Polski Koncern Naftowy Orlen SA
WSE:PKN
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Polski Koncern Naftowy Orlen SA
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Good afternoon, ladies and gentlemen. Welcome to the conference calls, which will be devoted to the performance of Grupa ORLEN, the ORLEN Group after the third quarter of 2022.
Today's speakers will include Jan Szewczak, CFO; and Mr. Armen Artwich, Management Board member for Corporate Affairs. Again, a very good afternoon to you, and I'll give the floor over to my fellow speakers.
Good afternoon, and welcome to yet another conference call after the third quarter of 2022. Before I move on to a more in-depth discussion of the presentation and our performance, I would like to have a few words of introduction in order to do away with the myths and misconceptions that our corporation makes money on Poles and their wallets. Our profit for the third quarter went down by nearly PLN 300 million year-on-year. That is the truth we'll have to share with you, mainly based on a downward trend on margins on fuels going down by 2% in Poland.
So the story is about our enormous profits on margins are not true, especially that we can actually reveal the fact that the model margin refining margin, which you hear about ever so often, it actually went down by 30% year-on-year. So it shows clearly that this is a downward trend. One more thing about the sales of fuels, petrostations in Poland. It is absolutely not the main factor in terms of our profits.
It is only 4% in its contribution into our profits, nearly 4% only. So we're talking about nonfuel sales, hot dogs, coffee, not alcoholic beverages and sweets. So we are talking about the contribution of only 4% to our operating profit more than -- or around 1/2 of our profit came from for a non-Polish sales actually.
Even if we are supposed to take into account a comparison with 2012, so 10 years back based on the minimum wage in Poland, then it will turn out that we could buy actually 263 liters of fuel. We're talking about prices at around PLN 6 and the minimum price at around PLN 200 right now. So we are talking about the purchasing power of around 300 or more than 300 of fuel. That is an increase of 50%.
So this can -- this actually shows quite clearly that the purchasing power of Poles went up quite considerably. We have to remember about the margins. And the fact is that fuel companies actually contribute to model refining margin to a very limited extent and the contribution actually is due to Ukraine-Russia war, and the fact that we are departing or going away from imports from Russia and from the eastern direction in general.
We have to remember about the white one-offs as well, such as the bargain purchase of acquisition of the LOTOS Group and the operating profit in the third quarter went down by 20% disregarding those one-offs. Due to the fact that this operating profit based on the bargain purchase of the LOTOS Group was at PLN 5.5 billion. And if we add to PLN 2.3 billion of profit generated by the LOTOS Group. It will turn out that the operating profit for the ORLEN Group in general would -- add up to in total around PLN 30 million, which is up by around PLN 3 billion.
This shows that we are growing in terms of our operations. We are upscaling or scaling up our business. And we are a multi-utility business, but we have to remember that in terms of LIFO-based EBITDA, it went down by 20% quarter-to-quarter -- no, quarter-on-quarter, and this is due to the macroeconomic environment that we operate in because it has been very volatile. And we also see the signals of economic downtrend.
As I said before, on Slide #1, you can see that the operating margin went down. The Refining margin model refining margin went down by 38% quarter-on-quarter. And the same applies to differential going down by as much as 39% quarter-on-quarter. Model petrochemical margin went down as well by 18% quarter-on-quarter, but at the same time, the prices of natural gas went up by 102% quarter-on-quarter.
You can also see on the third slide that the GDP dynamics that is going down, not only in Poland, but in Europe, all around the world, actually. On the other hand, all those negative factors, we've been trying to offset them by increasing the digitization of refineries, going up by 15 percentage points quarter-on-quarter and also the nominal utilization level is as much as 98% to almost 100%.
Also, the positive contributor was higher at sales going up by over 30% quarter-on-quarter. And last but not least, the element that we have already mentioned, the contributor -- positive contributor that is the upscaling of our operations as a multi-utility group, so there was a positive contribution or impact of the acquisition of the LOTOS Group, which came in at PLN 2.3 billion.
You can see the tables on the slide in terms of LIFO-based EBITDA for the third quarter, but you have to remember about the adjusted EBITDA, eliminating one-offs. We are talking about PLN 8.6 billion. We can sum it up by saying that we are on the safe side in terms of our financial strength, which will fuel our further growth, mainly based on our acquisition plans. We'll discuss it in detail later on.
We also have reported cash flows from operations at PLN 9 billion, which is comparable to the previous quarter. Our CapEx in the third quarter came in at PLN 4.5 billion, and we are continuing our CapEx processes in the quarter to come, in the fourth quarter. And what we find really important and makes us very -- what makes us very happy is the fact that our net debt went down by nearly PLN 7 billion quarter-on-quarter. And we also reported a very low net debt-to-EBITDA indicator, which is at 0.09. This is an indicator that makes us on the really, makes us really safe in considering that our strategy assumed the level of even 2.5%. So this clearly shows that we managed to eliminate our debt to a considerable extent.
This is a proof and this is a sign that we are very prudent in terms of our spending, not only in terms of our investments, but in general, what makes us very happy as well. And that is a very positive signal is the fact that our investment grades went up to a historically unprecedented level in terms of ORLEN's investment grades. We are talking about A3 stable outlooks for Moody's and BBB+ with a stable outlook from Fitch.
And these are record-breaking, as I said, unprecedented levels of confidence that is expressed by investment-grade agencies. This is also a sign that our merger process is M&A decisions were very successful and that we have strong financial footing.
On the other hand, we saw that our macro environment in the previous quarter went down or deteriorated quarter-on-quarter. As I said before, both model refining margin and the differential went down considerably. We're talking about a downward trend in petrochemical margins as well, going down by 20%. So all those stories and myths on gigantic and enormous margins are simply speaking, not true. This translated into a downward trend in our EBITDA LIFO operating profit going down by 20% quarter-on-quarter.
And as I said before, we try to offset those trends by higher refining utilization capacity and capacity utilization. We're talking about a nearly 100 utilization level and an increase in sales. As I've mentioned before, in the context or against the background of the consolidation of the results reported by our acquire, that is the Grupa LOTOS Group and also on consideration of the structures of both companies.
As I said before, in terms of our financial footing, we are on the safe side still, but we see major threats related to recession in the economy that we can see and a demo trend in GDP Netherlands and Poland, but in general, in Europe and around the world actually.
Despite those factors, we are proceeding consistently with our CapEx processes, and we're trying to ensure energy security for Poland and for Poles as well as for our neighbors because we are also present in terms of operations in our neighboring markets, plant CapEx is at more than PLN 15 billion for this year year-to-date, after 10 months of the year, almost 10 months of the year, we have already reported around PLN 11 billion in CapEx, of which, as I said before, PLN 4.5 billion for quarter 3 alone. And we are expecting those spendings to go up next year. We are also planning an upgrade modernization of our upgrade of our strategy, which will be announced early next year.
And you will see all those trends I've been talking about in this new upgrade updated strategy. We are very happy, as I said, about the downward trend in net debt to EBITDA and net debt in general quarter-on-quarter. It stabilized at the level of around PLN 5 billion. This is not a considerable debt level for a huge company as ours.
As I said before, those -- this performance, those performance figures have been noticed and duly estimated by rating agencies. We also finalized in terms of key facts and figures of the third quarter. We have finalized the merger with the LOTOS Group. It was also the merger with PGNiG Group was confirmed and accepted by Extraordinary General Meetings of both companies with almost a 100% support from all shareholders. And this is something that we should take pride in because it shows clearly that the shareholders of the respective companies, both companies seek that this is a well grounded and a good decision to create merge both companies and create a multi-utility group.
We acquired petrochemical assets from Basell ORLEN polyolefins with yearly capacity of 100 tonnes of polyethylene of PE that is low-density polyethylene, but we're also analyzing building off construction of additional capacities of polyethylene in Plock. We are also continuing our talks with Saudi Aramco and SABIC on potential further cooperation in terms of petrochemical business. Baltic Power signed a reservation agreement for transport and installation of offshore wind turbines and offshore substations and launched investments in Swinoujscie. And we're talking about installation terminal, installation port. We're very happy about that because this is a major investment in Western Iranian region and Poland.
Also, we are discussing a turbine factory Szczecin as part of the project for installation of offshore wind farms in the Baltic Sea. And we are also proceeding with ORLEN Synthos Green Energy, which submitted an application for a technology assessment with small nuclear reactors that is SMRs to the National Atomic Agency -- Atomic Energy Agency. We are also continuing with our work for low emission aviation if you will, SAF for PLL LOTs as of 2025 due to the construction of a special installation for HVO that is Hydrotreated Vegetable Oil in Plock and also established cooperation with both Shopee and Vinted as part of the ORLEN Paczka ORLEN Parcel project. We have established cooperation with PESA for hydrogen-powered railways.
Our company based in Czech Republic, that is ORLEN Unipetrol, bought REMAQ that is a leader in recycling in Central Europe. And based on that, we'll be -- it will be possible for us to manage plastic waste, which is a major problem, global problem in terms of environmental protection around the world.
Well, in terms of key facts and figures. I have to mention that PKN ORLEN received another special prize for the best annual report 2021, and we also were recognized again in the responsible companies ranking in 2022. And last but not least, we remain the main sponsor of the Polish National Football team, and I hope that tomorrow will be celebrating our national Polish national football teams and other achievements.
What else? In terms of key facts and figures, we have already discussed the acquisition of the LOTOS Group. So before I move on to a more in-depth discussion of our financial performance, traditionally, again, on behalf of Mr. Daniel Obajtek, our CEO, I'd like to extend heartful thanks to all our colleagues across the ORLEN Group, and we also have new colleagues that joined us both from the PGNiG and the LOTOS Group. So, to all of them, thank you very much.
Moving on to the macro environment in the third quarter. I will give the floor over now to Mr. Armen Artwich, Management Board member for Corporate Affairs.
Thank you very much for this introduction. As my colleague and CEO have just as just said, we continued our business operations in the third quarter and quite a different macro environment compared to the second quarter of the year. Our macro environment deteriorated considerably quarter-on-quarter, both in terms of Refining as well as Petrochemical segment. The model margin, refining margin as well as differential went down by nearly 40% quarter-on-quarter. The same applies to all refining products. And in terms of model petrochemical margin, it went down by nearly 20% quarter-on-quarter. And this -- and here, we also saw a downward trend for all petrochemical products in with the exception of PTA. At the same time, the price of natural gas went up twofold quarter-on-quarter, nearly twofold quarter-on-quarter, which obviously translated into higher costs for the use of gas, natural gas.
On the other hand, we have a positive impact of lower exchange rate of PLN versus U.S. dollar. Looking at consumption data for both fuels and GDP, as you can see on this slide, you see that there is a clear downward trend in the economy. And with the GDP going down across all markets that we operate at mainly due to energy crisis and higher inflation rate across Europe, and there is an inflation wave sweeping across Europe. And the consumption of fuels year-on-year, it went down and in terms of quarter-on-quarter in comparison with the previous year, it flattened out.
We are talking about several percent of decreases, and this should come as no surprise to anybody. Moving on, I would like to give the floor over back to Mr. Szewczak to discuss our financial standing and financial results.
This slide shows you our revenues, the LIFO net profit net results. Let me start with the fact that we reported an increase in revenues going up by 26% quarter-on-quarter due to higher sales volumes, which resulted obviously from consolidation of the LOTOS Group. The revenue came in at nearly PLN 73 billion compared to PLN 57 billion in the second quarter. This obviously is an effect of a certain seasonality combined with lower quotations of both Refining and Petrochemical products as well as volatile, but in general, decreasing crude oil prices.
EBITDA LIFO adjusted EBITDA LIFO. We need to remember about the effect of 1 ops in this case, we are talking about at PLN 0.6 billion which was lower by PLN 2.1 billion quarter-on-quarter, in which we reported in the previous quarter, we reported PLN 10.7 billion in terms of adjusted LIFO EBITDA. This was mainly due to as I said before, lower margins, Refining margins, then the differential as well, lower petrochemical margins and the usage of historical inventory layers as well as higher labor costs quarter-on-quarter.
These negative factors were, as I said before, partially offset by seasonality as well as higher margins as well as the weakening of PLN versus U.S. dollar quarter-on-quarter. One-offs or the one-offs I have mentioned included the consolidation of the acquired LOTOS Group. We were talking about PLN 2.3 billion here and also positive impact of hedging in the amount of PLN 0.9 billion as well as a negative impact of a valuation of CO2 contracts in the amount of PLN 100 million.
Adding up to, in total, PLN 3.5 billion. The negative effect on the LIFO effect was at PLN 600 million in terms of the impact of changes in crude oil prices. And we are also talking about PLN 0.8 billion in terms of financial results. This was a negative impact due to the surplus of negative foreign exchange differences and interest costs had a positive net impact of settlement and valuation of derivative financial instruments as well as dividends received.
And the net result in the third quarter of the year came in at PLN 6.8 billion, which represented an increase quarter-on-quarter. But we have to mention that at this point that this results PLN 6.8 billion should not include a one-off effect of a bargain acquisition of the LOTOS Group, which in itself represented as much as PLN 5.9 billion. In the next slide, we are talking about a breakdown of LIFO-based EBITDA by segment. And I'll now give the floor over to Mr. Artwich to continue.
This slide presents a LIFO-based EBITDA breakdown by segment. In the refining segment, reported nearly PLN 8 billion going up quarter-on-quarter by PLN 3.3 billion, mainly on the back of consolidation of the acquired LOTOS Group at PLN 1.7 billion as well as the positive impact of hedging in the amount of PLN 3.5 billion quarter-on-quarter. Moreover, we recorded a positive impact quarter-on-quarter impact of higher sales volumes due to seasonality as well as the weakening of PLN versus U.S. dollar.
Those positive effects were offset by the negative impact of lower refining margins quarter-on-quarter as well as lower differentials, usage of historical inventory layers as well as the valuation of CO2 for contracts. In the Petrochemical business or segments, it came in at PLN 700 million, going down by nearly PLN 1 billion quarter-on-quarter due to the negative impact of quarter -- lower sales volumes, so lower petrochemical margins, weakening of euro versus U.S. dollar and the usage, again, of physical inventory layers and valuation of CO2 contracts. In the energy power generation segment, we are talking about an increase of PLN 0.4 billion to PLN 1.6 billion, mainly as a result of positive impact of higher margins hedging and valuation of CO2 contract offset by lower sales volumes and higher labor costs.
In terms of the Retail segment, it came in at around PLN 900 million, going down by PLN 0.2 billion due to the positive impact of higher sales volumes and resulting from seasonality mainly as well as promotional campaigns with higher fuel and nonfuel margins. In terms of Upstream, it went up by PLN 0.5 billion mainly on the back of consolidation of the LOTOS Group and also, we have to remember about the negative impact of sales volumes as well as lower margins and positive impact of hedging.
Corporate functions, the costs were at a similar level quarter-on-quarter. Moving on to a more in-depth discussion by segment. In the refining segment in the third quarter, our LIFO-based EBITDA -- adjusted EBITDA adjusted that is without one-offs, it came in at PLN 5.5 billion going down by PLN 1.4 billion, that is 20% compared to the previous quarter. If we include one-offs, at PLN 2.2 billion, which were described here. Our EBITDA LIFO went up by PLN 3.3 billion quarter-on-quarter. As a result of, first of all, a positive impact of macro quarter-on-quarter, including the positive impact of hedging, the weakening of PLN versus U.S. dollar, which was offset partially by the negative impact of both lower cracks on light and middle distillates and also HSFO as well as lower differential valuation of CO2 contracts.
Higher sales volumes in total went up by over 50% quarter-on-quarter in of which we're talking about higher volumes of high sales volumes of gasoline, diesel oil by 20 -- by more than 50% LPG and aviation fuel. The other bar that you can see in the right lower section of this slide. This includes the consolidation of the acquired LOTOS Group at PLN 1.7 billion, as well as higher trade margins at PLN 0.4 billion as well as usage of historical inventory layers down at minus PLN 0.6 billion quarter-on-quarter.
In terms of the operational data of the Refining segment, we -- the throughput of crude oil amounted to 10.5 million tonnes, of which 1.7 million tonnes at PKN ORLEN Gdansk.
This represents an increase quarter-on-quarter by 3.3 million tonnes, including an increase by 1.7 million in Poland, both for Plock and Gdansk, combined with a lower throughput oil as well as higher middle distillate yield resulting also from the change of a product mix after the acquisition of LOTOS. At ORLEN Unipetrol, we reported a higher throughput by 0.3 million tonnes as a result of the operational data from Kralupy and Litvinov at full production mode after the maintenance shutdowns. We reported lower fuel yield by 5 percentage points to the higher sale -- share of high-sulphur crude oil in the throughput structure.
At ORLEN Lietuva, we reported higher throughput by 1.2 million tonnes due to the completion of the planned cyclical regular maintenance shutdowns of refineries and favorable macro situation, lower fuel yield down by 14 percentage points was due to higher share of high-sulphur crude oil in our food structure as well as the shutdown of our Reforming unit.
In the third quarter, we sold more than 51 -- or more than 50% products than before. And this increase in Poland represented 60%, 22% for the Czech Republic and 47% in Lithuania.
Moving on to our Petrochemical model, the Petrochemicals segment reported LIFO-based EBITDA at nearly PLN 700 million, which includes both Anwil contribution as well as lower PTA sales. Our third quarter results were impacted by negative macro as well which included lower petrochem margins of olefins, polyolefins, PVC and fertilizers, the weakening of euro against U.S. dollars as well as the negative impact of the valuation of CO2 contracts.
Those effects were partially limited by the positive impact of higher margins on the sales of PTA. In the third quarter, we reported a decrease in sales volumes going down by 80% quarter-on-quarter, including lower sales of olefins going down by 15% and polyolefins going down by 7%, fertilizers going down by 37%, PVC by 17% and PTA by 24%.
Others, the factors -- Other factors included mainly lower trade margins, the usage of historical inventory layers as well as higher costs in terms of both fixed and labor costs. In terms of the operational data of this particular segment in the petrochemical segment, we saw lower utilization ratio due to maintenance shutdowns and also lower demand for petrochemical products. Looking at individual units, production units in terms of Petrochemical segment, you can see that the Olefins segment at Plock reported a decrease due to shutdowns of BOP and Anwil as well in the reported quarter.
Plock reported lower utilization due to the shutdown of its installations in the third quarter of 2022. Metathesis unit at Plock, we had a shutdown of this installation due to market conditions, market limitations. In terms of the fertilizers production, we had a shutdown of installations in the third quarter of 2022. In terms of PVC at Wloclawek, we also had a planned maintenance shutdown in the third quarter of the year, and the same applies to PTA at Wloclawek. And also in here, we had a limited market demand as a negative contributor. For the -- as far as the olefins installation at Unipetrol, it maintain stable operation of its installations. The utilization ratio was limited due to the high level of inventories as a result of shutdowns.
Sales amounted to 1.1 million tonnes going down by 18% quarter-on-quarter, which was a consequence of, first of all, this lower sales in Poland, going down by 21% fertilizers, mainly due to high gas prices, which affected production costs as well as olefins and PTA due to the lower demand for those products. In the Czech Republic, it went down by 12% as a result of lower sales of fertilizers, while in Lithuania, it went up as a result of the lack of negative impact of regular maintenance shutdowns which took place in the previous quarter.
Moving on to Power Generation engine segment. In third quarter, this segment reported more than PLN 1.6 billion in terms of LIFO-based EBITDA, mainly due to the positive contribution of the Energa Group at PLN 1.1 billion. This result was considerably higher both quarter-on-quarter and year-on-year, mainly due to an improvement of our macro conditions despite lower volumes in terms of LNG products.
The positive macro impact quarter-on-quarter was related to an increase in margins on both production and sales of electricity as well as due to a positive impact of hedging, valuation of CO2 contracts as well as lower field to provision in terms of CO2 costs. We also reported a negative volume effect quarter-on-quarter. And also, we have to remember that this was a result of lower production and sales of electricity in both CCGT Wloclawek and CCGT Plock, due to high natural gas quotations, lower sales and distribution volumes with higher production at ENERGA Group. That was another contributor.
Other factors that was important or important for this particular segment, including mainly higher labor costs at PLN 0.1 billion going down quarter-on-quarter. In terms of the operational data for the Power Generation segment, we are talking about 2.8 terawatt hour of electricity in terms of production volumes, of which 4% from the renewable energy resources. The production went up to the high demand from ORLEN Lietuva and shorter shutdown of CCGT Wloclawek compared to the second quarter of 2022, combined with a decrease in production from the renewable energy resources due to worse weather conditions, address sales went down by 5% quarter-on-quarter due to lower production of CCG blocks and lower trading.
Electricity distribution was comparable quarter-on-quarter at 5.6 terawatt hours. CO2 emissions amounted to 2.4 million tonnes due to higher production at the Ostroleka Power station, which is fueled by coal. Moving on to the financial performance of the Retail segment. The Retail muscle in the third quarter reported EBITDA at PLN 856 million contributed mainly to very high demand and consumption of fuels, supported by a widely known promotional campaign.
Despite holiday period, which obviously in our business translates into a successful site success period. The fuel margins in Poland were down year-on-year and both year-on-year and quarter-on-quarter. In Germany, margins went up by 30% quarter-on-quarter. And in the Czech Republic, they went up by 9% quarter-on-quarter compared with a comparable level in terms of Lithuania.
In terms of nonfuel margins, it went up both in Poland and the Czech Republic with comparable margins reported in Germany and Lithuania. Higher sales volumes were reported by -- representing 9% quarter-on-quarter due to, first of all, seasonality as well as the promotional campaign I have mentioned and also higher sales of gasoline by 11%, diesel oil by 7% and LPG by 5%. Other factors impacting the financial performance of the Retail segment included, first of all, an increase in -- or an increase in costs in terms of the operation of fuel stations, which was quite noticeable quarter-on-quarter.
In terms of operational data for this particular segment, in the third quarter of the year, the sales volume came in at 2.5 million tonnes, going up by 9% quarter-on-quarter. Sales went up across all our markets, across the board: 11% in Poland, 4% in Czech Republic and Germany and by 4% -- 5% in Lithuania. The number of fuel stations across ORLEN Group came in at 2,898, going up by 13 quarter-on-quarter, going up in Poland, Czech Republic as well as in Slovakia, with a comparable number of fuel stations in Germany and Lithuania.
Our market share went up in Poland while staying comparable in other countries where we operate quarter-on-quarter. The number of nonfuel locations went up by 14 quarter-on-quarter to 2,323, including in Poland, 1,775 including 14 ORLEN w ruchu locations, 332 in the Czech Republic, 171 in Germany and 16 in Slovakia and 29 in Lithuania.
Alternative fuel points. The number of those fuel points is going up systematically. We are talking about 600 alternative fuel locations going up quarter-on-quarter, including 460 in Poland, 121 in Czech Republic and 19 in Germany. Right now, we have 532 (sic) [ 552 ] alternative fuel points in terms of electrical vehicles and a number of both hydrogen and CNG locations.
Moving on to our Upstream segment, EBITDA LIFO came in at PLN 842 million, going up by sixfold year-on-year and twofold quarter-on-quarter. The main contributors included, obviously, consolidation of the acquired LOTOS Group at PLN 500 million and also positive macro impact as well as higher sales. Those positive -- those positive factors were also increased by the positive impact of hedging and negative impact of certain acquisitions.
Sales went up by 26% quarter-on-quarter, including higher sales of crude oil by 81% as well as natural gas by 27% combined with lower sales of condensate -- gas condensate going down by 8%.
In terms of the operational data for the Upstream segment, we are talking a major contribution from the acquisition of the LOTOS Group, which obviously translated into higher reserves of both crude oil and gas and higher production. Obviously, the exposure in Poland went up considerably, but we also added new markets. That is, Norwegian -- Norway and Lithuania.
At the end of the day, in terms of total reserves, we're talking about 223 million barrels of oil equivalents, obviously. Average production went up by 62% quarter-on-quarter. It came in at 30.2 thousand barrels of oil equivalents per day, going up in Poland by 73%. The same applies to Canada as well as Lithuania going down by 15.2 thousand barrels of oil equivalent per day and 0.5%, respectively.
In terms of the sales structure, gas represent -- natural gas represented 47% and liquid hydrocarbons at 53%. Moving on, I will give now the floor over back to Mr. Jan Szewczak, who will discuss our cash flows and the financial period in general.
This slide presents cash flow from operations as well as free cash flow and cash flow from investments. We can put it in a nutshell. In the third quarter, we generated cash flow from operations at PLN 9 billion. They were limited, basically mainly by the working capital increase of PLN 2.1 billion. We need to remember about our investments as well. The cash flow from investments came in at PLN 4.5 billion with net outflows from investments at PLN 0.5 billion. Obviously, we have to remember about that. This was due to the acquisition of LOTOS. We generated more than PLN 22 billion or actually nearly PLN 23 billion of free cash flows with the LIFO. Year-to-date, for the 9 months, the LIFO effect was nearly at PLN 3 billion, working capital increase was at PLN 9.2 billion and CapEx came in at nearly PLN 11 billion or PLN 10.82 billion to be specific.
We spent nearly PLN 3 billion for the purchase of CO2 emission rights and property rights. This is a major contributor. This is a major cost. We are talking about nearly PLN 3 billion after 9 months of the year. We also spent PLN 4.5 billion for the settlement of deposits securing our hedging instruments -- for hedge not designated as hedge accounting. What makes us very happy is the fact that our debt indicators and debt figures went down by nearly PLN 7.5 billion down to a very safe level, mainly due to solid cash flow from operations, combined with cash flows from investments at PLN 0.5 billion.
The mandatory reserves was at nearly PLN 13 billion. Our net debt-to-EBITDA covenant, as I said, was at a very safe level, nearly 0, at 0.09. Our financing sources are well diversified, and average maturity date is this up to 2025. The ratings that we have reported, that is, from Moody's and Fitch rating agencies, are unprecedented, historically highest ratings enjoyed by Grupa ORLEN -- ORLEN Group. This is a sign of our financial strength.
We have already discussed our investments in CapEx projects. We are planning the CapEx to come in at PLN 15 billion or more than PLN 15 billion of which 70% is attributable to growth projects, which is very important. And this level does not include the plans for the acquired LOTOS Group. The CapEx forecast, including LOTOS Group, for this year, will come in at around PLN 17 billion.
Our all investments year-to-date for the 9 months of the year came in at nearly PLN 11 billion, of which nearly 60% for the Petrochemical business and the power generation business, which are main contributors and positive contributors to our profits. In terms of our macro environment, so the last slide we want to discuss in the market outlook, it will be discussed by Mr. Armen Artwich, again, to recap the presentation.
Ladies and gentlemen, as we said before at the very beginning, our macro environment or our market environment is highly volatile. So it is very difficult for us to talk about our expectations for our macro environment for the future. But we would like to discuss it -- discuss the main market indicators and the factors that are important to us as of today.
First of all, in the medium term, we expect that crude oil prices, average crude prices to be in the range of between USD 90 to USD 110 per barrel. We are also expecting a temporary increase in margins in European markets in the coming quarters as a result of an increase in demand for diesel as well as -- mainly diesel by the energy segment, which we used a substitute for natural gas. We are expecting the margins, Petrochemical margins, to remain at the level of around EUR 1,000 per tonne.
In terms of gas prices, gas prices will obviously depend on the weather conditions in the coming months as well as geopolitical risks related mainly to the ongoing invasion of Russia against Ukraine.
In terms of electricity prices, they should not exceed PLN 1,000 per megawatt hour as a result of regulatory changes as well as the projected favorable weather conditions as well as the expected economic recession. In terms of GDP for our markets, they are unfortunately not as optimistic as previously reported. We are expecting that the fuel demand will go down, both for fuel and petrochemical products, as a result of, as I have mentioned, an economic decline.
Next week on December 5, we will have a ban on seaborne imports of crude oil from Russia. And the same will apply to the imports of fuel as of next year from Russia. And we need to remember that in terms of our supplies of crude oil to the refineries across the ORLEN group, we are well diversified. 70% of the crude oil processed at ORLEN Group comes from outside of Russia, and we have not purchased any crude oil on the spot market from Russia.
We are only proceeding with our long-term contracts, which are still in effect in terms of pipeline supplies from Russia. We do not import any fuels from Russia as well. In terms of our taxes. By the end of the year, we will have anti-inflation regulations in Poland, which will include an exemption of value-added tax as well as sales tax as well as excise tax on fuels. This is a governmental anti-inflation package and let me remind you that PKN ORLEN is the largest payer of value of tax in Poland, paying nearly PLN 27 billion to Poland in terms of taxes. And the average every year is around PLN 400 billion in total.
Thank you very much for your attention, and let me now start the Q&A session.
Thank you very much. And traditionally, we'll move on to the questions we are receiving from the journalists. A question from Wojciech Jakóbik from Biznes Alert 24. Are you interested in any way in the Schwedt refinery? And if so, are Saudi Aramco interested as well, and maybe you will clarify the speculations in this area?
We do not want to refer to any speculations in the media. If we take any decisions or we have any plans, those are in line with corporate procedures, and we are informing the market, the investors and the journalists officially if any such decisions are taken, obviously, in due time. This is not our problem in terms of Poland or in terms of ORLEN with the Schwedt refinery. This is a German problem. The Germans will have to [ seek ] those problems themselves.
A question from Salon24. When will we see the first offshore wind farms in the Baltic Sea? What is the stage of completion of this project?
As you well know, both PKN ORLEN and the partner are in the process of building on the first offshore project with a capacity of 1.2 gigawatts power. This project will generate electricity in 2026 in accordance with the plan. At the same time, we're trying to make sure that we will have more licenses. We're doing our best to secure those licenses of the level of licenses that are available in the market right now. PKN ORLEN -- the PKN ORLEN strategy is related to -- or includes, to a large extent, investment in renewable energy projects, including offshore projects, obviously.
And I do believe that it is also worth pointing out that we are considering this investment, first of all, in a very prudent way. But on the other hand, we are not wary and we are not afraid to be a trendsetter in terms of the region. This is why we decided to build one of the most state-of-the-art or use one of the most state-of-the-art wind turbines in our Baltic Sea farm. We are talking about 15-megawatt turbines, one of the most advanced turbines available in the market.
We are also considering certain other aspects in order to make sure that we proceed with the investment as planned. This is why we decided to build an installation terminal, expansion port for our wind farms in the Baltic Sea, which will be located in Swinoujscie. We have also secured -- for the purposes of this investment, we have secured a vast area of land, around 20 hectares, which will be used to, first of all, install those installations and systems to make sure that the colossal 15-megawatt turbines operate as planned, but also the smaller 20-megawatts turbines.
We're also doing our best in order to make sure that the Polish economy is a beneficiary to the largest extent possible from these investments, and we are discussing with our partners to make sure that this is our goal. For instance, we have Vestas, one of the 3 major producers of turbines around the world. We are discussing with this company. We have partnered with this company, and it sees a major potential in Poland. This is why they decided recently, they have decided recently to locate it -- their factory for the kind of components of turbines, in Szczecin.
This will employ several hundreds of people and the products from this factory will not only be used for our Baltic Sea project, but also will be sold to customers all around the world.
Thank you very much for this comprehensive answer. Another question came from Mr. [ Kyo Bachinski, ] representing [ Strava Business ]. So when will you present PKN ORLEN's strategy, which will include the acquisition of PGNiG and LOTOS Groups?
As we said before, we are planning a new updated strategy to be published shortly, which will include the scale of the new multi-utility business after both acquisitions, and we are planning to present it early next year.
And the last question [indiscernible] represented by [indiscernible]. Will you resign from long-term contracts with Russia as of the beginning of next year as announced? What if the sanctions are not introduced?
This question has already been answered, but maybe to complement it, Mr. Jan Szewczak will complement it.
We did not wait and rest on our laurels. So we actually had expected it beforehand. We had prepared for the 4 years before the actual war. So we decided to negotiate with the world's biggest corporation in terms of crude oil, Saudi Aramco, in the context of the diversification of our crude oil supplies.
We signed respective agreements with Saudi Aramco to secure 20 million tonnes of crude oil to Poland. So we actually, we're a step ahead of a great number of major corporations around the world. They woke up only after Russia invaded Ukraine. We took -- or had taken certain steps before. And in terms of the limitations in the future, we are well prepared to actually take certain difficult decisions based on the European Commission's decisions. Obviously, those decisions must be unanimous and they must be taken together by both sides, and they should not result in any disruptions in terms of competition.
Some of the -- all the participants of this, actually, process needs to conform to those decisions. So in terms of the sanctions, we are well prepared to any sanctions that will be introduced. We are also fully secured in terms of the supply of fuel of products to both our refineries and the refineries of our partners in the neighboring countries.
All your questions -- other questions will be answered by our press office. Thank you very much for your attention. Thank you to our speakers, and see you next time. Thank you very much.