage and processing facilities?
  • How do I declare equipment provided to overseas facilities free of charge or at reduced cost?
  • What licensing or registration requirements apply to my products and it importer or exporter?
  • (How) Can I sourcing or sell product to “high security risk” countries subject to trade sanctions?
  • How much duty, excise and other import taxes and import / export fees do I pay? Can I reduce them?

How can WMS help?

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

  • Determination of the correct classification and customs valuation of equipment - Application of the correct tariff classification and customs valuation of equipment can be complex as contracts are often lump sum, and with or without crew (e.g. bareboat charter) or ancillary materials. We identify and support the appropriate tariff classification, assess which import taxes are applicable, and determine supportable customs values under global and national valuation rules, thus managing import tax costs in the supply chain. In particular, valuation of commodities bought under moving average or highly fluctuating price negotiations can cause difficulties for the customs authorities.
  • Determination of duty exemption and temporary importation schemes for equipment such as oil rigs, mining equipment, crane vessels etc. - Depending on the country of import, careful planning of available duty exemption and temporary importation schemes is recommended in order to be in line with local regulations and avoid impact on costs and lead times. Our in-country WMS experts identify the best schemes available and guide you through the application processes.
  • Determination and understanding of the in-country regulatory environment - Our energy and mining clients typically run a high risk of non-compliance with local regulations, particularly where there is no in-country dedicated or experience regulatory resource. Often the import or export process is outsourced with little oversight, yet any supply chain disruption or penalty is often at the expense of our client. We can help you determine license and registration requirements, its application processes, and help reduce their impact on lead times.

Case studies

Moving oil rigs around

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:

  • Identification of three different import modes and detailed description of its pro and cons;
  • Determination of each modes tax impact (import VAT and customs duties), showing timing restrictions as well as any quota restrictions;
  • Comparison of all modes as well as schemes for export and re-importation and evaluation of the best mode to be applied considering the business situation of the client.

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. 

Customs valuation of leased equipment

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:

  • A technical assessment of the declared dutiable value, including validation of the method of valuation;
  • Provision of strategies, technical information and regulations to support the position;
  • Provision of explanation letters and ongoing assistance in addressing Customs' concerns and mitigating potential financial and legal risks.

Benefit for the client

  • All queries and challenges from various customs authorities in the region have been fended off without assessments. A particular success was the avoidance of a case to the Anti-smuggling Bureau in China, which saved the company from administrative penalties and other commercial exposure.
  • We improved the compliance level for the company in relation to the determination of dutiable value.


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Contact us

Frank Debets

Frank Debets

Managing Partner, PwC Asia Pacific Customs and Trade

Tel: +65 9750 7745

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