Ethane Exports by Enterprise Denied by BIS

After dodging the huge tariffs on exports of U.S. LPG and ethane to China — at least until August 12 — a new wrinkle has emerged. Enterprise Products Partners said in a filing May 29 that the U.S. Bureau of Industry and Security (BIS) has flagged its exports of butane and ethane to China as a security risk; specifically, that they pose an “unacceptable risk of use in or diversion to a military end use.” Details about the licenses and how they will apply are limited at this point, but it appears they will be required for these exports to continue. In today’s RBN blog, we examine the potential impact on the ethane and butane markets. 

The details of a trade deal between the U.S. and China, announced June 26 by Commerce Secretary Howard Lutnick and confirmed by China, remain sparse. Once they are finalized, the requirement for U.S. exporters to obtain a Bureau of Industry and Security (BIS) license to send ethane to China should be lifted, but the effect on trade flows is already apparent. In today’s RBN blog, we review the impact of the BIS license requirement, the still-pending imposition of fees on vessels owned or operated by China, and the risk that comes with using the energy industry as a bargaining chip in trade talks.