UBS-Midstream Natural Gas Russia-Ukraine War Impacts Both CountriesNat Gas Infrastructure-20251012

<p style="text-indent:28px"><span style="font-size: 14px;">What Happened?</span></p><p style="text-indent:28px"><span style="font-size: 14px;">According to Bloomberg, Russian strikes have wiped out ~60% of Ukraine&#39;s natural gas</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">production in recent days. Russia has ramped up drone and missile strikes in recent</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">weeks, targeting Ukraine&#39;s gas and electricity infrastructure. Naftogaz, Ukraine&#39;s largest</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">national oil and gas company, called the attack &quot;the most massive&quot; strike on gas</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">infrastructure since the war began. The strikes have raised concerns about potential</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">shortages and the need for additional imports. Ukraine&#39;s Energy Minister Svitlana</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">Hrynchuk noted that Kyiv plans to increase nat gas imports by 30% as a result of the</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">attacks. As per Ukraine&#39;s Energy Minister, if strikes continue, expects it will need to buy</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">roughly 4.4Bn cubic meters of gas by the end of March at a cost of €1.9Bn euros</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">($2.2Bn), in order to survive the winter. As per Bloomberg, Ukraine is also seeking</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">financial aid to import gas to cover the production shortfall.</span></p><p style="text-indent:28px"><span style="font-size: 14px;">However, Ukraine has also intensified attacks on Russian energy infrastructure. Whereas</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">Russian forces have targeted Ukraine&#39;s gas production, Ukraine has focused on Russia&#39;s</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">oil refineries, with Ukrainian drones reportedly having hit at least 16 of Russia&#39;s 38</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">refineries since August. Additionally, Ukraine struck the Korobkovsky gas processing</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">plant, the largest nat gas processor in Russia&#39;s Southern Federal District, through an</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">overnight drone strike on October 9th. As per Reuters, Ukrainian President Volodymyr</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">Zelenskyy stated the country&#39;s long-range strikes on Russian energy facilities may have</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">reduced gas supplies in Russia by 20%. An attack earlier this week hit the Kirishi oil</span><span style="font-size: 14px;">&nbsp;</span><span style="font-size: 14px;">refinery, halting one of Russia&#39;s largest crude processing units.</span></p><p><br/></p>