By Arathy Somasekhar

HOUSTON, Aug 6 (Reuters) - Recent U.S. restrictions on

ethane exports to China will likely make it more difficult to

contract with Chinese companies, even though they have already

been lifted, U.S. exporter Energy Transfer ( ET ) said on

Wednesday.

The U.S. placed restrictions on shipping ethane - and a

wide swathe of other exports - to China in late May and early

June after accusing Beijing of slowing shipments of rare earths

vital to automakers and other industries.

The restrictions were rescinded last month, but they

disrupted flows of ethane and caused significant delays to

shipments.

"That, you know, put a little bit of a black eye on us, on

our industry, on our country...," Marshall McCrea, co-CEO of

Energy Transfer ( ET ), said in a post-earnings conference call.

The company is one of the top U.S. exporters of ethane, a

natural gas liquid.

"We think it's going to be probably a little bit more

difficult to contract with Chinese crackers, good or bad, we

think that they're probably going to be a little bit more

hesitant," McCrea added.

About half of U.S. ethane, which is extracted from shale

gas, heads to China where it is run through crackers to produce

ethylene, a building block for plastics.

Chinese petrochemical firms use ethane as a feedstock because

it is cheaper than naphtha, while U.S. oil and gas producers

need China to buy their natural gas liquids as domestic supply

exceeds demand.

Rival Enterprise Products Partners ( EPD ) also warned last

week that the export curbs compromised the U.S. brand for

reliable supply and energy security.

"These kind of actions rarely hurt the intended target and

often backfire hurting our own industry more," said Jim Teague,

CEO of Enterprise Products ( EPD ).

Enterprise said at least one non-Chinese company that it was

in discussions with about contracting ethane decided to contract

naphtha instead.

Energy Transfer ( ET ) reported a 11.5% decline in net income to

$1.16 billion, or 32 cents per unit, in the three months ended

June 30. Revenue of $19.24 billion came in well below estimates

of about $22 billion, according to LSEG data.