Enterprise Products Partners, a fuel transportation company, has announced that the U.S. government plans to refuse to issue licenses for three batches of proposed ethane shipments to China.
The company, headquartered in Houston, provides midstream energy services to producers and consumers of natural gas, natural gas liquids, crude oil, petrochemical products, and refined products, and is one of the largest midstream companies.
According to a statement issued by Enterprise Products Partners LP, the U.S. Department of Commerce’s Bureau of Industry and Security intends to reject the company’s request to transport three ships of ethane from its dock on the Houston Ship Channel to China. The company has up to 20 days to respond to the notification issued by the U.S. Department of Commerce’s Bureau of Industry and Security on Wednesday (June 4th). These shipments contain approximately 2.2 million barrels of ethane.
Ethane and propane are essential raw materials for plastic production and have become major export products from the United States in recent years, sourced from both oil wells in West Texas and gas fields in the Appalachian region.
Nearly all of China’s ethane imports come from the United States, purchasing about half of the total U.S. ethane exports. According to data from the U.S. Energy Information Administration, last year China imported a record 230,000 barrels of ethane per day from the United States. Ethane is a byproduct of oil and natural gas production, primarily used in plastic manufacturing.
Last week, the U.S. government began requiring some companies to apply for licenses to export ethane to China, leading to tankers waiting near ethane export docks along the U.S. Gulf Coast.
As the largest ethane exporter in the United States, the company reported receiving a notice from the U.S. stating that it needed a license to export ethane products to China. The document stated that the U.S. Department of Commerce’s Bureau of Industry and Security expressed concerns about ethane being used in China’s military-civil fusion strategy.
Enterprise was informed that such exports, re-exports, or transfers within China pose an unacceptable risk of being used for “military end-use” or diverted to Chinese (CCP) “military end-users,” particularly concerning their potential use in China’s military-civil fusion strategy.
The pipeline and liquefied natural gas export company plans to apply for emergency authorization to continue transporting ethane to customers including China, and to apply for new licenses.
China’s largest U.S. ethane buyer, Wanhua Chemical Group Co., Ltd., saw its stock price in the Shenzhen market drop by 3.3% on Thursday (June 5th) before recovering most of the losses. Another major buyer, Satellite Petrochemical Co., Ltd., had its stock price slide by 0.6% on the Shanghai market.
(This article references reports from Bloomberg and The Wall Street Journal)