U.S. Suspends Ethane Exports to China Over National Security Concerns | Energy Market Impact

On June 4, Enterprise Products Partners stated that it had received notification from the U.S. Department of Commerce of its intent to deny requests for exporting three proposed shipments of ethane to China, totaling approximately 2.2 million barrels.

The pipeline and terminal operator Enterprise said last week that the U.S. Commerce Department required it to apply for an export license to China, which could negatively impact its ethane and butane exports. The company is one of the largest processors of ethane and butane in the U.S.

According to a company filing, the Commerce Department’s Bureau of Industry and Security (BIS) notified Enterprise in a letter two weeks ago that the export of ethane and butane posed an unacceptable risk due to potential military end use in China.

Enterprise noted that it has up to 20 days to respond to BIS's notice regarding the export denial and to submit any comments or rebuttals. Unless BIS informs the company before the 45th day from the original notice, the denial will become a final decision.

Last week, the U.S. ordered numerous companies to halt shipments of goods — including ethane and butane — to China without a license, and revoked licenses previously granted to certain suppliers.

Ethane and butane are liquids separated from natural gas, used to manufacture plastics and chemicals, and also used for heating and cooking.

Chinese petrochemical companies use ethane as a feedstock because it is a cheaper alternative to naphtha. Meanwhile, U.S. oil and gas producers rely on China to purchase their liquefied natural gas due to domestic oversupply.

As disclosed in the Form 8-K filed by Enterprise with the U.S. Securities and Exchange Commission on May 29, 2025, the BIS informed Enterprise on the afternoon of Friday, May 23, 2025, of a new licensing requirement for the export of “saturated ethane and butane with a purity of 95% or higher” to China. This new requirement took effect immediately (the butane licensing requirement was later withdrawn).

Ethane is a major component of natural gas and is used to produce ethylene, the primary raw material for plastics. Thanks to technological breakthroughs brought by the shale gas revolution, ethane has become a major U.S. export in recent years. According to the U.S. Energy Information Administration (EIA), in 2024 the U.S. exported an average of 492,000 barrels of ethane per day, with approximately 227,000 barrels per day going to China — accounting for 46% of total exports.

Reuters analysis noted that China is the main buyer of U.S. ethane, and U.S. oil and gas producers need Chinese demand to absorb their domestic oversupply. BIS’s move will force producers to seek alternative buyers, increasing their costs. According to Fortune magazine, U.S. producers cannot easily divert these ethane shipments to other countries, and U.S. ethane exports may temporarily stall.

"BIS’s decision could disrupt the U.S. ethane market and global flows," said Kristen Holmquist, managing director of analysis at U.S. energy market consultancy RBN Energy. She noted that the specifics of the new U.S. regulations are still unclear, and while short-term disruption is likely, long-term impact could be significant if licenses are not granted or are delayed.