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  • September 6, 2008 03:09 PM EDT by Brian Sullivan

    Lukoil's Sub-$5 Buck Oil

    We know that oil producers around the globe are making big profits with crude trading above $100 per barrel.   What we didn't know - until now - was exactly how much.   The numbers are staggering.

    Friday we interviewed Lukoil's (LUKOY) Head of Business Strategy, Andrei Gaidamaka.   I asked him what Lukoil's cost-per-barrel is, not expecting an answer.   But we got one.   And that answer was $4.30.    Let's repeat: 4-dollars and thirty cents per barrel.    Admittedly that doesn't include transport or taxes (the Russian government takes its own huge "windfall" profits tax at anything above $30 per barrel), but to think that its cost is below $5 a barrel is truly incredible.

    Given this, and that Lukoil's efficiencies are nowhere near Saudi Aramco's (and probably a higher cost of labor as well), its feasible to believe that Saudi producers have costs below $2 or $3 bucks per barrel.   They could be making more than $100 a barrel in profit.    Staggering.

    The Lukoil interview is below:

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monkeyfurball

A TRAVESTY of monumental proportions. We need natural gas powered cars in the USA and we need them now.

September 6, 2008 at 6:39 pm

Lex

This is another sensationalist headline that betrays complete carelessness with the subject matter. That is just lifting cost. You cant subtract that from the market price to find profit. There are many other costs that reduce the profit to something like 15-30% that is characteristic of boom-time profits in any industry. Look at pharmaceutical profits, for example. The other cost are: transporting oil from siberia to a market (europe, us, asia), overhead, investment in new field exploration and development (R&D) etc. Russian government oil taxes change with the market price and are designed to leave a company no more than $20-25 in gross profit. Be a little more responsible with your reporting - you are misguiding people.

September 8, 2008 at 11:44 am

Dennis Butler

Any way you cut it, if that was U.S. oil we would be pumping billions in to our economy.

September 8, 2008 at 1:18 pm

about this blog

  • Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.

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