Orlen SA
PSE:PKN
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Earnings Call Analysis
Q3-2023 Analysis
Orlen SA
Orlen Group reported robust financials for Q3 with PLN 75 billion in revenues and an EBITDA LIFO of PLN 8.2 billion. Cash flow from operations was strong at PLN 7.2 billion, and substantial investments were made evident from the PLN 7.9 billion in CapEx spending. The company maintained a healthy net cash position of PLN 1.3 billion. The quarter also saw strategic moves including a financial investment decision for the first offshore wind farm, entry into the Austrian fuel market with the purchase of 266 fuel stations, and various partnerships and agreements in renewable and synthetic fuel initiatives.
Sales volumes decreased across several product lines with a 2% year-on-year decline in total sales volume. Diesel sales were down by 5%, and heavy fuel oil experienced a notable 11% decline, although gasoline and jet fuel did see increases of 10% and 19% respectively. Crude oil throughput was high although slightly lower year-on-year due to a reduction in consolidated throughput from 100% to 70%. The petrochemical segment faced a loss due to a weak macro environment, with major product sales such as Olefin and PVC showing declines. The energy segment was affected by both positive and negative macroeconomic factors, but ultimately reached an EBITDA of PLN 1.3 billion, thanks to contributions from the Energa Group and consolidation of PGNiG Group results. Upstream operations were impacted by significant decreases in hydrocarbon prices, contributing to a lower EBITDA for the segment.
The Orlen Group felt the impact of a shifting energy market with gas prices for enterprises dropping by 30% in September compared to June 2023. This along with an 84% year-on-year decline in prices on the Polish power exchange and lower natural gas prices from upstream to gas segment operations influenced overall segment results. Gas distribution volumes remained level year-on-year, while gas storage levels were comparable to the previous year at 99%.
Orlen Group reported a net operating cash flow of PLN 7.2 billion for the quarter. This was accompanied by PLN 10.5 billion in cash flow from investments, dominated by CapEx and CO2 allowances purchases. The company has increased their net cash position by PLN 1 billion over 9 months while maintaining a net cash position of PLN 1.2 billion by the end of Q3, even after significant outflows related to dividends, investment, and taxes. The forecast for the year-end CapEx spending remains at PLN 36 billion with expectations of increased investment in Q4, especially in major projects like wind farms and Olefin.
Looking ahead, Orlen Group predicts a challenging macro environment, expecting average crude oil prices to be around USD 80 per barrel, with a potential short-term increase to USD 90 due to Middle East tension. Refining margins are estimated at around USD 15 per barrel, and a petrochemical margin reduction by 20% year-on-year is anticipated. Gas prices are expected to stabilize at PLN 200 per megawatt hour with electricity at PLN 500 per megawatt hour. The future consumption of fuels and petrochemicals is projected to decline, correlating with a lowered gas demand attributable to an ongoing energy crisis and high commodity prices. The company's strategy outlines a significant increase in CapEx through 2025, potentially reaching up to PLN 50 billion next year, driven by flagship projects and strategic investments.
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Good morning, ladies and gentlemen. I hope you hear me clearly. So we changed the settings because you've got -- a lot of requested that Skype was not working properly, so I hope this time will be better.So welcome to the conference call regarding Q3 consolidated financial results of Orlen Group. My name is Konrad Wlodarczyk. I'm Head of IR and I will moderate this call. The presentation will be delivered by me, Michal Perlik, Executive Director for Finance Management; and Marcin Piechota, Deputy IR Director.After the presentation, as usual, we will open the Q&A session. The whole meeting, as you heard, will be recorded, as usual, so the recording will be available on the web page, and during the presentation please switch off your microphone.So let's start from key facts of last quarter, so Slide #3. PLN 75 billion revenues, PLN 8.2 billion in EBITDA LIFO, PLN 7.2 billion cash flow from operations, PLN 7.9 billion CapEx spending, net cash position PLN 1.3 billion, so this is in a big picture financials in Q3. We've got a lot of things that we did recently in Q4, but as usual, I picked a few cherries from you -- from this slide. So I think that it's worth to underline financial investment decision for the first offshore wind farm on the Baltic Sea, conditional agreement to purchase wind farms in Poland's capacity over 60 megawatts, partnership with Horisont Energi for potential cooperation on one of the most advanced CCS initiatives on the Norwegian continental shelf, cooperation agreement with Yokogawa to develop cutting-edge integrated production system in synthetic fuel, launching UCO FAME, installation to produce biocomponent second generation from cooking oil. We got European Commission approval to purchase 266 fuel stations in Austria, so it will be a new retail market for Orlen. Probably, the transaction will be at the end of this year.Kickoff of production from Tommeliten Alpha gas field in Norway for additional 0.5 BTM gas production per year, that will be delivered to Poland via Baltic Pipe and expansion of underground storage facilities in Wierzchowice, so the capacity of storaging will increase by 25%, so I mean 0.8 BTM up to 4 BTM in total.So now let's move to next slide, Slide #5, macroenvironment in Q3. So third quarter was characterized really by very high volatility of macro, model refining margins as you see, achieved almost $22 per barrel, so increased by 60% quarter-on-quarter, mainly due to positive impact of higher cracks on diesel, gasoline, heavy heating oil as well as lower natural gas prices. Diesel cracks increased by circa 80% quarter-on-quarter, mainly due to lower supply as a result of plant maintenance shutdown of refineries in Europe and on the west coast of India, but also due to the lower supply in the Mediterranean Sea region as tropical heat reduced refineries capacity by 10%.We observed higher demand for diesel in Europe at lower imports and transport constraints caused by low water level on the Rhine River and also temporary ban on fuel export introduced by Russia in September. Gasoline cracks increased by 7% quarter-on-quarter, mainly due to lower supply as a result of plant maintenance shutdowns of refineries and transport constraints, so similarly as in case of diesel. Additionally, we observed gasoline supply shortages due to closure of third largest refinery in the U.S., I mean Marathon Petroleum in Louisiana, so there was a fire in this refinery and the production of this refinery was off.As a result of changing the structure of process, crude oil related mainly to the reduction of Russian REBCO processing and of course, replacement REBCO with more expensive grade of crude oil differential in Q3, achieved negative value minus USD1 per barrel, which means that we are paying premium compared to grant quotations.In case of petchem, macroenvironment remains tough. We still observe low demand for petchem products as a result of economic slowdown and competitive imports. In terms of crude oil, grant quotations increased in Q3 by 11% quarter-on-quarter. However natural gas prices decreased quarter-on-quarter on Polish power exchange, which had a negative impact on upstream segment. Relatively slow -- strong Polish zloty versus dollar and euro impacted negatively on operational results.So now let's move to Slide #6, so data regarding consumption of fuels and GDP. In Q3 we observed further signs of economic slowdown, GDP dynamics in all markets, a part of Slovakia and Lithuania show a drop compared to the previous year. Fuel consumption in the third quarter was higher in majority of whole markets, significant increase by 10% was recorded in Poland and Czechia. In the coming quarters we expect economic recovery in Poland and higher fuel consumption.Next slide, Slide #8, on the financial results. In Q3 we achieved, as I've mentioned at the beginning, PLN 75 billion of revenues. This is mainly due to higher sales volumes and higher quotations of refining products and lower quotations of petrochem products and lower quotations of hydrocarbons, I mean lower crude oil and natural gas price.The EBITDA LIFO amounts to PLN 8.2 billion and was lower by minus PLN 2.7 billion year-on-year, mainly due to negative impact of lower volume effect, lower differential, lower trade margin, lower petchem margin, hedging, transferring of polish zlotys versus U.S. dollar, lower fuel margins in retail, lower margins in upstream as well as higher overhead and labor costs. Of course, those effects were partially limited by positive impact of consolidation of PGNiG Group results, higher refining margins, higher non-fuel margins in retail, lower provision for CO2 emissions as well as usage of historical inventory layers.Positive impact of changes in crude oil price on inventory valuation in Q3, so as we call LIFO effect, amounted to PLN 1.3 billion and increased EBITDA to the level of PLN 9.5 billion.Financials below EBIT line in Q3 amounted to minus PLN 0.6 billion as a result of negative impact of net effect differences and positive impact of net changes. Net profit in Q3 amounted PLN 3.5 billion and cumulatively for 9 months of this year over PLN 17 billion.So now let's move to Slide #9, EBITDA LIFO split by segment. Refining, PLN 1.9 billion, so lower results by PLN 5.5 billion year-on-year, mainly due to negative macro impact, lower sales volume, lower results of local groups, lower trade margins as well as higher overhead and labor costs and positive impact of usage of historical inventory layers.Petchem, minus PLN 0.1 billion decreased by minus PLN 0.8 billion year-on-year, mainly due to negative macro impact, lower sales volumes and lower trade margins. Energy, PLN 1.3 billion decreased by PLN 0.3 billion year-on-year as a result of negative impact of macro, negative impact of payment to the Price Difference Payment Fund, and also provision created in ENERGA Group due to one-off reduction in electricity bill for households and positive impact of consolidation of PGNiG Group results.Retail, PLN 0.6 billion decreased by PLN 0.3 billion year-on-year as a result of negative impact of lower fuel margins and higher cost of running fuel stations and positive impact of higher sales volumes and higher non-fuel margins. Upstream, PLN minus 0.2 billion decreased by minus PLN 1 billion due to negative macro impact, lower sales volume, write-off for the Price Difference Payment Fund, and higher labor costs as positive impact of consolidation of PGNiG Group results.Gas segment, the best one, PLN 5.2 billion, higher of course by PLN 5.2 billion as a result of positive impact of consolidation of PGNiG Group results.Corporate functions, minus PLN 0.4 billion, so higher of course by PLN 0.1 billion comparing year-on-year due to increasing the scale of Orlen Group operations.So now let's move to the details of each of the segments and I will start from Slide #10, Refining. So in Q3 EBITDA LIFO of the refining segment amounted to PLN 1.9 billion and it was lowered by PLN 5.5 billion year-on-year as a result of negative macro impact at the amount of PLN 1.5 billion year-on-year, resulting from lower margins on middle distillate, lower differential significant decrease by minus USD 8.4 per barrel year-on-year due to changes in the structure of processed crude oil. Negative impact of hedging and strengthening of polish zlotys versus U.S. dollars and these factors were mitigated by higher margins on light distillate and heavy fuel oil. We had lower cost of internal usage resulting from decreasing crude oil price and also, lower cost of provision for CO2 emissions as well as we had a positive impact of CO2 forward contract valuation.Negative year-on-year volume effect at the level of minus PLN 2.2 billion, so this is caused by the decreasing sales and the change in the structure of processed crude due to limitation of REBCO oil within the group and replacing it with more expensive rates. Additionally in Poland we had planned and unplanned maintenance shutdowns of major units like Hydrocracking, FTC, H-oil, Hydrogen Plants that caused a higher share of heavy fractions in the sales structure which was negative.Sales volumes decreased by 2% year-on-year, sales of diesel was lowered by 5%, LPG by 1%, heavy fuel oil minus 11% year-on-year. On the other hand we saw 10% more gasoline and 19% more jet fuel.Other factors include negative impact of lower result of Orlen Group by minus PLN 0.8 billion, lower trade margins and higher overheads and labor costs and positive impact of usage of historical inventory layers.Next slide, Slide #11, so refining segment operational result. Here everything went smoothly, I may say so. So crude oil throughput in Q3 was high and reached 10 million tonnes, which is 94% of utilization. However, comparing to the last year, throughput was lower by 0.4 million tonnes due to the same incomparable reporting period. So just to remind you, in Q3 last year, we consolidated 100% of local throughput [ while in the third ] quarter result, so we think the beginning of this year we are consolidating just 70%.In Plock throughput decreased by 0.5 million tonnes year-on-year mainly as a result of maintenance shutdown, while Gdansk refinery was working full speed, which resulted in throughput increase by 0.1 million tonnes.Throughput and utilization in Orlen Lietuva and Unipetrol maintained at comparable levels year-on-year. Fuel yield in all of our refineries also maintained at comparable levels year-on-year. In Q3, sales volume of refining products reached 8.8 million tonnes. We have noted lower by 7% year-on-year sales in Poland while in Czechia and Lithuania by minus 18% and 37% respectively.Slide #12. So we are moving to Petchem, petrochemical segment results. Petchem recorded a loss at the level of minus PLN 136 million in the first quarter. So this is the result of weak macro environment coming from lower year-on-year margin on majority of petrochemical products. It was partially offset by strengthening of euro versus U.S. dollar higher margins on fertilizers and positive impact of CO2 contracts evaluation.Increase in sales by 2% comes mainly from higher sales of fertilizers. Negative volume effect comes from increasing natural gas consumption due to higher fertilizer production in Q3 this year, and lower sales of Olefin by minus 8%, PVC by minus 25% and PTA by minus 8%. Volumes increased by 7% in Poland while in Czechia and Lithuania dropped by minus 4% and minus 50% respectively. Other factors that had a negative impact on Q3 results include lower sales margins.Slide #13. So petrochemical segment operational results. In Q3 compared to the last year, we recorded high utilization of fertilizer unit in Wloclawek by 13 percentage points as well as higher utilization of Olefin unit in Czechia by 9 percentage points. Lower production levels were noted in Olefin installation in Plock and PVC in Wloclawek.Sales in the quarter reached 1.14 million tonnes and was higher by 2% year-on-year, and this is mainly due to increasing fertilizer sales by almost 30% year-on-year while sales of aromatics also increased.So now I will let Marcin Piechota to describe other segments. Please Marcin go ahead.
On Slide 14, Energy in Q3 reached a PTA level of PLN 1.3 billion mainly due to results of Energa Group and Orlen's units. We saw negative impact of the macroenvironment year-on-year, hedging of energy prices in the Energa Group and Orlen in particular with lower margins on energy production in Energa Group and higher margins in distribution. The impact of spread between electricity and gas prices with lower cost of CO2 emission provisions was positive. The result includes a provision establishing Energa [ albeit for longer ] production of electricity bills for households in the amount of PLN 240 million, which is 75% of the total estimated sum for 2023. The negative volume effect year-on-year results from lower production, sales and distribution of electricity in the Energa Group, and lower production and sales of CCGT Plock and CHP Plock with higher gas consumption. Additionally, the segment's result was supported by the consolidation of the PGNiG Group's results and the profit on the dilution of Baltic power shares in total amount of PLN 0.3 billion. These effects were partially offset by contributions to the Price Difference Payment Fund of Orlen S.A. and higher year-on-year cost of transmission and transit fees.Moving to Slide 15. In the third quarter the Poland group produced 2.8 terawatt hours of electricity, out of which 60% came from renewable energy sources and gas-powered units. Electricity production including the operations of former PGNiG and LOTOS Groups, decreased by 13% which was related to the plant shutdown of CCGT Plock and lower production of the Ostroleka power plant. Electricity distribution decreased by minus 2% year-on-year, which is mainly due to lower energy consumption in most tariff groups which in turn is the result of the introduction of saving incentives. A visible increase in electricity sales by 3% year-on-year results from an increased activity on the wholesale market of the new trading company Orlen Energa.Sales of heat from generation amounted to 12.9 petajoules, lowered by 4% year-on-year due to temperatures higher by 1.2 degrees Celsius in the quarter.Moving to retail. In Q3 second region an EBITDA level of PLN 601 million and was lowered by minus PLN 255 million compared to Q3 2022. This results from lower fuel margins year-on-year in all market and higher operating cost of fuel station due to both inflation and increasing the number of new locations by 255. The above mentioned effects were limited by the positive impact of higher sales volumes and non-fuel margins in all markets.Sales volumes in Q3 were higher by 10%, including higher sales in Czechia, Poland and Lithuania by 61%, 9% and 6% respectively. However, in Germany sales volumes decreased by minus 4% year-on-year. The number of fuel stations at the end of Q3 2023 was 3,163. Year-on-year increase resulted from new locations added in all markets where Orlen Group operates. In Poland, Hungary and Slovakia, the growth resulted from merger with Lotos Group and implementation of remedies. The number of fuel stations in Slovakia increased also due to launch and rebranding of self-service fuel stations acquired from the local network while in Germany the launch of self-service stations acquired from OMV. Moreover, European Commission has approved purchase of 266 fuel stations in Austria. As a result, Orlen Group will be among the three largest fuel chains in this country with a 10% share in the retail market. Market share increased in Poland, Hungary, Czechia, and Slovakia with a stable share on German and Lithuanian markets.Number of non-fuel locations increased from 273 year-on-year to 2,596. During the year number of alternative fuel points increased by 101 and reached 701 at the end of September. Currently we are the owner of 651 electric car charging stations, 47 CNG and 3 hydrogen stations. Number of Orlen Paczka locations amounted to 9,600.Moving to Upstream. Segment posted a EBITDA of minus PLN 212 million, which was lower by PLN 993 million compared to Q3 2022. This is mainly an effect of significant decrease of hydrocarbon prices. Gas price was lower by over 18 % year-on-year, crude oil by 14% year-on-year. Moreover, the segment's results were negatively affected by write-down on the Price Difference Payment Fund in the amount of minus PLN 3 billion in Q3 2023. Write-down for the entire 2023 can reach almost PLN 14 billion of which Orlen Group already transferred PLN 9.6 billion by the end of September.Thanks to acquisition of the PGNiG Group and the LOTOS Group the average production of hydrocarbons in Orlen Group has increased in Q3 by almost 125,000 barrels per day year-on-year. Gas production was higher by over 100,000 barrels a day, oil and NGL by 24,000 barrels a day. On the other hand, compared to the second quarter reduction of hydrocarbons dropped by minus 9,000 barrels per day quarter-on-quarter and the most significant decline by 6,000 barrels per day was recorded in Poland. The main reason for lower production primary of crude oil were maintenance shutdowns.Moving to Slide 19, the total 2P hydrocarbon reserves amounted to 1,278 million barrels. This is the level at the end of 2022. Average gas and oil production in Q3 2023 amounted to nearly 155,000 barrels a day. In Poland it was 69 kboe/d, in Norway 67 kboe/d, in Canada 14 kboe/d, in Pakistan 5 kboe/d and in Lithuania 0.3 kboe/d. Natural gas accounts for 74%, oil and gas and NGL for 26% of total Q3 production structure.On Slide #20, we have a gas segment which generated an EBITDA of PLN 5.2 billion, out of which PLN 4.8 billion was generated by trade and storage and PLN 0.5 billion by distribution. EPA tariffs remains unchanged on the level of PLN 570 per megawatt hour. Due to falling gas prices, Poland cut prices for small and medium enterprises. As a result, in September, the average price for 1 megawatt hour of gas was around PLN 200, which is minus 30% lower than in June 2023. Significant impact on segments results year-on-year had lower costs of gas due to falling prices on the spot market, and in monthly contracts. Compared to Q3 2022, the EPA market had price declined by 84% in year-on-year.Average price of all transactions in Polish power exchange including spots and contracts was PLN 276 per megawatt hour, which is 26% lower year-on-year. Meanwhile average price of natural gas transfer from upstream division to gas segment amounted to PLN 169 per megawatt hour. In Q3, PGNiG retail received compensations from the Price Difference Payment Fund of PLN 1.5 billion. Orlen Group generated a EBITDA of PLN 0.4 billion from distribution activities which is stable level compared to Q3 2022 PGNiG Group's EBITDA before consolidation.Gas imports to Poland in Q3 2023 amounted to 43.8 terawatt hours, which 41% was LNG. Total gas sales outside the Orlen Group in Q3 decreased by 11% year-on-year mainly due to merger of companies and high intragroup sales volumes in 2023. Sales of PGNiG retail also dropped. Decline was caused among others by higher temperatures and hence lower gas consumptions for heating. Relatively high level of execution prices of sales contracts with falling prices on the current market were still several factors to segment results perspective. Gas distribution volumes in Q3 remained at similar level year-on-year. At the end of September 2023 overall level of stored gas in Poland reached 99%. At the same time year-on-year this level was comparable and amounted to 98%.Now cash flow and indebtedness will be described by Michal Perlik. Michal, the floor is yours.
Thank you very much. Good morning, everyone. So we record another strong quarter in terms of net operating cash flow. Cash flow for quarter was PLN 7.2 billion, which was mainly generated by EBITDA of PLN 9.5 billion, with a very minor change in net working capital and only partially deteriorated by increase of deposits on derivatives of PLN 1.2 billion and PLN 1 billion of income tax payments.In terms of cash flow from investment, we see PLN 10.5 billion mainly generated by PLN 7.5 billion spend on CapEx in the last quarter and PLN 2.2 billion for purchase of CO2 allowances. Over the 9 months of the year, we have generated a total sum of PLN 34 billion of EBITDA and this amount was distributed -- on the top of that we generated PLN 14.4 billion of additional positive cash flow from decreasing needs for working capital. The amount was dedicated for CapEx over PLN 20 billion spent on investment over the last 9 months. At the end of September, we distributed dividends to our shareholders of PLN 6.4 billion cash dividend [Indiscernible] market, PLN 8.2 billion dedicated to purchase CO2 allowances and rights and PLN 15 billion for income tax payments. Over the last 9 months we have increased our net cash position by PLN 1 billion.Coming to the next slide, even though in the last quarter we spent more cash than generated, the rest of main dividend and investment we are still on the net cash position of PLN 1.2 billion, which means that the main bank covenant, net debt-to-EBITDA is still negative and far below the maximum thresholds established both in our bank facility agreements and the traffic. We also still have a massive banking facility to be used of almost PLN 30 billion as of the end of the last quarter.These are the main highlights related to the cash flows and the net cash position. And I hand over to, [ Konrad ].
Okay. Hi, again. So Slide #25, CapEx, very shortly, so after 9 months, CapEx spending amounts to PLN 20.4 billion. We may say that we spent equally in petchem, refining, energy and upstream. So roughly speaking PLN 4 billion in each of those segments. Of course, we maintain CapEx forecast for this year at the level of PLN 36 billion, which means that usually that has sped up in spending in Q4 as usual.Slide #27, so current macro environment. In Q4, Brent crude oil price is higher quarter-on-quarter by 6%. This is mainly a result of escalation of Israeli-Palestinian conflict and fears of course of the wider destabilization of the situation in the Middle East, as well as low crude oil incentives in the U.S.Model refining margin is lower by 40%, quarter-on-quarter, due to negative impact of lower diesel, gasoline and HSFO gas and higher gas prices. Differential is lower by circa USD 0.6 per barrel, so we may say premium to Brent at the level of $1.6 per barrel as a result of reduction of [ crude oil ] throughput in Orlen Group, down to 10% and replacing it with more expensive grades from Saudi Arabia, Norway and the U.S. main.Just to remind you, Russian crude oil is processed only in our Czech refineries. This is based on the long-term contract. There is also a lower quotation of diesel differential that impacted negatively for 20% quarter-on-quarter of lower diesel. We're still processing 10% of Russian crude oil.In terms of crack margins on petrochemicals, we observed quarter-on-quarter some rebound, so there could be some first signs of some recovery. In terms of natural gas price on TTF and PPX rises in Q4, as a result of seasonal increase in gas consumption, so winter season has started. Triton energy terminal in Australia, closure of running gas fields, so the largest gas fields in Europe, and Baltic connector failure between Finland and Estonia.Last slide, Slide #28, market outlook for this year. So in 2023, we expect average gas crude oil price at the level USD 80. However, due to conflict in the Middle East, oil price in the short-term makes its USD 90 per barrel. Refining margin is the level of circa USD 15 per barrel. Differential is the level of USD 1.5 per barrel. Petchem margin lowered by 20% year-on-year, and gas price is at the level of PLN 200 megawatts and electricity prices at PLN 500 megawatts. On a full-year basis, we expect the consumption of fuels and petrochemicals to decline compared to the prior year. Lower gas demand as a result of energy crisis, high commodity prices, and decreasing gas consumption, while comparable level of electricity prices.In the regulatory environment compared to the previous quarter, nothing has changed. So I think that's all from my side. Thank you very much for your attention, and please feel free to ask the questions.
[Operator instructions]
Okay, so I have the first question. What was the adopted EBITDA LIFO in September in refining? Should we expect extending loss in October due to inland discounts in Poland?
Actually, [ let's say ] EBITDA. We do not provide EBITDA split on particular amounts. What I may say is that generally in the first quarter, all of our requirements recorded positive results.
Okay. So the second one, would Orlen be interested in taking up a potential share issue from Azoty? Would the agreement with Basell allow it? How is the due diligence process for Pulawy going?
The due diligence process for Pulawy is taking place. It's still ongoing and hasn't finished. We do not change our approach so far.
Okay. So maybe the last one, could you give us some guidance on CapEx next year?
Well, for the next year, this is something in line with the strategy. So in our strategy, we said that the CapEx spending will be on the increasing trend set until the end of 2025. So we should expect that according to our prior communication, the CapEx would increase even up to PLN 50 billion because just to remind you, in our strategy, the CapEx over 8 years was at the level of PLN 320 billion, so roughly speaking, PLN 40 billion on the yearly basis. However, we speed up with big flagship projects like the first project of the wind farm on the Baltic Sea. So this is quite a CapEx-consuming project as well as we speed up with Olefin project as well. And in terms of CCGT, so both Ostroleka and Grudziad also are in the kick-off phase. So you should expect that up to PLN 50 billion probably will be achievable. However, of course, as usual, we will be providing, let's say, that exact guidance in Q4, which is also the beginning of next year.
It's also worth to mention that we have already secured financing for the majority of the investments. Konrad mentioned offshore wind farms, which has been already concluded from the project finance perspective, non-required project finance perspective. So this financing for 80% of the investment will be not taken into consideration of calculating our net debt for the covenant. The same story with financing for CCGT Ostroleka. Here, only 60% is covered by limited-to-cost project finance. This is also experienced from the covenant, and we are also very advanced in terms of finalizing funding for the project finance formula for all the payments. So all 3 major investments will be in the finance and the whole financial structure.
Ladies and gentlemen, we have a question from Anna Kishmariya. Anna?
I have several questions. First, on the upstream production, what levels would you expect in post-quarter after the maintenance is completed, and if you can give rough guidance for 2024?
Okay. So based on the recent news flow and starting up of Tommeliten Alpha field, we expect a slight increase in production in Norway. So basically, we are targeting somewhere around over 3 billion cubic meters of gas production by the end of this year. And with continuous works on these fields, we also should expect increased volumes compared to this year's volumes coming from Norwegian operations. So basically, Tommeliten Alpha will add roughly 0.5 billion cubic meters of gas production, which in fact will replace some natural decline occurring on the remaining fields in Norway. But what's also important to note is that with gas produced from this field, also NGLs and crude oil production will increase in Norway. On the other hand, we have a Polish upstream that should remain rather flat. So no significant discoveries, no significant increase in production. This third quarter was exceptional in the way that the crude oil volumes decreased due to shutdowns on major Polish fields, while in the fourth quarter, we should not expect that the volumes will stay at the level that we saw in the first quarter. So basically, we are targeting higher volumes than in Q3 and probably compared to, for example, the first quarter of this year, a bit lower.
Another question is, you have realized loss for share in equity investments, if you can comment where did it come from?
You're referring probably to the write-down on assets that occurred in gas segments, right?
It's like in your income statement, you have sharing profit from investments accounted for using the equity method, and it's PLN 0.9 billion loss for this quarter.
Yes, so this is in fact a write-down that is an effect of changes of the valuation of the investment in the Europol Gaz entity. So basically, due to the decision of the Ministry, the owner will be moving towards acquisition of the remaining shares of Europol Gaz, up to 100% total shares in this company. So that's why at the end of the reporting period, we have re-evaluated the valuation of the company. That was shown in the line of EBIT line the gas segment.
And final one from me, if I may. If there are any updates on government plans to purchase this coal assets from energy companies, including the coal assets from Energa?
Well, this National Agency of Energy Security plan is right now put on hold, so we can't say based on the news flow. So we have to wait for the situation to go forward. Currently, we don't have any comments on this.
We have another question coming from Lukasz Prokopiuk.
I have a few questions. Could you please tell us about your strategy on fuels in the quarter in Poland? Did you import fuels or did you consume obligatory reserves? Could you please tell us something about this?
Okay. So generally, according to the pricing policy, as you see perfectly now we are quite flexible for what we said last time. So we are currently focusing more on volume, not on margin, so in order to maintain the market share. So truly saying what our goal was to stabilize prices as much as possible. If you look on the trade margin, because it's visible on the slide, which is refining. So in Poland, in Q3, indeed, there was a huge drop in the trade margin, meaning that it was over 50% year-on-year, lower both on the diesel and the gasoline. However, I checked the, let's say, the historical data and this was not record low level. So we have similar levels of trade margins in the previous year, except of course, the last year. So I mean, from the second quarter of 2022, so the period after the outbreak of war in Ukraine, where there was a shortage of products on the market. So then, trade margin soared and remained at high level, we think, until the end of 2022. And since Q1 2022, trade margins in Poland have gradually normalized for the quarter-on-quarter. So you see that the negative impact of trade margins on all markets in Q3, because trade margins were not only lower on Polish market, but also on other markets as well. It was minus PLN 1.7 billion year-on-year. However, as I said at the beginning, even despite the fact that we had, let's say, lower trade margins, all of our refiners in Orlen Group generated positive results. So currently, trade margins are on the increasing trend in Poland. And answering to your question, if we imported, yes, we imported a lot of gasoline and the diesel to Poland in Q3. We do not provide exact numbers. Generally, you may speaking that import of fuels generally increased year on year by 700,000 tonnes. But not only in Orlen, but also other importers as well.
Okay. So the poor performance of fuel trade margins in Poland, which we observed in the quarter, how exactly did you book it in the financial statement? Because I would generally, expect this effect to be in revenues, but instead I see it in higher costs. Could you please comment on this?
I never, let's say, clean it up. Let's say the EBITDA is part of the EBITDA line for me. So from my point of view, lowest trading margins, we treat it as a cost.
Lower trade margin should be booked at cost?
I think so.
Okay. Could we please see Page 33 in the presentation? I was looking at the results of different companies and the previous one, the previous slide. Yes. Because if I calculate correctly, the refining segment, the total refining segment in 3Q generated adjusted the EBITDA LIFO of PLN 1.3 billion. And now I see Orlen Lietuva, which generated PLN 815 million, which is the majority of this number. I see Orlen Unipetrol, which generated PLN 188 million. And it also includes losses in petrochemicals. And I see Orlen Petroleum, which generated and I see on, I think it was on Page 10 that you mentioned that LOTOS, itself generated PLN 200 million in the refining segments. So if I calculate correctly, Poland, despite having 60% of utilization in refining assets, generated like PLN 300 million or something, PLN 300 million, PLN 400 million maybe of EBITDA, whereas your different assets, which are said to be less competitive and less efficient generated, the majority of EBITDA. Could you please comment on this?
Yes, I agree. I agree with you.
Okay. Could we see Page 10 in the presentation, please? You typically show the waterfall in the effects. And I mean, my question, because if I calculate correctly, the inland premium effects, negative ones, was around PLN 3 billion, PLN 4 billion negatives in the quarter. And well, these figures you present in the waterfall are completely different. And my question, did you change your methodology in calculating these waterfalls?
No, we did not. But please also bear in mind that waterfalls show dynamics year-on-year, yes.
I know. I know. Exactly.
So you've got a lower trading margin included in this box minus PLN 1,726 million, yes, but it's not only, let's say, lower trading margin, but we have also lower results of Orlen Group, minus PLN 0.8 billion for these losses. We have, let's say, higher cost at the level of PLN 0.2 billion for these losses offset by, let's say, positive dynamics on usage of historical layers at the level of PLN 0.8 billion for these losses. So the remaining part at the level of minus PLN 1.7 billion is trading margin. So we always presented this like this.
Okay. But you didn't change your, well, the way you count it, yes?
No, no, we didn't.
Another question, why did you stop showing your model refining margin? It was presented for like, I don't know, 15 years since, I don't know that there's really no reason to change it. Like, even if you wanted to change it, you could have still shown it until you've changed it. So could you please comment on it?
Okay. So that was an internal decision. We are not showing both, so refining and petrochemical margins, we follow, let's say, all other majors and we think we haven't seen that they are presenting such data on the frequent basis, like on the monthly basis, but as we did previously. So usually, we are presenting those data on the quarterly basis and in majority of cases, it's included in trading statements or in the financial statement as we did right now. So also, in the presentation.
So just to clarify your first question about decrease of margins, whether it's affecting income over cost, is it affecting income? Just to clarify.
Revenues.
The revenues, yes. The lower margin onto decreasing revenues, not increasing revenues.
Because that's exactly what my question comes from, because I usually expected it to be in revenues, but I don't see it in revenues. I see it in cost.
I need to comment how you say it's in cost, because we are also changing the mix of crude oil, for example, the price of energy that we are consuming on the production process. So it's a good comment.
Okay. One last question. Sorry. Why did you pick your new auditor?
Well, as you probably have, there was a decision of the Audit Supervisory office to penalize Deloitte, meaning that there was the decision released that Deloitte will be forbidden to provide audit services for the period of 3 years. Following the decision, our Supervisory Board decided to terminate the agreement with Deloitte, which actually was a trigger to select the new auditor.
Yes, but I know you had to choose a new one, but why did you choose this one, if I may ask?
This is the decision of the Supervisory Board, which actually collected the offers from the market and selected the auditor based on the experience, mainly in terms of auditing big international companies and, of course, the price of the services. These are the main criteria.
We have another person in the queue. Please, Tomasz Trukowski.
Just 2 questions. The first one, once again, on this price stabilization. Would you provide some estimate of the total cost that you incurred in the third quarter, which is associated with all those activities? I'm talking about lower trading margins, but also the probably some import and probably some higher logistic costs.
Unfortunately, we do not provide such figures, so sensitive information, so we do not provide, we just provide you only the effects year-on-year.
Okay. So the other question is on gas trading, because this business continues to deliver really good earnings. So the question is, what is the output for the fourth quarter and how we should think about this business in 2024, given the fact that this year the margins are tremendous, but in the past the margins were thin?
Well, indeed, gas trading is generating great results due to the fact that we have this rather high selling prices of gas that were anchored in the third quarter of last year. So as a reminder, it was the period in which the gas prices in Europe skyrocketed to historically all-time highs. And with the current portfolio of gas inputs and our own upstream activities that are rather priced at spot prices of, or maybe a multiple pricing of gas, we have this spread between a rather stable selling prices for a majority for the wholesale clients, with relatively low, compared to the last year's levels of prices, procurement costs of the gas segment.So, moving ahead to the fourth quarter, and for the first quarter, we have to keep in mind that the volumes that will be traded will increase due to the seasonality of this business. However, the spread should decline, spread between the stable price of gas anchored from -- based on the year-end contract or season contracts will be lower with all forthcoming quarters, while we can see that the cost of gas is going up in this winter period with some easing in the summer period. So what we should expect is that the volume effect in the fourth quarter and the first quarter will be significant in terms of the gas business, while the spread will be eventually getting lower. So with this situation in mind, we should see that the gas business eventually, starting from probably next year, will go to the new normality, which will probably transfer the EBITDA part towards the upstream division, rather than stay at this level as shown in the first 3 quarters throughout this year.
And when it comes to hedging philosophy, are you going to hedge the exposure in this business line? I mean, when you -- so in fourth quarter and forward for next year, let's say the price of PLN 50, are you going to hedge in any way? Or if it appears that next year the price is, spot price is PLN 100, you're going to incur huge losses or the price is PLN 20, you will be again feeling profitable?
In terms of hedging, we are still keeping the policy of hedging of the open position that we have, that's resulting from the difference between the formula behind the costs of imports or costs of gas coming from upstream versus the portfolio of gas that we are selling, the formulas of the gas, of the contracts at which we are selling the gas. So this is -- this remains the same as it was a couple of years ago, established in Poland Energa Group, so there was no changes in this approach.
We have Jonathan Lamb in the queue.
A further question about the gas trading business. Given where gas prices are at the moment, wouldn't it be fairly easy to get rid of a fixed price for domestic customers and get rid of the need for a compensation fund mechanism? Do you think there's a chance of that happening going forward if we don't see very high prices in winter?
Just to be clear, the compensation scheme is devoted only for the tariff customers, so the retail clients. What we can see from this business, especially from the results of the gas trading business, is that the spread that I was talking about, it's a spread that's occurring on the contracts majority with wholesale clients, industrials mainly, because as you run the company and you would like to have a gas that will cover your production, that's why many of the clients were interested last year to have the volumes based on the longer contracts, like for example, year-long contracts, half-year-long contracts, seasonal contracts. That's why, let's say, I put it in the quotation marks, this stable price is what we can see throughout this year. This is a price that was anchored last year and with a steep decline in current prices of gas, that's why we are showing this spread that's positively affecting the results in gas business. In terms of wholesale clients, this is the case. In terms of households, we have a tariff that is based on the portfolio of gas contracts that the PGNiG retail showed to the company. And this is basically a weighted average portfolio of all contracts and all of the procurement costs that they expect in next year. So that's why this tariff level is way higher than the frozen price of the wholesale client. That's why the compensation scheme is introduced.
Yes, I'm just thinking your costs are going down. So the compensation scheme becomes less important perhaps in a few months or next year sometimes.
That's why we wanted to highlight that the household gas pricing compensation scheme has been actually implemented only for 2023. And at the moment, it is not clear whether it will be extended and in what form it will be extended for the next year. We don't have any details in this respect.
Okay. I've got a couple more follow-up questions. Any news on the venture global contracts? Any chance that they'll come in this quarter or next year?
Well, nowadays, we do not comment on this contract. So we have to take time and see how things will go.
Okay. And then, there were some shutdowns in the third quarter in refining. Is anything still shut down? Anything -- any of these carried on to the fourth quarter?
If we are talking about the fourth quarter, please bear in mind that we have some maintenance, plant maintenance shutdowns in the pipeline. So you should expect that the throughput will be slightly lower compared to the quarter-on-quarter. So we are targeting 9.5 million tonnes of processed crude oil, so 90% of utilization. So we think we have maintenance shutdowns in all of our refineries. So in Q4, plus refineries, 3.7 million tonnes of crude oil, so 90% utilization ratio. So here we will have hydrocracking 5 weeks, FCC 2 weeks, hydrogen recovery 5 weeks, and H-oil the whole quarter. In terms of petrochemical parts, all of them will be out of order for the whole month. In terms of Gdansk refinery, there will be a closure of CDU units as well as Plock units. In terms of Unipetrol, hydrocracking 3 weeks, heat breaking 3 weeks, and in Orlen Lietuva 4 weeks. So 3.7 million tonnes in Plock, 1.8 million tonnes in Gdansk, 1.8 million tonnes in Unipetrol, and 2.1 million tonnes in Orlen Lietuva.
We have [ Krzysztof Kozio ] at [ KU ].
I have a few questions. The first one, could you please clarify the question about CapEx? I mean, after 3 quarters, you have realized like PLN 20 billions of CapEx, whereas the target for this year is PLN 36 billion. And could you clarify, is this like cash target? Or, I mean, is it going be fully expensed in the -- are we going to see PLN 14 billion or PLN 16 billion, actually PLN 16 billion in the fourth quarter to be expensed in cash flow? Is it like, the target of PLN 36 billion cash target? Or is it like accounting, something like more accounting CapEx?
Well, you may expect that whole CapEx will be spent in Q4, so that is the level of, let's say, PLN 15 billion, something like that.
Okay. And the other question I have is about that new fertilizer's line. Could you please clarify when is it going to be scheduled for the commissioning? And how do you want to place those additional volumes given, like in the context of what's going on right now on the fertilizers market? We've seen today that I think Achema is shutting down one of the lines. So are you going to be selling that in Poland or are you going to sell that, I mean, to export that?
Okay. So, in terms of expansion of fertilizers, this project was finally, let's say, projected to be completed at the end of this year. Probably, it will be a little bit postponed. Also, this is the fact that you've mentioned so unfavorable macro environment, but probably you should expect that first half of next year is still achievable. So just to remind you, this project, the aim is to increase the number of fertilizers by almost 500 kilotonnes. So, the final level will be almost 1.5 million tonnes. Additional data from this project will be calculated at the level of PLN 150 million to PLN 200 million, but we will see, of course, if the macro environment will be unfavorable. We will adjust, let's say, utilization of this new line gradually, not working full speed. Of course, the aim was to sell this domestically, but of course, we had a possibility to sell also the petrochemical products to the neighboring countries as well.
We have a follow-up question from Lukasz Prokopiuk.
Yes, thank you. I was just curious, the source of fuel imports to Poland in 3Q, was it partly, to some extent, from Saudi Arabia? Could you please tell us what was the destination of imports, fuel imports to Poland?
If you look generally, because we never disclose, let's say, from what directions we are taking, let's say, the volumes. So if you look on this year, in terms of gasoline imports to Poland, the majority comes from Germany, then Czech Republic, likely from Lithuania and Slovakia. And in terms of diesel, the majority of volumes comes as well from Germany, then from Sweden, Denmark, USA, and that's all. So we say --
Europe.
[indiscernible] visible.
Okay. I have another question on CapEx, a follow-up on CapEx. Could you please tell us what -- because you've got your CapEx plans for the next 2 years, but could you tell us what are your commitments to CapEx? I mean, the CapEx which you will have to spend based on your current contracts.
Well, the easiest way is to go project by project, yes, and the ones that I described in the presentation are, in majority, already committed to starting with the biggest project, so in 3 the offshore wind farm projects, just to see the fields mentioned by Konrad are also committed on the contract.
[indiscernible]
[indiscernible] Lithuania. So all the major projects that are listed in the presentation are committed in that perspective.
So the majority of the CapEx plans are like, committed, yes?
The majority for the next 2--
Next 2 years?
Next 2 years are committed, yes.
Okay. Last question from my side, if I may.
Of course, there can be some shifts related to the schedule of the project, but the majority of the CapEx is committed.
Could we come back to the waterfall on Page 10 of the presentation? Could you please disclose, I mean, what's in the figures, in the volumes and in the others? Because the macro is well described, it's clear, but could you please tell us or, I don't know, you could comment on what is in this particular number of volumes minus PLN 2 billion and in the others minus PLN 1.7 billion.
So in minus PLN 2.4 billion, there is many negative volume effects coming from the fact that we have changed the structure of processed crude oil. So based on, let's say, more expensive crude oil, let's say, this effect is negative. Additionally, we had also a lot of maintenance shutdowns in Poland that impacted negatively also, let's say, the production yield, if I may say so. So due to the fact that hydrocracking, FCC, H-oil, hydrogen plant was out of order, so there was significantly higher share of heavy fractions, which are with a negative quotation.And in terms of others, as I said at the beginning, you have mainly 4 factors. So a lot of growth results minus PLN 0.8 billion, a lot of generated this year slightly above PLN 200 million compared to more than PLN 1 billion last year. We had lower trade margin, yearly effect is minus PLN 1.7 billion. We have a higher overhead and labor cost minus PLN 0.2 billion and plus PLN 0.8 billion, this is the usage of historical inventory layers coming from the fact that this quoted on the refining side, we have a positive impact of historical usage at the level of PLN 500 million, last year it was minus PLN 200 million, so only now plus PLN 0.7 billion, PLN 0.8 billion. So this is in a nutshell what is included. Nothing was changed in terms of, let's say, booking or, let's say, sticking to all of these figures.
So to just, if I have it correctly, the negative inland premium effect calculated is PLN 1.7 billion, yes, minus, more or less?
Yes, yes. So this is the effect year-on-year, yes. Year-on-year, we have a negative from lower trading margins at the level of minus PLN 1.7 billion.
And we have Piotr Dzieciolowski. You have to unmute yourself.
So I have a quick question for you. So what is your working assumption going into the next year with regards to the payment to the price differential sum of the gas side? And what is your working assumption on the inland premium for the next year? So how much of the kind of your stabilization measure are you planning to extrapolate into the future yet? And then, beyond that, I want to have a third question, which is around your kind of acquisition strategy. I mean, can you -- do you think the company may need a bit of more strategic logic into what you buy and what prices you pay? So I see no kind of synergies between the Austrian retail stations versus the onshore in Poland acquired at the fairly high multiples. So I thought the strategy of the company is more to invest in the Polish economy and control investments organically. So why would you not prefer organic investments creating more value as opposed to acquisitions, which are a little bit of a -- they look at a random investment?
Okay, thank you for all the questions. I will start maybe with the assumption for the Price Difference Payment Funds. Nowadays, we are in a situation in which we don't know what the regulation will be for the coming year. So based on the current market environment, we see that, of course, gas prices are lower than it was, for example, in 2022. That's why current prices, as we have said, on Polish Power Exchange are below the tariff price that would compensate for. So the sole value of the compensations, if it would be prolonged for 2024, should be relatively lower than the assumptions behind the scheme that was introduced back at the end of 2022 and the beginning of 2023. So I have to say about how this compensation scheme may be funded, even though we still have to keep in mind that the tariff price is the major factor that is based on the compensation that I'm based on. Without the current tariff process to be solved, we cannot target how big the compensation scheme fund should be. So we have to wait for the 2 things. First of all, we have to wait for the government to set up the regulations for next year and then we have to wait for the tariff process to end with the [ Natural Gas Regulatory Act ]. That would be a comment for the gas. The second question about --
The inland premiums. Yes, about the assumptions of inland premiums. Of course, the answer is not straightforward to be taken because this depends on the market conditions. So if they are busy with the final product, markets, et cetera. But having a quick look on this year, so we may say that margins, trading margins, especially on the diesel, were on the very high end truly paying this year. So I would expect that next year it will deteriorate comparing year-on-year, yes. So what we observe right now, trading margins in Poland are slowing down, please also bear in mind that last year there may be more products available globally. So in the next few months, there could be pressure on margins, mainly due to the new refining capacities coming globally. So I mean, Key West, Nigeria, Oman, and Mexico. So in my opinion, year-on-year, there will be a negative impact on the full-year basis. However, it may vary quarter-on-quarter.
Okay. And I think your first question is about M&A strategy, and M&A targets. I cannot agree that they are a down zone. They are fully aligned with the strategy and as we presented the strategy in the beginning of this year, in detail, we stated that we want to have like 3,500 fuel stations in [ San Carlo, Europe ] by the end of the decade. And we acquired Austria to cover the fee coverage of the market. So now we have retail organization from Poland to Germany, Austria, Czech Republic, Slovakia, and Hungary in a block of countries that gives you like a comprehensive network and allows to win big customers. Of course, the stations have the fuel, the fuel business has changes, but we are aware of them and we are aware that we need to transform the business, but we keep this as an opportunity with such a wide network ratio.Regarding the onshore investments, we did learn in our strategy that we want to have 9 gigawatts of renewable energy by the end of the decade. And we achieved that or we want to achieve that by a mix of organic and inorganic, both in offshore and onshore. As we already declared, we realized that this is an offshore multi-wind -- multi-power project, but in onshore, we want to get additional capacity, power generation capacity, and we invest in the capacity organically. So we don't -- we have organic projects that are going on and Energa Group, Energa, in development companies, developing several so-called PV, mostly PV projects right now. But in terms of wind, we invest organically in the onshore projects and we spend the way CapEx on that project.In terms of expansion or expansion outside Poland, currently about 75% of the total CapEx is spent in Poland, and Poland is our core market for developing our business. However, we see opportunities in other markets and we see a lot of opportunities outside Poland, and if we see such opportunities, we want to develop them.
Lukasz, do you want to ask a question?
Yes, yes. Last question, sorry. One last question about LOTOS, because I just -- I'm looking at the results in 3Q, and LOTOS generated like the PLN 200 million EBITDA LIFO, which is like close to zero, yes? Even though the macro environment was extremely good, yes? Last year, it was PLN 1.7 billion. If I look at these figures, it seems as with the inland premium effect was much higher than PLN 1.7 billion, because looking at these figures and taking into consideration that LOTOS had 100% of utilization, yes, if I understand correctly, there was no maintenance shutdowns in LOTOS. So the only factor in LOTOS which would downgrade the results was, I don't know, the inland premium effect, apart from revenue. Could you please try to explain why was the results of LOTOS in the refining segment so poor?
Well, to be honest, I don't have a split of such a data. I may come back to you offline with this truly saying, because we are not splitting, yes? We are showing and seeing only the final results, yes? We are not thinking what's going on, let's say, in LOTOS refinery, as well as we are not thinking and keeping, for example, Unipetrol refineries on Kralupy and Litvinov, yes? So but generally, yes, you are right. There were no maintenance shutdowns both in the third quarter last year and this year. There could be, let's say, negative effect also about there could be lower margins, because let's bear in mind that, as you said, 100% was consolidated last year. This year, it's consolidated 70%, but we are also selling partially, let's say, the final product from LOTOS to Saudi Aramco, yes? So this is without, let's say, any margin, truly saying so that was not a case last year.And in terms of, let's say, crude oil, probably there is nothing changed except the fact that, for example, in LOTOS, we are also paying more for crude oil than it was last year, yes? Even taking into consideration that last year, we were not processing Russian crude oil in LOTOS, and right now, we are not processing also Russian crude oil in LOTOS, but alternative grades are more expensive. So this is additional cost. So it's not only, let's say, inland premium pressure, but definitely other factors that impacted negatively the LOTOS results, but truly saying, I did not have a leak of LOTOS apparently on the results, so I cannot precisely tell you what was in the figures.
But can I -- if I could have a follow-up on this. How much products from LOTOS are sold based on market value? Is it 70% or 50?
70%.
70%? Okay.
We have no people in the queue, so if any one of you would like to ask a question, this may be this time. Please unmute yourself and ask a question. [Operator Instructions] Okay. So it seems that we have no further questions. So please Konrad close this with your final remarks.
Yes, there are no more questions, thank you very much for being with us. I hope that we clarified, let's say, a major of your questions. I know that it was a tough quarter, especially on the refining, and there were a lot of questions, but I hope that the majority of them were ourselves, and we revealed some of the information. So thank you very much again, and take care. Have a nice day. Bye.