Costs battle continues for Lukoil. (Companies).

Lukoil's 2002 third-quarter profits jumped by 7.2pc to $507mn. But Russia's largest oil producer still faces a big challenge to cut costs and win over sceptical investors.

The firm's third-quarter operating costs of $1.43bn were barely changed from the same period in 2001, when Lukoil was heavily criticised as one of the most inefficient oil firms in Russia (FSUE, 22 February, p2). This led to an 4.43pc drop in its share price to $13.81.

The gap between Lukoil and its peers has shown little sign of closing over the past year, despite the firm's launch last April of a major restructuring plan (FSUE, 26 April, p11). "Production costs are still higher than their …