Varfolomeyev then took the , graduating in 1998. In July 1998 he transferred to the Oscar II-class Orel as assistant commander, then as senior assistant to the commander from April 2000. During this period another Oscar II-class submarine, the Kursk, was in service with the Northern Fleet. In August 2000 the Kursk suffered a series of explosions and sank in the Barents Sea, killing the entire crew. For Varfolomeyev, who had sailed aboard her and had friends on her, the loss was "the most bitter episode". Varfolomeyev was present at the rescue attempts, aboard the hospital ship Svir. In May 2004 he became commander of the Orel, a post he held until September 2007.
