Guidance

Oil, gas, refining and petrochemicals: international trade regulations

Rules for importers and exporters of crude oil, hydrocarbon oils and gas; pumps, valves, compressors, turbines, subsea equipment and pipelines.

Introduction

This guide provides an overview of the oil, gas, refining and petrochemical sector, the key regulations you’ll need to comply with as an exporter or importer and selected sources of further help and support. It explains the duty rates applied to hydrocarbon oils and which hydrocarbon oils are eligible for excise duty relief. It also gives information on bans and restrictions particular to this sector - eg sanctions on exports to Iran’s oil and gas industry.

Find commodity codes and other measures applying to imports and exports by accessing the online UK Trade Tariff tool

Overview of the sector

The oil, gas, refining and petrochemical industries generally fall into either the upstream or downstream category.

Upstream

This relates to obtaining crude oil and gas from natural resources and includes the:

  • exploration of potential new oil and gas reserves using seismic and geophysical surveys and prospective drilling
  • development of oil or gas fields, including constructing the well head and production facilities

Downstream

This relates to processing crude oil into products that your business can market. It includes:

  • transportation of crude oil and gas, including pipelines and pumping systems
  • liquefied natural gas systems, including the liquefaction and re-gasification plant and machinery
  • oil refineries, petrochemical plants and gas processing

Key drivers in the oil, gas, refining and petrochemical sector

The development of the UK sector is based on long-standing design, engineering and manufacturing industries. Key drivers include:

  • increasing demand for oil and gas
  • increasing demand for refined and petrochemical products
  • new discoveries of oil and gas in increasingly complex geological structures, eg deep water, and/or inhospitable locations - requiring developments in technology and materials
  • environmental impact concerns, again requiring specialist technology developments
  • new regulations, which have driven the development and expansion of the oil refining industry

UK capabilities

The development of UK capability in this sector is based on the long-standing design, engineering and manufacturing industries. The UK is a world leader in project management and the fabrication of all types of upstream and downstream equipment, including pumps, valves, compressors, turbines, instrumentation and control systems, electrical equipment, subsea equipment and pipelines. The UK also produces all types of marine equipment, supply vessels and floating production facilities.

International trade in this sector

The industry consists of international oil and gas operating companies, national oil and gas corporations, major contractors, and large numbers of equipment manufacturing and service companies in many different countries.

The value of the investment and operating activity in the sector runs to several hundred billion pounds a year, although not all of it is internationally traded.

Export regulations in the oil, gas, refining and petrochemical sector

Regulations, charges or other restrictions may apply to oil, gas, refining and petrochemical exports as they leave the UK and when they arrive at their destination country. It is important that traders research both sides of the transaction, all the more so for countries which have sanctions and embargoes against them, eg Iran.

Once you are sure your goods are not in any way restricted, you need to classify them. Use of standardised classification codes makes it easier to check if any restrictions or duties are applicable. You can use the Integrated Tariff of the United Kingdom (the Tariff) to classify your goods. For more information, see the guide on classification of goods.

You can also read HMRC Notice 600 on classifying your imports or exports.

When using the Tariff, you should be aware that there is not always a direct reference or correlation to items that require an export licence. You are therefore advised to check the rating or classification of your goods for export licensing purposes, as outlined below.

Export licensing and certification

An export licence is required in order to export specified goods with military uses or with potential military uses (referred to as Dual-Use Goods). The list of goods requiring a licence is wide ranging and includes, for example, marine vessels and their associated equipment for the offshore and subsea markets.

You should check if your goods are listed on the UK Strategic Export Control Lists. If your goods are listed on a Control List, you will need to apply for an export licence.

If your goods are not listed on a Control List, you might still need a licence due to end-use concerns (in relation to a military or Weapons of Mass Destruction usage).

You should also be aware of any sanctions and embargoes which apply to your intended export destination.

Restrictions on exporting oil and gas items to Iran

As of 27 October 2010, restrictive measures apply in the EU on exports to Iran’s oil and gas industry. These measures were issued in Council Regulation (EU) 961/2010.

To find out more about export controls of military and dual-use goods, read Do I need an export licence?

Watch a video about your export control responsibilities and how you can ensure you have the correct licences on the BIS website.

Fiscal restrictions

In addition to a range of measures to freeze funds and economic resources, new restrictions also apply to the financing of any of the prohibited activities relating to the exploration of crude oil and natural gas, the production of crude oil and natural gas, refining, or the liquefaction of natural gas, whether by an Iranian person, entity or body.

‘Financing’ includes investment, loans or the extension of credit. Download the full text of Regulation 961/2010 from the Europa website.

Exporting goods for processing

You may be able to obtain relief from customs duties when you re-import EU goods that have previously been exported from the EU for processing. The Outward Processing Relief (OPR) procedure enables you to claim relief from customs duty if you can show that the exported goods were used in - or incorporated into - the products being imported.

Before you can claim duty relief under OPR, however, you must have the appropriate authorisation. Read notice 235 on OPR.

Specific oil and gas regulations

When exporting oil and gas, you also need to be aware of the Oil and gas supply chain code of practice (SCCOP).

Registered Dealers in controlled oil

If you deal in controlled oils (marked rebated gas oil (red diesel) or kerosene), the Registered Dealers in Controlled Oil (RDCO) scheme requires you to be approved to do so.

Researching your export destination

You should thoroughly research your export destination country when planning to export.

There are a number of issues to consider. As a starting point, you may wish to seek advice from UK Trade & Investment (UKTI). Find your local international trade team on the UKTI website.

There are also various ways that you can research a potential export destination. These include:

You can use the UK Trade Tariff to check:

  • special conditions such as prohibitions on your products
  • licensing restrictions and requirements
  • rates of duty payable when your goods enter your export market

You should also consider product safety and other technical standards in your export market. Your goods may need to be adapted to comply with these. Rules in your export market may be less or more strict than in the UK.

You should also be aware of any sanctions and embargoes which apply to your intended export destination. If Iran is an existing or target market, you should read the section about restrictions on exporting to or financing of Iran’s oil and gas industry in the guide on sanctions on Iran.

You can ask for information about your export destination country from a range of organisations, including:

  • your local UKTI trade team
  • your UKTI team within the commercial section of the UK embassy or consulate in your destination country
  • oil, gas, refining and petrochemical sector trade associations
  • the Chambers of Commerce in the UK and in your destination country

The tendering process

Many of the contracts that your business wins will come via the tendering process - this is now a well-established mechanism for locating businesses to carry out specific tasks. Your local UKTI trade team can help you find suitable tenders and assist you in completing the relevant documents.

Tariffs and duties in the oil, gas, refining and petrochemical sector

There is a range of import-specific regulations with which all businesses in this sector must comply. The key issues relate to the Tariff, duties, Intrastat and intellectual property.

You may be able to obtain relief from customs duties when you re-import EU goods that have previously been exported from the EU for processing. Read about Outward Processing Relief.

Using the Integrated Tariff

A common customs tariff is applied across all EU countries on goods imported from outside the EU.

You should use the Tariff to determine the specific classification code of your goods and to find:

  • any licensing requirements that apply
  • the rates of duty and import VAT that apply
  • any additional charges, such as anti-dumping duties
  • any available preferential duty rates

Preferential rates of duty

The Generalised System of Preferences (GSP) allows originating products from a wide range of countries to be imported into the EU at a reduced or zero rate of duty. For more information on how to determine whether a product is an originating one, read tariff preference: new GSP rules of origin.

The EU has a number of other trade preference agreements with third (non-EU) countries, as a result of which goods may attract preferential rates of duty.

Shipwork end-use relief

Some goods may qualify for shipwork end-use relief for the Continental Shelf.

Intrastat

Intrastat is the method of collecting information and producing statistics on goods traded between EU member states. Intrastat is only applicable to VAT-registered traders.

If you are VAT-registered and the goods you acquire from or supply to VAT-registered businesses in other EU countries reach the Intrastat exemption threshold for the year, you must submit monthly supplementary declarations to HMRC. The thresholds are £600,000 for Arrivals and £250,000 for Dispatches.

Intellectual property (IP)

You should ensure imported goods do not breach IP rights of other businesses, eg watch out for counterfeit goods and design infringements. Infringing goods can be seized and destroyed by HMRC. You can ask HMRC to check for imported counterfeit versions of your goods. Read more about intellectual property rights.

Export controls

You are advised to check the UK Strategic Export Control Lists if you intend to export controlled military or dual-use goods. See the guide: UK Strategic Export Control Lists - the consolidated list of strategic military and Dual-Use items.

For Iran, you will also have to check whether your goods or technology for the oil and gas industry are subject to bans and restrictive measures.

Hydrocarbon oils duty and reliefs

If you import hydrocarbon oil from non EU member states, or refine or warehouse certain types, duty may apply.

Excise duty drawback

You may be eligible for duty drawback (repayment of duty paid) if you:

  • load oil into a ship or aircraft for use as stores on a foreign voyage or flight or place the oil in a tax warehouse for use as ship or aircraft stores - read Excise Notice 172
  • export excise-duty-paid oils on a commercial basis, ie as cargo

Excise duty relief

You may be entitled to duty relief if you use oil:

  • for industrial purposes in your business
  • in marine voyages

Rebate of excise duty

You may be entitled to a rebate of duty if you:

Other tax implications

If you supply or use aviation turbine fuels, commonly known as AVTUR, Jet A1 and ATK, certain tax implications apply.

Import regulations in the sector

As the EU is a Customs Union, you can buy most goods from other member countries without restrictions, although VAT and excise duties can still apply.

If you import from outside the EU, you may have to comply with import licensing requirements and with common customs tariffs that apply across the EU. For more information, see the guide on importing your goods from outside the EU

Import licences

Import restrictions can be product-specific or trade-specific. Many products are subject to product-specific standards and need to be supported by applicable certificates, product-specific licences and documentation.

Quantitative restrictions or limitations and anti-dumping duties may apply to certain imported commodities.

Health and safety

It’s very important to know about the health and safety issues that relate to your industry - regulations are strict in this sector. Read about the health and safety issues relating to the offshore industry.

Sources of help and support in the oil, gas, refining and petrochemical sector

As an importer or exporter in the oil, gas, refining and petrochemical sector, you can turn to a range of bodies for help and information.

The government organisation with primary responsibility for providing trade support to UK exporters is UK Trade & Investment. UKTI has an impartial global presence in countries throughout the world and helps businesses realise their international potential through knowledge transfer and ongoing partnership support. You can find information on the services they offer to exporters on the UKTI website.

You can also find details of your local trade team on the UKTI website.

Government sources of help and information

In addition to UK Trade & Investment, other government bodies that provide business support in the oil, gas, refining and petrochemical sector include:

Further information

HMRC Tariff Classification email advice service

Provision of non-legally binding tariff classification commodity codes advice is available by emailing classification.enquiries@hmrc.gsi.gov.uk including the information detailed in Customs Information Paper 27 (2015) with your enquiry.

UKTI enquiry line

020 7215 8000

BIS Export Control Organisation (ECO) helpline

020 7215 4594 or email eco.help@bis.gsi.gov.uk

Published 8 August 2012