Nonresident Scholar Carnegie Russia Eurasia Center
Sergey Vakulenko is a nonresident scholar at the Carnegie Russia Eurasia Center. He has twenty-five years of experience in the oil and gas industry as an economist, manager, executive, and consultant, including Royal Dutch Shell and IHS CERA. Until February 2022, he served as head of strategy and innovations at Gazprom Neft.
If the scale of Ukrainian drone attacks is maintained at the levels of March and Russian air defenses do not improve, Ukraine will be able to keep damaging Russian refineries faster than they can be fixed, slowly but steadily eroding the country’s refining capacity.
Extending the transport of Russian gas via Ukraine after 2024 would likely benefit both Russia and Ukraine. Stopping the flow of gas, on the other hand, would be painful for whichever side initiates it.
The state has taken an ever-greater role in Russian energy markets in recent years, and the system for regulating domestic fuel prices has become more and more cumbersome. The war in Ukraine has shown both that the system is no longer fit for purpose, and that a government filled with technocrats is unable to see the forest for the trees.
Building the Power of Siberia 2 gas pipeline from Russia to China is a rational decision that would have made sense even before the war, but the project will never be able to replace Russia’s decimated gas trade with Europe.
Russia is now in a far worse negotiating position than in 2014. Finding itself at the mercy of a monopsonist buyer, there is very little it can actually do.
Russia’s war against Ukraine has many fronts, not least energy. And as with the Kremlin’s plans for a swift victory in Ukraine, both sides in the energy conflict have seen their dreams of rapid triumph collapse amid grinding and attritional trench warfare.
Podcast host Alexander Gabuev and Sergei Vakulenko, a new non-resident senior fellow at the Carnegie Endowment, discuss the energy dimension of the ongoing battle between Russia and the West.