Energy Infrastructure Takes a Front Seat in Ukraine-Russia Ceasefire
Plus Israel expands its natural gas resources as a strategic asset, the US launches a renewed military campaign against the Houthis, and key takeaways from the 2025 CERAWeek Energy Conference.
This week, we examine the first potential ceasefire agreement between Russia and Ukraine centered on energy infrastructure, as well as the implications of a renewed United States military campaign against the Houthi militia and its broader effects on Iran. We also explore Israel’s expanded natural gas exploration as it continues to position itself as a regional energy hub. Finally, we highlight the key themes coming out of the world’s “Super Bowl of Energy” conference, CERAWeek.
Russia Agrees to Energy & Infrastructure Ceasefire
DRIVING THE NEWS: On a call Tuesday with President Trump, Russian President Vladimir Putin agreed to a 30-day “energy and infrastructure ceasefire” in the war with Ukraine. Agreement from Ukraine remains uncertain but expected (NY Times, Reuters).
The agreement falls short of the broader ceasefire sought by the US and Ukraine, allowing Russia to continue attacking other civilian infrastructure in the country.
THE CONTEXT: Since the start of the war, Russia has specifically targeted energy facilities and other critical infrastructure as part of its aggression, intensifying its strikes in the spring of 2024.
Over 2022-2023, roughly half of Ukraine’s power generation capacity and large-scale network substations were either damaged or destroyed, leading to regular power deficits and blackouts lasting up to 12 hours or more. The spring 2024 offensive further reduced capacity by an additional 9 GW, leaving only one-third of the country’s pre-war capacity operating (IEA, UN Ukraine).
Meanwhile, Ukraine has also undertaken strikes on Russian oil and gas infrastructure beyond its border, seeking to disrupt an industry that provides a key source of revenue to the Russian state
WHY IT MATTERS: If the energy infrastructure ceasefire is agreed upon and implemented, it will be the first suspension of attacks since Russia invaded in 2022—a potential first step toward a longer and more durable peace agreement.
THE INTRIGUE: Also back in the mainstream conversation is the Zaporizhzhia nuclear power plant, which was captured by Russia in the early stages of the invasion and has been a major source of concern for the IAEA and the international community due to the risk of a potential nuclear accident (Reuters 2022).
Prior to the war, the six-reactor plant had served roughly 20% of Ukraine’s electricity. Ukraine now claims its recovery is critical to powering the mineral extraction operations that the US is seeking (NY Times).
LOOKING FORWARD: The two sides still have a long way to go in peace negotiations, which are expected to continue in Saudi Arabia. These discussions remain complex, with key issues including:
For Russia: Putin reportedly is not ready for an unconditional ceasefire, according to the Kremlin (Axios). Any longer-term peace deal would depend on halting all foreign military aid and intelligence sharing with Ukraine, as well as the permanent ceding of territory.
For Ukraine: President Zelensky and other senior officials have outlined several “red lines” that they are unwilling to compromise on, including the return of thousands of children and civilians held by Russia, international security guarantees, rejection of Russian sovereignty over occupied Ukrainian land, and a commitment to maintaining the current size of Ukraine’s armed forces (The Independent).
DIVE DEEPER: The United Nations Human Rights Monitoring Mission in Ukraine has a detailed and interactive report covering Russian attacks on Ukrainian energy infrastructure.
Israel Advances Expansion of Natural Gas Development
DRIVING THE NEWS: Israel has awarded its latest offshore natural gas exploration license to a joint venture between BP, the State Oil Company of Azerbaijan (SOCAR), and Israeli firm NewMed Energy (Reuters).
The license covers exploration in the Leviathan gas field—which contains an estimated 22 trillion cubic feet of gas—located in Israel’s economic waters for an initial period of three years.
THE CONTEXT: Israel is working to expand both its domestic gas reserves and exports, with Energy Minister Eli Cohen explaining, “Natural gas is a strategic asset that strengthens our economic and diplomatic standing worldwide, particularly in the Middle East.”
The country has substantially increased its exports since 2020, reaching nearly 47% of its total gas production (IEA), and has confirmed that additional licenses will be granted with another round of bidding planned for later this year.
THE GEOPOLITICS: With Europe still working to secure alternative supplies to replace Russian gas, Israel is actively positioning itself as a regional energy hub committed to selling gas to European countries.
In 2022, Israel, Egypt, and the European Union signed a memorandum of understanding to supply gas to the bloc (Israeli Ministry of Energy and Infrastructure and European Commission).
The new license also highlights Israel’s deepening economic relationship with Azerbaijan, a strategic ally that borders Iran and which Israel has supported militarily during its recent conflicts (The Times of Israel).
LOOKING FORWARD: Israel will need to balance growing its gas exports with rising domestic energy needs. The government is currently reviewing its export policy, with recommendations expected in the coming weeks.
AT THE SAME TIME: Other countries are taking steps to expand LNG export capacity globally.
TotalEnergies’ Mozambique LNG project—which was halted in 2021 due to attacks from Islamist insurgences that caused the company to declare force majeure—has been revived with a new $4.7 billion loan from the US Export-Import Bank (Financial Times).
The Trump Administration has also renewed support for a conceptual Alaska LNG pipeline and liquefaction project, with Alaskan officials planning trips to Japan, South Korea, Taiwan, and Thailand to seek investors (Reuters, Alaska Public Media)
THE LARGER PICTURE: The global resurgence of natural gas contradicts climate science, which shows that gas and other fossil fuels must be phased out to limit warming and reduce the associated physical risks. This underscores the tension within the often-cited energy trilemma, as countries around the world prioritize energy security and affordability at the expense of environmental sustainability.
US Launches Renewed Campaign on Houthi Militants
DRIVING THE NEWS: Over the weekend, the US conducted a campaign of airstrikes against the Houthis in Yemen, with President Trump stating, “We will use overwhelming lethal force” against the group (Foreign Policy).
THE CONTEXT: The Houthis—a militia group backed by Iran and with reported procurement networks in China and Russia—have been launching attacks against commercial vessels in the Red Sea since October 2023, claiming the attacks are in response to Israel’s war in Gaza (Atlantic Council).
The group has proven highly resilient to US-UK-led airstrikes over the last year, aided by its dispersed military assets across Yemen that make it difficult to target key locations.
THE ENERGY ANGLE: The Houthis’ strategic location on the edge of the Red Sea gives them the ability to disrupting international shipping through one of the world’s busiest corridors, increasing shipping costs as companies search for alternative routes (such as rerouting vessels around the Cape of Good Hope, which can add weeks to a journey).
The Houthis have also targeted energy assets in Saudi Arabia and the United Arab Emirates over the years, escalating their conflict with a Saudi-led coalition that has carried out continuous strikes against Houthi targets from 2015 to 2022.
The militia group recognizes that disrupting oil prices is a strategic lever against the US and other adversaries, providing a way to destabilize global markets.
Crude prices temporarily spiked following the news of US strikes on Saturday, only to drop back down under broader macroeconomic pressures (e.g. weakening economic outlooks, the global trade war, etc.) (Euronews).
THE GEOPOLITICS: The Houthi conflict is increasingly entangled with China and Russia’s broader strategy in the region, while also increasing the risk of wider regional escalation.
China and Russia have both deepened ties with Iran in recent years, challenging US influence in the region and calling for an end to US sanctions while maintaining close energy and defense ties with Tehran (Carnegie Endowment, fall 2024).
Retaliation beyond the Red Sea remains a risk, with potential escalation drawing in Iran-backed groups in Lebanon, Iraq, or Syria, further destabilizing an already volatile region.
LOOKING FORWARD: In addition to military action, the US will need to engage in diplomatic talks with China and Russia to weaken the Houthis’ position. The Trump Administration is also actively seeking to revive a nuclear agreement with Iran (which President Trump withdrew from during his first term), adding complexity in dealing with Iran’s self-named “Axis of Resistance” of which the Houthis are a key part (AP News).
CERAWeek Takeaways on Energy & Geopolitics
DRIVING THE NEWS: Last week’s CERAWeek Conference by S&P Global was the largest gathering of energy leaders, policymakers, thought leaders, advocates, and professionals in the world, providing a pulse on today’s global energy sector. Key themes included:
US Takes a “180 degree pivot” on Energy: US Secretary of Energy Chris Wright delivered a keynote address touting the Trump Administration’s reversal of key energy and climate policy initiatives instituted by the Biden Administration. Wright was dismissive of renewable power as insignificant, instead highlighted the role of natural gas. He stated, “beyond the obvious scale and cost problems, there is simply no physical way wind, solar and batteries could replace the myriad uses of natural gas” (NY Times). He also reinforced his argument on the moral case for fossil fuels in addressing global poverty, a sharp contrast to the previous administration’s view that continued use of fossil fuel would drive negative consequences from longer-term climate change.
Oil and Gas vs. the Trump Administration: While calls of “drill, baby, drill” from the White House may seem favorable for O&G companies, a growing rift is emerging as energy companies navigate lower economic growth, trade tariffs, the President’s goal of reaching $50 per barrel of oil—a price so low it could trigger serious business challenges and even bankruptcies.
“Energy Realism” and “Energy Pragmatism”: These were the dominant buzzwords at CERAWeek, describing a shift in the energy transition as low carbon strategies slow and traditional energy sources return to center stage to meet rising demand in both developing and developed economies. This trend began even before Trump took office, as demand growth accelerated, but is now being leveraged by the energy industry to justify expanding oil and gas development (Columbia Energy Exchange).
LNG and Natural Gas: Secretary Wright made a point of formally approving the newest DOE authorization for an LNG export terminal at the conference, highlighting gas’s central role in the global energy conversation. While there is some concern about the potential resumption of Russian piped gas imports to Europe and its impact on global LNG suppliers, the industry is largely bullish on its role addressing energy security concerns worldwide. Many countries also see purchasing US LNG as a strategic tool to adjust their trade balances with the US (S&P Global).
Cleantech Shows Up: Despite headwinds for the cleantech industry, over 250 cleantech startups were present at the Agora (an adjacent event to CERAWeek). Challenges vary by technology, but as Ben Geman from Axios summarized: Geothermal is up, hydrogen is down, nuclear is up, wind is down, solar is up. The latest industry catchphrase for the is an “all of the above” approach, in which renewables and other cleantech are pushing to be included in the next “pragmatic” chapter of the energy transition.
Policy Continuity: Amidst all of the US policy changes, a growing coalition of industry leaders and Republican lawmakers is defending aspects of the Inflation Reduction Act, particularly tax incentives for technologies such as carbon capture. While electric vehicle and wind tax credits are a key target for cutting by the Trump Administration, the fate of other incentives remain more uncertain.
Power Crunches: The power supply crunch is here, as new demand continues to outpace new generation. Natural gas is helping fill the gap, but gas turbines shortages, high costs, and interconnection challenges are limiting progress. As NextEra President & CEO John Ketchum put it, “Demand is here now. We need generation available to meet that demand, or we’re heading for an affordability crisis” (CTVC).
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