14 Million USD Lost: How EPC Oil and Gas Contractor Failed to Leverage Customs Exemptions ?
Background
An international Engineering, Procurement, and Construction (EPC) contractor operating in the oil and gas sector executed a major project in the Middle East, involving the importation of large volumes of machinery, equipment, and construction materials to build an oil processing facility.
The contractor paid approximately $20 million USD in customs duties for imported goods.
The Issue
During the project, the EPC contractor paid around $20 million USD in customs duties. These duties were eligible for refund under the applicable customs regulations. However, due to process failures, lack of documentation, and non-compliance, the project team failed to complete the refund process, resulting in a 70% financial loss. Only a limited portion of the eligible amount was eventually recovered through delayed and partial efforts.
Key Reasons for the Loss :
Lack of Awareness of Laws and Exemptions
Failure to Complete the Refund Process.
Use of Incorrect HS Codes
No Engagement of Customs Consultant
Inadequate Customs Broker Oversight
Outcome :
1- Of the $20 million USD paid in customs duties, only 30% (~$6 million USD) was recovered.
2- The remaining 70% (~$14 million USD) was permanently lost, not due to inability, because the team failed to follow through on the refund process.
Key Takeaways :
• Being eligible for refunds is not enough—timely action and proper documentation are essential.
• Appoint a qualified customs consultant early to guide refund planning and execution.
• Customs duties and exemptions should be managed as a strategic financial function, not just logistics.
• Always verify that your customs broker has specific experience.
• Establish clear internal responsibility and tracking for refund claims during the project.
Lesson Learned :
"Customs compliance isn’t just paperwork, it’s real money."
This case highlights how a lack of preparation, poor vendor supervision, and absence of expert guidance can result in massive, avoidable financial losses.
For any future EPC project, especially in complex and highly regulated environments like oil and gas—investing in customs, expertise from the beginning can save millions.
If you Need Expert to Support?
If you're looking to avoid these types of costly mistakes:
RST Company has a team of specialized customs consultants with deep experience in EPC, oil & gas, and industrial projects.
We help international EPC Contractors:
• Maximize refunds of customs duty
• Properly classify of technical equipment.
• Utilize exemptions and Free Trade Agreements.
• Navigate refund processes efficiently.
Contact RST today to strengthen your customs strategy before it costs you millions.
Contact us today to schedule a consultation and ensure your business is audit-ready.