ConocoPhillips (COP), Chevron Corporation (CVX): Peace in the South China Sea Is Vital for the Oil and Gas Industry

If China were to use its military might to shut down shipping lanes, it could conceivably crimp the profits at these facilities. While that’s not a likely scenario, given that China needs access to gas, it is something to watch. The possibility does exist that the country could slow down trade or allow gas only to be shipped to mainland China.

That’s where North American exports could play a role in getting gas to Japan and South Korea. Shell just filed plans to build a $4 billion pipeline and LNG export terminal in British Columbia. The project is a joint venture with Japan’s Mitsubishi, Korea Gas, and PetroChina Company Limited (ADR) (NYSE:PTR). This project is just one of many proposed facilities on the continent to ship cheap North American natural gas to the lucrative Asian export markets.

Overall, I think that tensions in the South China Sea aren’t likely to amount to much more than an occasional dust-up, so this is unlikely to have much of an impact on the global oil and gas trade. China needs access to energy, which is why it’s gone to great lengths to secure its access to energy-related technology and knowledge. Instead, this is something to simply keep on your radar, because if a geopolitical storm does hit the South China Sea, it could be North American exporters that come out ahead.

The article Peace in the South China Sea Is Vital for the Oil and Gas Industry originally appeared on Fool.com.

Fool contributor Matt DiLallo owns shares of ConocoPhillips. The Motley Fool recommends Chevron.

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