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US EIA cuts ethane forecasts for 2025 and 2026 due to curbs on China exports

The U.S. Energy Information Administration announced on Tuesday that U.S. ethane imports would fall by 24 percent in 2025 while production of shale gases will drop by 4 percent. This was after Washington asked U.S. exporters to obtain licenses for shipping ethane into China, its top buyer. The license requirement already has an impact on exports, as half of U.S. exports go to China. It also raises questions about whether ethane should be extracted from natural gas or left in the stream.

The EIA forecast that U.S. exports of ethane will drop to 410,000 barrels a day by 2025, from an earlier forecast of 540,000 barrels a day. It also said that the output would decrease to 2.8 millions bpd compared to 2.9 million estimated previously.

The government's statistics arm predicted that exports would drop by 51%, to 310,000 barrels per day (bpd), while production would decline by 12%, to 2.7million barrels per day.

EIA's monthly Short-Term Energy Outlook stated that "we reduced our forecast of U.S. ethane for 2025 and 2026, because we expect ethane to not be separated from natural gas without an export outlet."

Ethane can be separated from natural gases by a process known as ethane recover, if the prices of ethane are higher than those for natural gas.

Analysts have stated that if export problems continue, almost all of the ethane exported to China could be kept in the natural gas stream, increasing the volume of gas and reducing the output of ethane. Energy Transfer and Enterprise Products Partners are two of the largest U.S. producers and exporters of ethane. They have said they received letters from U.S. Commerce Department asking them to apply for a permit to ship ethane into China.

Enterprise also said that it received notice from the U.S. Government of its intention to deny urgent requests for three proposed ethane export cargoes totaling approximately 2.2 million barrels towards China.

According to data from ship tracking, at least nine vessels that were originally scheduled to load ethane before sailing to China are either stalled or drifting on the U.S. Gulf Coast.

(source: Reuters)