Qatar's Multiple Energy Facilities Hit Again and Catch Fire, Gas Sector Continues to Rally in Afternoon Trading

Why does geopolitical conflict drive up gas sector stock prices?

On March 19, the gas sector remained active in the afternoon, with TianHao Energy rising over 12%, GuoXin Energy hitting the daily limit, and XinNengTianqi, Shouhua Gas, XinAo Shares, Shenzhen Gas, and others also gaining.

According to CCTV News, on the 19th local time, Qatar Energy issued a statement saying that several of its liquefied natural gas facilities were hit by missile attacks and caught fire early that morning. The fire has now been brought under control, with no casualties reported. The statement did not specify the source of the missiles or other details.

Earlier, on the 18th, Qatar’s Ministry of Defense stated that a missile from Iran struck Ras Laffan Industrial City, causing a fire. This industrial city is located in northern Qatar and is the country’s main liquefied natural gas production base.

Additionally, CCTV News reported that on the 18th local time, Iraq’s Ministry of Electricity announced that natural gas supplies from Iran to Iraq had been completely cut off, resulting in a loss of over 3,000 MW of power on Iraq’s national grid.

The statement said that Iraq’s Deputy Prime Minister and Minister of Oil, who oversees energy affairs, has instructed the acting Minister of Electricity to strengthen coordination to make up for the power shortfall caused by the interruption of natural gas imports. They will ensure diesel supplies, fully utilize domestic natural gas reserves, and minimize the impact of natural gas supply disruptions on power plants within Iraq.

Iranian sources reported on the 18th that some petrochemical facilities in Bushehr Province’s South Pars and Asaluyeh were attacked by the US and Israel. Subsequently, reports indicated that the South Pars phases 3 to 6 natural gas plants were hit by US and Israeli drones.

Tianfeng Securities pointed out that rising natural gas prices and changes in overseas supply benefit upstream targets with gas sources in the natural gas industry chain, allowing them to enjoy the elasticity from price increases. Additionally, midstream companies with flexible, resellable LNG long-term contracts can profit from the price spread by reselling low-cost long-term contracted resources.

Dongwu Securities stated that geopolitical conflicts leading to rising gas prices highlight the importance of resource independence and control. They recommend focusing on resource-endowed companies like Shouhua Gas; also consider XinNengTianqi and Lanyan Holdings. They suggest paying attention to companies with high-quality long-term contract resources, flexible dispatch, and cost advantages, such as XinAo Shares (dividend yield 4.0%), Jiufeng Energy (dividend yield 3.5%), and Furan Energy. Also, consider Shenzhen Gas.

The continued normalization of city gas prices is another focus. Recommended stocks include XinAo Energy (dividend yield 5.5%), with fully priced-in profits for 2024 and a valuation recovery potential reflected in privatization plans; China Resources Gas, Kunlun Energy (dividend yield 4.6%), China Gas (dividend yield 6.5%), Blue Sky Gas (dividend yield 6.0%), and Furan Energy (dividend yield 3.7%). Also, pay attention to Shenzhen Gas and Honghua Smart Energy. (Valuation date: 2026/3/17)