Russia urgently needs to develop
new markets for its oil and gas companies, with Western sanctions
cutting into the backbone of its economy. It’s relying on a 37-year-old former
Morgan Stanley banker to keep profits flowing.
Pavel Sorokin, Russia’s deputy energy minister, is part of a cadre of young technocrats with deep knowledge of the West, fast-tracked
by Vladmir Putin to the upper echelons of power. Mr. Sorokin, who studied finance in London, has negotiated deals in Africa and the Middle East. He played an early role in the development of
OPEC+, the partnership between Russia’s oil industry and the Saudi-led Organization of the Petroleum Exporting Countries.
Last year, he was influential in exaggerating the impact of damage to the Russian-controlled pipeline to the Black Sea, a move that spooked the West and pushed oil prices higher, according to his former press secretary and a former journalist at Russia’s state-run news agency.
Mr. Sorokin, Russia’s energy ministry and the Kremlin didn’t respond to requests for comment.
Last month, Mr. Sorokin was instrumental in setting fixed prices on Russia’s main oil export, the Urals grade, instead of letting markets decide how much companies charge, said people familiar with the matter. The decision is expected to draw $8.2 billion in taxes to the country’s cash-strapped treasury.
Mr. Sorokin and his cohorts have thus far navigated the sanctions in a way that has left Russia under severe economic strain—but not yet incapacitated. That task will only get more complicated as the longer-term effects take hold, but analysts say they’ve defied expectations through the
Ukraine war’s first full year.
Mr. Sorokin has become Russia’s “secret weapon” in blunting the impact of the West’s sanctions, said Viktor Katona, the lead crude analyst at commodity-data company Kpler. He said he believes many Ukraine allies underestimated the expertise of the Kremlin’s new generation of Western-trained decision makers. Mr. Putin, long surrounded by former spies and business friends from St. Petersburg, has increasingly turned to these newcomers, who speak fluent English and adhere to his nationalist ideology.
An oil refinery at sunset in Omsk, Russia, last month.
Photo: ALEXEY MALGAVKO/REUTERS
Mr. Sorokin “is the epitome of something that didn’t exist in the Soviet Union,” Mr. Katona said. “He is part of a new breed of young people who had choices” and decided to work in the Russian government.
The war in Ukraine scrambled global energy markets and longtime alliances. Russia, which once counted Europe as its most lucrative energy customer, now sends much of its production to India and China, which typically buy it at steep discounts to market prices. In part because of those discounts, Russian oil and natural gas revenues fell 46% in January from the same month last year, according to data from the Russian Ministry of Finance.
To make up for that lost revenue, Russia needs to cultivate new trading partners. Mr. Sorokin and his associates are showing some success: Russia exported more than 8 million barrels of oil in January, according to Kpler—one of the top five months on record and a level not reached since April 2020, though it is typically selling at a discount of around $30 a barrel.
Mr. Sorokin’s outreach included a September trip to the Congolese capital of Brazzaville, where he emerged from a 20-hour flight to be greeted by the country’s president.
Over two days, often while seated on golden chairs amid the pilasters and palm trees of the colonial-era presidential palace, Mr. Sorokin hammered out a deal for Russia to supply oil products to the Republic of Congo and for two Russian companies to build a 625-mile, $850 million pipeline, according to a document seen by The Wall Street Journal and current and former officials briefed on the visit. The Congolese oil ministry and the government in Brazzaville didn’t return requests for comment.
Mr. Sorokin, second from right, at a meeting with OPEC+ countries in 2019.
Photo: mladen antonov/Agence France-Presse/Getty Images
The previous month, he met a delegation from Afghanistan, now run by the Taliban, the fundamentalist group whose forebears once fought the Soviet Union. Mr. Sorokin was nonplussed when the Afghans offered to trade raisins and herbs for fuel, said a former aide who was briefed on the meeting. The Taliban government and Kremlin later unveiled a deal to supply Kabul with Russian gasoline. The Afghan ministry of trade and industry didn’t return a request for comment.
Mr. Sorokin also held talks with Bahrain for the small Persian Gulf kingdom to become a hub for trading oil supplied by Russian companies, said people familiar with the matter. Customs records show that some of the Kremlin’s oil transactions were handled in the country last year. The Bahraini government didn’t return a request for comment.
A new regime
Inside the Kremlin, other rising officials include Russia’s 39-year-old deputy finance minister, Alexey Sazanov, who was educated at Oxford and worked with Mr. Sorokin at Ernst & Young in Moscow. Along with Mr. Sorokin, he now plays a key role in finding ways to plug Russia’s fast-expanding deficit.
Denis Deryushkin, a former Bank of America analyst, became the energy ministry’s head of research at age 29, representing Russia at OPEC advisory meetings designed to help maximize oil prices.
Mr. Putin’s most influential economic adviser, Maksim Oreshkin,
who got the job at 38, previously worked for French bank Crédit Agricole. He led a successful strategy to push foreign companies to buy Russian natural gas in rubles, rather than in dollars or euros, to bypass sanctions.
Russia’s Deputy Finance Minister Alexey Sazanov last year.
Photo: Sergei Fadeichev/TASS/Zuma Press
Mr. Sorokin was born in Moscow but raised in Cyprus in a family of Russian diplomats. He moved back to Russia to start his professional career as an accountant at Ernst & Young. He became a senior analyst at age 26 at Alfa-Bank, Russia’s largest private bank, before a brief spell getting his master’s of finance at the University of London.
He later moved on to Morgan Stanley’s Moscow office. In 2015, a ranking by Extel and Institutional Investor named him as one of the top analysts in the oil and gas sector for Russia and countries in Europe, the Middle East and Africa.
A Morgan Stanley spokesman declined to comment.
As a young banker, he was seen as both a rising star and an unassuming colleague who regularly had lunch at a local Ukrainian eatery and dinners at upmarket Asian-fusion restaurants, said people who knew him at the time. But he also stood out with conservative, hawkish views on Russian politics, they said. A former colleague said he was critical of Russia’s political opening in the 1990s. “He wanted to make Russia great again,” said another former colleague.
Political rise
In 2016, Alexander Novak, then Russia’s energy minister and now deputy prime minister, poached Mr. Sorokin from the Wall Street bank and put him in charge of his group’s energy research center.
Mr. Sorokin built a rapport with the famously frosty Mr. Novak. The latter started to address him by his nickname—“Pasha,” short for Pavel—and frequently invites him to barbecue outings at his dacha outside Moscow, according to people who know them.
Mr. Sorokin soon became a fixture at diplomatic events by accompanying Mr. Novak as a translator. He was easily recognized by his boyish bob, and his English skills earned him another nickname, “the interpreter.”
He also built an enduring friendship with Adeeb Al Yama, a longtime adviser to Saudi energy ministers, as well as the late OPEC chief Mohammed Barkindo. Mr. Al Yama didn’t return a request for comment. In part by building on those relationships, he helped Mr. Novak plan an alliance with the Saudi-led OPEC that led to the creation of OPEC+ in 2016, in which Russia got a bigger voice in the global oil market. The coalition shortly thereafter approved a production cut that successfully boosted prices.
During a meeting in 2018, Mr. Putin asked Mr. Sorokin what he was doing for the government. “A large project we have been working on recently is the agreement to limit production between Russia and OPEC countries,” he responded, according to the Kremlin’s transcript of their conversation.
“It is time to promote you,” the Russian president said. Within days, Mr. Sorokin was appointed deputy energy minister.
Mr. Sorokin has been adamant about his patriotism. “For all my life, when I was a child, I lived and went to school abroad. And I always knew that I wanted to go back to my homeland,” he told Mr. Putin, according to the Kremlin transcript.
The deputy minister has also spearheaded moves to modernize the country’s energy sector, recently launching motor-fuel stations powered with natural gas—of which Russia has the world’s largest resources—and a national plan to reduce energy consumption.
Mr. Sorokin, left, with Russia’s Deputy Prime Minister Alexander Novak, center, in 2021.
Photo: Ramil Sitdikov/TASS/Zuma Press
Information campaign
Soon after becoming deputy minister, Mr. Sorokin hired Arsenii Pogosyan, then a 27-year-old journalist, to handle his public relations.
Mr. Pogosyan left Russia after he learned he was to be called to the front line in Ukraine in late September, and has since defected.
The former press chief said Mr. Sorokin stood out in the career bureaucracy with his Westernized habits—snacking on sliced pineapple and celebrating with a glass of whiskey instead of vodka—and his private sector-style embrace of public engagement. “He wanted to go on YouTube and he would respond to press queries within an hour. It was thrilling,” Mr. Pogosyan said.
As tensions mounted between Russia and the West, Mr. Pogosyan said, Mr. Sorokin became less approachable, either refusing to respond to press queries or taking hours to issue statements.
One evening in March last year, the Russian-controlled Caspian Pipeline Consortium notified the ministry that its facility had been damaged by a storm. The pipeline exports 1.2 million barrels a day of Kazakh crude through a Russian port in the Black Sea, the bulk of which is pumped by
Chevron Corp. and
Exxon Mobil Corp. , which hold a minority stake in the export route. Chevron declined to comment. Exxon Mobil didn’t return a request for comment.
The consortium said the incident stemmed from the “displacement of the power frame of one of the floating hoses” and had caused no significant disruption, the state-run news agency TASS reported at the time.
Mr. Sorokin started the public response at the Russian energy ministry and helped turn the incident into a global event, according to Mr. Pogosyan and Iuliia Khazagaeva, who ran energy coverage at TASS. She has since left Russia and spoken out against the war.
Mr. Pogosyan said he came to Mr. Sorokin with a draft statement outlining the incident. After speaking with the Kremlin, Mr. Sorokin said it wasn’t tough enough, according to Mr. Pogosyan.
Mr. Sorokin repeatedly asked for edits to a videotaped message over the next 12 hours to make it increasingly alarming, his former press aide said. Paragraphs of context over the potential scope and impact of the disruption moved up from the bottom to the top of his statement.
“The Kremlin wanted the West to stay on the edge,” said Mr. Pogosyan. Russian media picked up the messaging.
Ms. Khazagaeva said that after she was initially informed the episode was relatively minor, her editors ordered her to emphasize a set of talking points playing up the risk of prolonged disruptions to the U.S., Chinese and European markets. Her editor in chief sent her an email telling her to reach out to Mr. Sorokin, among others, for comment.
TASS didn’t respond to a request for comment.
Pipeline operator CPC, which referred a request for comment to its past public statements, said at the time that two of three of its offshore loading points had been damaged by the storm and would require two to four weeks to repair.
On Russian state television, Mr. Sorokin warned the breakdown would require up to two months of repairs, with the loss of exports of up to one million barrels a day. International oil prices immediately rose by 5%.
Within two days, loadings from the terminal had restarted, Kpler data shows. CPC announced a return to full capacity within a month.
—Summer Said contributed to this article.
Write to Benoit Faucon at
benoit.faucon@wsj.com
