In recent results, Yukos posted a $ 3.47 Billion net income, from gross revenues of $ 9.81 Billion. That is 65% higher than Lukoil's net income of $ 2.109 Billion. Meanwhile, you are making a net profit of $ 8.18 per barrel compared with Lukoil's $ 3.69 per barrel. So what is the secret of your profitability in comparison with Lukoil's, and how have you achieved this? Has it been through technology, has it been through rationalising, or a combination of many different aspects?

It is difficult for me to make a head to head comparison with Lukoil because I do not have their numbers and can not do a side by side comparison. What I can tell you is why I think our profits are relatively higher compared to other companies in the industry.

First is the cost of production. We were able to reduce our production costs and to keep them low. We are not doing anything unusual; just using standard, well-known technologies. But we do implement them in a big way.

Second, we have kept our capital investments for increasing production down, through the kind of modelling that we use for our oil fields. Production from each single new well is up, water cut is down and average productivity per well is also up.

But the key component for any Russian company remains transportation costs and markets. Our marketing arm is able to maintain exports at a high level, and the fact that we have opted for a strategy of negotiating long term contracts has given us the opportunity to acquire some very attractive segments of the market.

To what extent are you reducing your transportation costs through mergers and acquisitions in Central and Eastern Europe?

You can not easily reduce transportation costs that way, because you would find yourself in violation of antimonopoly legislation. What such acquisitions do is allow us to expand the markets for our crude. For example, Lithuania's ??žeikiai Nafta AB, of which we are acquiring 26,85 %, has signed a contract with us to buy a substantial portion of their crude from us over a significant period of time; we are also getting access to their port facilities. Likewise, the acquisition of 49% of the Slovakian pipeline company Transpetrol a.s. lets us increase the amount of crude we can ship to Germany.

This is all fitting in nicely with the huge chess game that is taking place between the United States, the European Union and the Middle East. How can you take advantage of this momentum and establish a new strategy to forge alliances with the West?

We understand that energy is a very sensitive topic in today's economy. Right now, Russia accounts for 21% of Europe's oil imports. We are well aware that in order to gain additional market share - say, to increase it to 50% of European consumption - the European consumer has to develop trust in us as a supplier.

What can we do to achieve this? First, we can - and indeed we are - making the company transparent. Second, we need to make the Russian legal framework more stable and predictable - and there has been quite a bit of progress made in this area already. Third, we believe that two-way investments create more mutual interest and trust: we can invest in European downstream, while European companies can invest in Russian upstream.

I often read in the media that the Russian oil sector is in dire need of foreign investment. I will agree that we need foreign investment, but not for the money. And not for the know-how, either. Know-how can be bought: you just pay the money and you get whatever know-how you need.

No, we need foreign investment in order to build mutual trust. Allow me to illustrate. One of our large customers is a Hungarian company, MOL Rt. They said that they would like to have their own piece of upstream in Russia. I do not need their investments. And as far as upstream know-how goes, we probably have more than they do. But nonetheless, I am glad to work together with them on one of our fields, because this creates a mutual interest between my customer and me.

In your youth, in 1987, you founded a cooperative called the Youth Scientific-Technical Creativity Centre, which traded in computers, among other things. Today, is the e-economy an area you might be looking at more closely?

It is unlikely that I would go into a completely new field at this point in my life. After all, I am playing in the big leagues already. If you are a minor leaguer and you are playing basketball and suddenly you opt for football, you might be able to pull that off. However, in the big leagues, that's just not a realistic option.

As far as my involvement in information technology, that falls under the category of philanthropic work. We are providing the children living in the regions where we operate an opportunity to work with computers. And we are giving young people a chance to gain new job skills in a new field. But that is not our line of business; we hire a special company to do this and we just provide them with financing.

Because we live in a global village, how do we bring together the people of Siberia with those in Silicon Valley?

It is perfectly evident that the era of globalisation will diffuse the nation state. It is clear that although the nation state will continue to have influence in the cultural arena and the social arena, global business will force it to become more global. We see this happening in Europe, and we see it in recent actions by the American government. This is the mainstream current. It may not happen overnight, and there will no doubt be some backsliding, but if we are looking at a 50-year time horizon, then there is no question that there will be a diffusion of the nation state.

Regarding the people of Siberia and the people in Silicon Valley, video conferencing on a global scale no longer raises any eyebrows today, nor do phenomena such as global groups meeting on the internet or employees working at home for a large corporation without ever coming to the office…

Do you see yourself as a venture capitalist in the near future?

When I retire from the company and will be looking for something to keep me busy, obviously one thing I might do is spend my time figuring out how to invest my money. But I hope that this is still quite a long way off! And right now, I certainly do not have the time to worry about allocating my money, so I have put it all into a trust fund managed by one of my colleagues.

I have studied the phenomenon of Virgin and Richard Branson, where there is a direct association of Virgin with the personality of the CEO, which in turn boosts the confidence and image of the company. It seems that the same is happening with Mikhail Khodorkovsky and Yukos - would you agree?

The heart of any oil company is, of course, its oil fields. But it is true that there is a habit in Russia to associate large companies with their heads. One of my challenges is to put together a team that is capable of running things without me, and I think I have succeeded better at this than some others have. I certainly would not like to see our share price take a nosedive or skyrocket the day I leave the company!

What final message would you address to our readers?

I personally believe that Russia, and especially Siberia, is like a young, new America. It is the America of 100-150 years ago, with all the problems that existed then, but with the same opportunities too.

There is risk… and there is reward. In the European part of Russia, there is less risk (especially Moscow, where doing business is practically the same as in Europe), but there are fewer opportunities as well. But the further you get from Moscow, the higher the risk and the greater the opportunities. Those who would choose a safe life should invest their money in Europe, while those who prefer to live a little more dangerously can put their money in America. But if you have a fire in your heart, and want to do better than your parents did, then you should definitely invest in Russia. And not just money - you can invest your time and your brains as well. And if you are lucky, you will be richly rewarded.