ARCHIVED — Vol. 146, No. 13 — June 20, 2012

Registration

SOR/2012-123 June 8, 2012

CUSTOMS TARIFF

“SeaRose FPSO” Repair or Alteration Remission Order, 2012

P.C. 2012-769 June 7, 2012

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 115 (see footnote a) of the Customs Tariff (see footnote b), makes the annexed “SeaRose FPSO” Repair or Alteration Remission Order, 2012.

“SEAROSE FPSO” REPAIR OR ALTERATION REMISSION ORDER, 2012

REMISSION

1. Remission is granted to Husky Oil Operations Ltd., Calgary, Alberta, of the customs duties paid or payable under the Customs Tariff in respect of the “SeaRose FPSO” that was returned to Canada after having been exported in 2012 for repair or alteration.

CONDITIONS

2. The remission is granted on the following conditions:

  • (a) the importer files, as requested, all evidence that is required by the Canada Border Services Agency to determine eligibility for remission; and

  • (b) a claim for remission is made by the importer to the Minister of Public Safety and Emergency Preparedness within two years after the day on which this Order comes into force.

COMING INTO FORCE

3. This Order comes into force on the day on which it is registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issue and objectives

Husky Oil Operations Ltd. (Husky Oil), the operator and majority owner in the White Rose oil field and satellite expansions off the coast of Newfoundland and Labrador, is seeking remission of the duties payable on the reimportation of the SeaRose Floating Production, Storage and Offloading (FPSO) vessel following maintenance and repair work scheduled to be performed in Northern Ireland in June 2012. Husky Oil must refit and upgrade the “SeaRose FPSO” in 2012 to comply with Transport Canada regulations.

The tariff rate applicable to ship repairs performed outside Canada is 25%. Given the lack of adequate repair facilities in Canada, Husky Oil has asked for relief of the duties applied on the repair and maintenance work done abroad on the “SeaRose FPSO.”

Description and rationale

The “SeaRose FPSO” Repair or Alteration Remission Order, 2012 remits an estimated $9.5 million in customs duties payable by Husky Oil on the reimportation of the “SeaRose FPSO” following maintenance and repair work scheduled to be performed in Northern Ireland starting in June 2012. This regulatory-mandated repair and maintenance work cannot be performed in Canada as the vessel is too large for any domestic dry dock facility. When the “SeaRose FPSO” was initially imported into Canada in 2004, the vessel was accorded $73 million in duty remission for its hull and turret, on the basis that the Canadian shipbuilding industry could not construct these components.

The remission of the duties payable on the repairs and maintenance done abroad on the “SeaRose FPSO” will enhance the cost competitiveness of the White Rose oil project and will partially offset the revenues lost during the anticipated three- to four-month period the vessel is out of commission. The measure will have no effect on the Canadian ship repair industry given the lack of shipyard facilities to perform this work.

Consultation

The Shipbuilding Association of Canada was consulted and confirmed that the beam of the “SeaRose FPSO” is too wide to fit into any Canadian drydock.

Implementation, enforcement and service standards

The Canada Border Services Agency is responsible for the administration of and compliance with customs and tariff legislation and regulations. The Agency will administer the provisions of this Order in the normal course of its administration of customs and tariff-related legislation.

Contact

Paul Robichaud
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Telephone: 613-992-2510

Footnote a
S.C, 2005, c. 38, par. 145(2)(j)

Footnote b
S.C. 1997, c. 36