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The U.S. Department of Commerce sent letters to Enterprise Products Partners (NYSE:EPD) and Energy Transfer (NYSE:ET) telling the companies they could load ethane onto vessels destined for China but could not unload the ethane in China without authorization, Reuters reported Wednesday.
The letters, which follow a licensing requirement imposed several weeks ago on the companies’ exports of ethane to China, may signal the Trump administration is preparing to lift the restrictions.
However, the companies are unlikely to risk loading the ethane on vessels and sending them to China, according to the report; if the vessel makes its way to China, it may be difficult to stop its offloading the ethane and the companies could face penalties of up to twice the value of the shipment if they do.
“This letter authorizes Enterprise Products to load vessels with ethane, transport and anchor in foreign ports, even if… to a party located in China,” the letter reportedly said. “However, Enterprise Products may not complete such export… to a party that is located in China” without further authorization.
About half of all U.S. ethane exports go to China, where it is used by the petrochemical industry.