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Investing.com -- The U.S. Department of Commerce has imposed new restrictions on ethane exports to China, sending official letters to major energy companies Enterprise Products and Energy Transfer (NYSE:ET) on Wednesday, as reported by Reuters on Wednesday.
According to the letters, the companies are permitted to load ethane onto vessels headed for China but cannot unload the product at Chinese ports without specific authorization from the U.S. government.
One letter stated: "This letter authorizes Enterprise Products to load vessels with ethane, transport and anchor in foreign ports, even if...to a party located in China. However, Enterprise Products may not complete such export...to a party that is located in China..without further BIS authorization."
The Commerce Department’s action follows earlier notifications that established license requirements for ethane exports to China.
Industry sources indicate the companies are unlikely to risk loading ethane onto vessels bound for China under these conditions. If a vessel reaches China, companies could face difficulties preventing offloading and potential penalties of up to twice the value of the ethane cargo.