Lukoil Has Plan to Boost Profits

Lukoil is planning to cut crude production costs, excluding transport, to between $2.6 and $2.8 a barrel by 2004. "At the moment our costs are at a little over $3 a barrel," Lukoil Vice President Leonid Fedun said in a statement. Lukoil wants to boost its annual net profit by $500 million in the next two to three years.

According to U.S. Generally Accepted Accounting Principles, Lukoil reported a 21% decline in its nine-month net profit to $1.94 billion from $2.46 billion a year earlier. Analysts expect Lukoil's 2001 full-year profit to drop to about $2.8 billion from $3.6 billion in 2000. "In order to cut our costs we also want to shut about 5,000 inefficient wells by 2010, Fedun said. The company currently operates about 25,000 wells, he said. Lukoil is the largest oil producer in Russia with a daily output of 1.6 million barrels, compared with number two oil producer Yukos, which produces 1.4 million barrels per day. Lukoil's market capitalization, however, is $14 billion, while Yukos's stands at $22 billion.