Sinolink Securities: Middle East Gas Equipment Expands with Dual Domestic and Export Demand, "Extraction-Processing-Storage-Application" Chain Goes Global

Sinolink Securities released a research report stating that Middle Eastern countries are accelerating their natural gas industry development. Saudi Arabia and Qatar plan to increase production by 60% and 44%, respectively, by 2030, with large-scale gas field projects underway. The entire industrial chain—from EPC projects to compressors, valves, cryogenic equipment, and gas turbines—is benefiting, with the "extraction-processing-storage-application" chain experiencing robust growth. Domestic equipment and service providers have significant penetration potential in the Middle East market.

Key insights from Sinolink Securities include: 1. **Middle East Gas Expansion**: Saudi Arabia and Qatar aim to boost production by 60% and 44% by 2030, respectively, with major fields like Jafurah and North Field under development. 2. **Demand Drivers**: - **Domestic Use**: 80% of Middle Eastern gas supplies regional demand, with 45% used for power generation (70% of the region's electricity comes from gas). Industrial and hydrogen applications also contribute. - **Exports**: 20% is exported, primarily as LNG from Qatar. Asia-Pacific demand is projected to rise by 32% by 2030, with China and India leading growth at 47% and 60%, respectively. 3. **LNG Expansion**: Qatar, with the world’s lowest LNG production costs, is aggressively expanding output and liquefaction capacity to capitalize on global demand. 4. **Industrial Chain Opportunities**: - **EPC Projects**: Middle East & North Africa’s oil, gas, and chemical project contracts reached $101.2B in 2024, up 112% from 2022. Chinese firms saw a 116.7% YoY increase in contract value. - **Equipment**: Demand for compressors, valves, cryogenic systems, and gas turbines is surging. Global leaders like Enerflex and Chart Industries report strong order growth, while domestic players like Jereh Group are gaining traction. - **Valves & Turbines**: The valve market is expected to grow at a 6% CAGR (2025–2033), with gas-related high-end valves in demand. Gas turbine suppliers like Siemens Energy and GE Vernova are securing major Middle East contracts.

**Investment Recommendations**: Focus on Jereh Group, Zhongtai Gas Equipment, and Yingliu Co. **Risks**: Volatility in oil/gas prices, currency fluctuations, and intensifying overseas competition.