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, and welcome to everybody who are joining us live online. Today's press conference is devoted to a summary of the financial performance of PKN ORLEN for the year 2021 as well as for the fourth quarter of 2021.
This conference call will be delivered by Mr. Jan Szewczak, Management Board Member of PKN ORLEN for Finance, CFO; as well as Mr. Armen Artwich, Management Board Member PKN ORLEN for Corporate Affairs. I'll now give the floor over to them to deliver the presentation.
Good afternoon, ladies and gentlemen, and welcome to yet another conference call of PKN ORLEN, both applying to the fourth quarter and the entire year of 2021.
Before I move on to fourth quarter of the year to discuss it, I'll start by saying a couple of words about the entire year of 2021. We have just closed, and I am very happy to tell you that for yet another year running our performance of record breaking, not in the scale or across the scale of a couple of years. But against the background of the entire transformation of Poland economic transformation because we have delivered LIFO-based EBITDA at PLN 14 million -- more than PLN 14 billion, PLN 14.2 billion. This is something that needs to be noticed not only in Poland in the CEE region, but also among the world's global powerhouses in Europe.
Our net profit for 2021 is more than PLN 10 billion, specifically PLN 10.2 billion. And only in the fourth quarter of the year, we delivered net profit at PLN 3.2 billion, which means that during the 3 quarters of the year -- of the last year, PKN ORLEN delivered net profit which was higher in comparison with the past 8 years -- in the comparison with the 8 years of the previous government, management of the company. So again, in the 3 quarters of the year, we have made more money than our predecessors for their 8 years -- for the 8 years of their governance. So this is driven to a major extent by our good ad solid performance as well as our courageous decisions we have made under way. I'll discuss it later on against the background, for instance, of the purchases of issues -- CO2 issues -- emission certificates.
These were all the factors that were the drivers behind our solid performance. Our LIFO-based EBITDA is well diversified, and our financial standing is solid as well. We have made more than PLN 13 billion, to be exact, PLN 13.4 billion in operating cash flows. And what's also important and worth pointing out is our investments. We are talking about almost of around PLN 10 billion in our CapEx. And in this year, we expect to report an even higher CapEx of around PLN 15 billion.
We have managed to achieve such solid performance, but we also paid out dividend to our shareholders at PLN 3.5 per share. And yet another confirmation of our strength is the fact that all these effects were achieved in the context of the lower debt. We draw debt down, down to around PLN 15 billion. However, our net debt-to-EBITDA covenant is at a very safe level of 0.61.
As you may remember, we have always emphasized that in the strategy, the covenant is at 2.5. So you can clearly see that it is possible to deliver record-breaking results in terms of our financial performance and operating performance of a company that is state owned while keeping our debt at a safe level.
We have secured financing of our ongoing operations for all the growth projects through the issue of ESG-based bonds at PLN 1 billion. And what's also important, and we have already communicated it to you, as the first company in Poland, we have issued green eurobonds of EUR 500 million more. And this is about PLN 2 billion. This is a level that has never been seen before in Poland. I'd like to thank all the team responsible for the management of our finances. I do believe that this project was a spearheading project, pioneering project in Poland in the context of great uncertainty of the market situation in terms of the fuel market. So to Mr. Michal Perlik and all the team, thank you very much, and please give our heartful thanks to all of the members of that team.
This -- the proceeds from that issue will be devoted to -- or be dedicated to our investments, especially in terms of offshore, foreign projects and the infrastructure to -- infrastructure dedicated to this huge project. And this -- it will be discussed in more detail by Mr. Artwich. And also, we will be dedicating those proceeds to other CapEx project.
We also managed to secure financing from the European Investment Bank for projects which will support sustainable development. We're talking about the funding of about EUR 180 million. Obviously, 2021 was a challenging year. This year was not a normal situation in the context of the pandemic. However, we managed to deliver all our most important goals and projects. And we also made great progress in terms of our acquisitions.
As you obviously know, we selected 4 partners for remedies and we submitted documentation required by the European Commission. We're talking about the LOTOS Group acquisition. This has been a major effort, and we dedicated the entirety of December to that project. And we do believe that the agreement with MOL Group and Saudi Aramco is a historical moment for not only PKN ORLEN but also for the Polish economy.
We're not only talking here about selection of remedies partners, but we are talking about the projects dedicated to technologies, patents and licenses as well as other technologies of Saudi Aramco, which are the most state-of-the-art solutions around the world for fuels, alternative fuels, synthetic fuels that Saudi Aramco has in their portfolio. And this is why this project was very important to us and very valuable to us.
We prolonged that process because we needed to make sure that we achieve the greatest possible results, most advantaged results for PKN ORLEN. We are very happy that we have been able to secure such amazing partners.
As far as the PGNiG acquisition is concerned, you probably know that we are still awaiting the decision of the Antimonopoly Office.
In 2021, we closed a number of growth investments and projects. We're talking about propylene glycol project at ORLEN Poludnie, Visbreaking installation at Plock and also preparation work for wind farm projects in the Baltic Sea as well as hydrocracking unit at ORLEN Lietuva as well as bioethanol second generation at ORLEN Poludnie and CCGT at Ostroleka and -- as well as Grudziadz.
We acquired 100% of shares in OTP, the largest fuel -- road fuel carrier in Poland. This is a very important step, very important acquisition. We also launched around more than 400 automated parcel machines as part of the ORLEN Paczka, an ORLEN parcel project. This is a new growth project, and we're keeping our fingers crossed for it.
We launched 300 alternative fuel points, and we also launched new formats of ORLEN in motion, ORLEN w ruchu. Other projects included the fact that we secured crude oil supplies by signing annexes to Rosneft and Tatneft as well as Saudi Aramco contracts. And we also signed new contracts with ExxonMobil.
We're talking about major powerhouses, global partners. And I'd like to emphasize once again that this cooperation with one of the most, if not the most, petrochemical -- the largest petrochemical company in the world, Saudi Aramco is very important for us.
We also launched certain start-up programs, meaning -- by which I mean ORLEN Skylight Accelerator as well as HYDROGEN EAGLE, which is aimed at the construction of international hygiene hubs network. This is a very important project for us as well. We want to take action in that area. And we are very sad to hear that there has been a number of information in the press that were not true.
This is a priority project for us. We are very much aware of the fact that the world in terms of fuel market is changing. And we need to take proactive action in order to meet those challenges in order to make sure that we are ready for those changes. I'm talking about hubs and hydrogen projects.
We also signed an agreement with Synthos to jointly develop and implement zero-emission projects. MMRs and SMRs, we have mentioned those projects before. And I do believe that this has already extend the future of the Polish engine market. And we do believe that -- just as our CEO, Daniel Obajtek said, we do believe that we will achieve those goals.
We also have partnership with GE Renewable Energy in relation to new licenses for wind farms in the Baltic Sea. This is, again, an important and a global partner. So all our works in that area have been recognized by the markets. We again were named the World's Most Ethical Company as well as Top Employer Poland. And obviously, we are happy to be a company to -- that draws great attention to its corporate governance and CSR activities. And also, our reports were -- annual reports were also recognized and appreciated by the market.
We also received the Golden Leaf by the Polityka magazine. And ORLEN was also named Poland's Most Valuable Brand. I do believe that this value of the company will be even greater after this year's results or last year's results.
This is as far as the recap of the entire year is concerned. Again, I'd like to emphasize it has been a great year for us. So we put a lot of work in order to meet the challenges of this very challenging market situation in the context of the pandemic. We still managed to report historical record-breaking results due to our great involvement and the great involvement, obviously, of the entire team across PKN ORLEN.
Before I move on to discussing the fourth quarter alone, I would like to -- on behalf of Mr. Daniel Obajtek, again, ORLEN's CEO, I'd like to thank all the members of our team, all the employees for their engagement and solid work. Thank you very much on behalf of the entire Management Board.
As far as the macro environment is concerned for the quarter of the year. Moving on to the next slide, Slide #5, you can see that the model downstream margin went up by USD 2.2 per barrel in comparison with 2020. It went up to USD 6.7 (sic) [ USD 7.6 ] per barrel as a result of the nearly sixfold increase of the refining margin and the Brent/Ural differential as well as the 50% increase of petrochemical margin. Margins on light and middle distillates went up as well. The same applies to all petrochemical products. However, our margins were on heavy fractions. Refining fractions went down, which means that we also reported higher costs of our in-house usage due to higher prices of crude oil, which obviously is still -- are still very volatile.
As far as consumption of fuels is concerned, we saw a certain economic recovery in 2021. On Slide 6, you will see the data for fuel consumption for the figures. We reported significant increases across all our markets mainly due to the absence of certain -- of lockdowns or some serious limitations in terms of transportation and in the context of the pandemic, which we obviously suffered from in 2020. And obviously, certain economic recovery and an increase in GDP figures. This will be an important factor for the previous year. We do not have yet the official data, but I do believe that the GDP figure is about 4.5%, which obviously will drive up consumptions across all our markets. And I do believe that the GDP growth will continue in Poland.
On Slide 8, you will see financial results of PKN ORLEN. We reported higher revenue by 68% (sic) [ 78% ], going up by 16% year-on-year due to higher quotations of refining and petrochemical products as well as due to crude oil prices increasing by USD 36 per barrel but also due to higher sales volumes going up by 7% year-on-year.
We reported PLN 4.3 billion in the fourth quarter alone in terms of LIFO-based EBITDA going up by PLN 1.5 billion year-on-year. As I said before, this is mainly a result of the positive macro impact. However, also due to -- it was due to higher trade margins in wholesale as well as nonfuel margins in retail as well as the usage of historical older inventory layers.
Still, LIFO-based EBITDA was driven mainly -- again, I'd like to emphasize my great management and courageous, bold decisions, especially in relation to CO2 emission allowances and purchases of those allowances. Those positive effects were partially limited by other drivers.
We need to remember about the LIFO effect at PLN 1.3 billion in terms of the impact of changes in crude oil prices. Financial results -- our financial results stood at more than PLN 100 million as a result of only the surplus of positive FX differences.
Our net result in the fourth quarter stood at PLN 3.2 billion and at PLN 10.2 billion for the entire 2021. We would like to see those results maintained in the years to come because, as I said before, these are record-breaking results not only in the scale of a couple of years but in the context of the last 3 years of Poland's economic development.
Moving on to LIFO-based EBITDA performance by segment. I'd like to give the floor over to Mr. Artwich.
Thank you very much for this introduction. Moving on to discussing Slide #9, LIFO-based EBITDA by segment in the fourth quarter of 2021. In the Refining segment, we reported the figure going up by -- going up year-on-year mainly due to positive macro impact, higher sales volumes, higher trade margins and the usage of historical inventory layers at negative inventory valuation as well as higher provisions for CO2 emissions.
In the Petchemicas segment, we reported an increase of PLN 600 million year-on-year. And the contributors included, obviously, the positive macro impact as well as higher trade margins, the negative impact of lower sales volumes as well as higher provision for CO2 emissions.
In terms of the Energy segment, we reported a decrease by PLN 1.1 million year-on-year mainly due to negative macro impact as well as higher overheads as well as higher provisions for CO2 emissions.
In terms of Retail, we reported PLN 600 million, down by nearly PLN 200 million year-on-year. This was obviously due to negative macro impact as well as fuel margins, higher overheads and labor costs, combined with the positive impact of higher sales volumes as well as higher nonfuel margins.
In the Upstream segment, our result were higher -- was higher by PLN 136 million year-on-year due to positive macro impact combined with lower service volumes.
In Corporate Functions, we reported lower costs by PLN 142 million year-on-year mainly due to ORLEN Group's companies better results as well as lower donations and other spending related to the fight with COVID-19.
Moving on to a more detailed discussion of our performance by segment. Slide #10 presents our Refining segment reporting nearly PLN 2.1 billion in LIFO-based EBITDA, going up by PLN 2 billion year-on-year. The positive macro impact year-on-year was mainly due to higher Brent/Ural differential, higher cracks on light and middle distillates, weakening of PLN against the U.S. dollar as well as settlement of CO2 contract. These were all drivers of that result.
When we are talking about CO2 future contracts, we need to remember that the effect was at PLN 500 -- or more than PLN 500 million versus around PLN 200 million in the fourth quarter of 2020. Those effects -- positive effects were offset by the negative impact of lower cracks on heavy fuel oil, higher cost of our internal usage due to rising crude oil prices as well as cash flow hedging transactions as a result of higher crude oil prices and petroleum prices in the fourth quarter of 2021.
In the previous quarter, we reported higher sales in the Refining segment, going up 10% year-on-year, especially in terms of gasoline, diesel oil, jet aviation fuel as well as heavy fuel oil, combined with the lower LPG sales.
On the chart on that slide, you'll see others, which includes PLN 0.3 billion positive impact of higher trade margins as well as the usage of historical inventory layers as well as the negative figure of minus PLN 1 billion year-on-year of negative NRV impact and higher provisions for CO2 emissions.
Moving on to Slide #11. I'd like to discuss the operational data for the Refining segment. In the fourth quarter of the year, we -- the throughput, crude throughput was at 0.4 million tonnes going up year-on-year by 1.2 million. We also need to remember that we reported higher crude oil throughput at PKN ORLEN due to the lack of maintenance shutdowns in the fourth quarter of the year, including CDU hydrocracking, hydrogen unit as well as lower utilization of FCC, H-oil and HDC (sic) [ HDS ] units.
At ORLEN Unipetrol, we reported an increase of 0.2 million tonnes year-on-year due to improvement of our macroeconomic situation as well as our market spending and the smaller scope of maintenance shutdowns year-on-year, which led to also higher fuel yield figures going up by 3 percentage points.
At ORLEN Lietuva, we reported an increase of 0.6 million tonnes year-on-year due to reduced production in the fourth quarter of 2020, resulting from unfavorable macro situation and the so-called base effect. We also reported higher fuel years by 2 percentage points due to higher usage of semi-finished products.
In the fourth quarter, we sold 6.8 million tonnes of our Refining products, going up by 10% year-on-year, mainly due to better market and macroeconomic situation. And those volumes in terms of all our markets went up.
Moving on to Petrochemical segment on Slide #12. You will see that the petchem reported a high record-breaking result at PLN 1.4 billion, going up by 78% (sic) [ 76% ] year-on-year. Obviously, positive macro impact due to higher margins on olefins, polyolefins and PTA as well as PVC and fertilizers was a major driver but also settlement of CO2 contract.
As I mentioned before, we reported solid results due to those driver. Sales volumes went down year-on-year by 7% mainly due to lower sales of fertilizers, PVC and PTA, combined with higher sales of olefins and polyolefins.
Also, you will see in this particular slide, the others item, which includes PLN 0.2 billion year-on-year positive impact of higher trade margins as well as the usage of historical layers of our inventories as well as the item -- negative item of minus PLN 100 million due to negative impact of higher provisions for CO2 emissions.
In terms of our usage and utilization figures, we went back to more than 90% usage at Plock but also -- at BOP at Plock after the shutdown of the olefin unit in the previous period.
As far as metathesis unit at Plock, the utilization needed to be adjusted to the demand for polypropylene and propylene and available storage capacities.
At Wloclawek, we extended the planned investment, maintenance shutdown for PTA. And in terms of olefins at Unipetrol, we reported stable work of the installation compared to previous periods.
Sales volumes amounted to 1.3 million megatons, going down by 7% year-on-year mainly due to lower sales in Poland, going down by 13% mainly for fertilizers and PTA as a result of maintenance shutdown of PTA and reforming installations combined with higher sales in Lithuania going up by 47% due to macro environment improvement as well as higher sales in the Czech Republic by 3% as a result of improving operational parameters of the installations year-on-year.
In the Energy segment, Slide #14, you will see that we generated nearly 500 -- PLN 220 million (sic) [ PLN 248 million ] LIFO-based EBITDA in terms of our performance, going down year-on-year. And the contributors were mainly ENERGA Group.
In the fourth quarter, we reported negative macro impact year-on-year as a result of higher gas prices, higher lignite prices at Unipetrol as well as unfavorable price relations between the purchase and the resale of energy at ENERGA Group, which was partially limited by the positive impact and settlement of CO2 emission contracts.
In the fourth quarter, we reported record breaking gas prices going up sixfold year-on-year. And the same applies to the volatility of prices as a result of lower utilization rates due to high cost gas quotations. And we need to remember that our gas stocks -- gas stocks across Europe were low. The item others include higher provisions for CO2 emissions at PLN 0.3 billion as well as higher fixed costs.
In terms of the operational data of the Energy segment, you will see on the next slide that we've produced 3.3 -- or 3.2 terawatt-hours of electricity, which also came from renewable energy sources of CCGT units.
Our electricity production went down by 3% as a result of lower utilization of gas units due to unfavorable macro as well as higher energy production at Ostroleka due to higher demand from PSE, Polish grid network. And electricity sales increased by -- or decreased by 8% due to lower sales on TGE, the exchange.
Electricity distribution figures went up by 2% due to higher economic activity and economic recovery as well as a higher number of energy connection points. And CO2 emissions amounted to 2.5 million tonnes.
Moving on to Retail segment. The fourth quarter of the year was a period of lower fuel margins combined with higher sales volumes. EBITDA of our Retail segment was at PLN 572 million, going down 25% mainly due to higher cost of our service stations combined with higher costs and higher nonfuel margins.
Fuel margins in Poland went higher in Poland as well as in Germany -- lower in Poland but higher in Germany and in Czech Republic and comparable in Lithuania year-on-year. Higher nonfuel margins in Poland were combined with lower margins in Germany and Czech Republic. Our nonfuel margins was higher in Poland and Lithuania but lower in Germany and in Czech Republic.
We have consistently increased the number of our stations offering alternative fuel points. We currently have 508 alternative fuel points going up year-on-year by 296. At the end of the fourth quarter, we reported 2,881 fuel stations in total going up, both in Poland but also in Germany, Czech Republic and Slovakia. 80% of our stations already offer our Stop Cafe nonfuel concept.
We also opened new nonfuel locations, including ORLEN w ruchu or ORLEN in motion. At the end of the year, we reported 2,290 nonfuel locations going up across all our markets. Our sales volumes went up year-on-year mainly due to higher sales in Poland going up by 12%, in the Czech Republic going up by 6% and Germany going up by 2%.
Our market share in Germany and Slovakia went up but went down across all our other markets. We are developing our nonfuel -- alternative fuel points going up in Poland by 273, by 19 in the Czech Republic and by 4 in Germany. Our clients were offered new locations for recharging their electric vehicles. We also have 2 hydrogen stations, some fuel points in Germany and also CNG stations in Czech Republic.
In terms of our Upstream segment, we reported positive macro impact, combined with lower sales volumes. Our EBITDA -- LIFO-based EBITDA was record-breaking, almost fourfold in terms of its increase year-on-year. Obviously, due to higher prices of all hydrocarbons, our average production went down by 300 barrels of oil equivalents per day due to lower production in Canada. And our sales went down by 7% year-on-year as a result mainly of unplanned shutdown of our external hydrocarbon customer in Canada.
The operational data for our Upstream segment includes the average production at 15,900 barrels of oil equivalents per day. And our Upstream CapEx stood at PLN 150 million.
In the upstream segment, we focus on the most prospective projects and promising project. On Slide 19, you'll see specific information in terms of our operational activities in the fourth quarter in terms of Miocen, Edge, Sieraków and Plotki projects in Poland as well as Kakwa, Ferrier and Lochend in Canada.
Moving on to our financial standing. And I'll now give the floor over to Jan Szewczak to discuss it.
On Slide #21, you will see our cash flow figures. I'd like to draw your attention to 2 points. We generated PLN 14.2 billion in terms of LIFO-based EBITDA. We have already mentioned that figure. The LIFO effect was at PLN 4.2 billion. Working capital was at PLN 4.4 billion. Working capital increased, and this makes us quite happy because we are translating it into high CapEx, nearly at PLN 10 billion, specifically PLN 9.9 billion, which was combined with our dividend payout, which means that we are meeting our shareholders' expectations at PLN 3.5 per share.
We spent PLN 1.8 billion on the acquisition of, for instance, CO2 emission allowances. But this is also -- we have also -- we have spent that money in order to make some savings. So we would have spent a lot more had we secured our allowances in 2 years ahead. For some major powerhouses and major companies around the world, it's a great challenge to meet. We managed to keep it under control. We need to also -- we generated also nearly PLN 2 billion, PLN 1.9 billion specifically, for settlement of deposits to secure hedging instruments.
The next slide is very important. It shows our debt figures. As I said before, across the year, we reported lower debt in the fourth quarter alone and went up to PLN 12.2 billion at the end of the year, which was mainly due to our spending at PLN 100 million, combined with positive flows -- cash flows.
I'd like to point out again that we secured a funding from the European Investment Bank dedicated to sustainable projects, which is very important these days. These are very specific projects that we need to focus on.
Obligatory reserves in the balance sheet stood at PLN 6.4 billion at the end of the fourth quarter. And our net debt-to-EBITDA covenant is a very solid and safe level of 0.61. And despite that, our strategy figure is at 2.5. So we are on the very safe side here. Our sources of financing are well diversified. You can see that in the lower part of the slide, in the pie chart. And the majority of 2023 is a very solid figure as well.
We have rankings from global renowned agencies such as Fitch and Moody's. And this all shows that our decisions in terms of our strategy were good decisions.
The next slide is devoted to our CapEx figures and our investments and our business spending. As I said before, stood at nearly PLN 10 billion. These are record-breaking results never seen before in Poland and higher then we have planned before. We planned it at PLN 9.5 billion, and we managed to go beyond that plan.
This is due to the fact that we managed to accelerate certain processes, and some growth projects are at a more advanced stages than before and -- than we would have expected. And we also spent more on petchem and energy projects. These are strategic directions of our growth as well as refining.
We are well aware of the fact that our decision and assumptions that we need to create a multi-utility company here, a multi-utility powerhouse. And we need to do that in order to feel safe in these uncertain times. We need to have solid pillars of our operations.
And we used to report higher contributions from Retail, for instance, in previous periods. But we can see right now that when Retail does not contribute that much anymore, other pillars and segments of our operations contribute to balance that affect, for instance, Petchem or Energy.
In terms of our main growth projects in the fourth quarter of the year, we have already mentioned Visbreaking at Plock as well as the olefins unit at Plock. This is a major product project watershed or breakthrough project in terms of the development of the olefin production in Poland.
We have secured financing for that projects. And we see there is a lot of interest among the banks around the world, not only European banks but also global, Asian banks in that particular project.
In Retail, we opened 35 fuel stations. We closed 7 fuel stations. It's not that we only open or build new fuel stations. Sometimes we need to close them down if they do not bring any profit and if it turns out that the cost effect figure is not to our advantage.
The road infrastructure in Poland has changed. We are building new highways and this is all ahead of us. We want to make sure that PKN ORLEN's share in that particular market is considerable. Poles like to see PKN ORLEN fuel stations on the way when they are traveling. They are nice. They look good. They offered a lot. So we keep our fingers crossed that we will be involved in those processes as time goes by.
On Slide #25, you will see our CapEx plan for 2022. This is a major figure. This is a huge figure, more than PLN 15 billion, PLN 15.2 billion, of which we want to spend PLN 10.7 billion on our growth projects, 75%, which is brand-new in our history.
And this major growth in CapEx figure is due to more spending on the advanced stage projects. And this includes hydrocracking unit at Lithuania as well as hydrotreated vegetable oils unit at Plock, bioethanol second-generation unit at ORLEN Poludnie, construction of the Visbreaking unit, as I said before, extension of olefins capacity at Plock but also building of the wind farm project in the Baltic Sea as well as connection of new clients to ENERGA Group as well as construction of CCGT and units at Ostroleka and at Grudziadz.
We want to open more than 30 new fuel stations. We want to extend our nonfuel sales offering. This is of major importance to us important to us. We are opening more than 30 new locations with the Stop Cafe/Star Connect format. We want to introduce new services and new products. And we hope that it will attract new clients. And we also do hope that as time goes by, slowly step by self, the pandemic will subside. And Poles like to spend money. Consumption is one of the major drivers of Poland's economic growth. And we do hope that we benefit from it as well.
Moving on to macro environment. This will be discussed by Mr. Artwich.
Again, let us comment on our current macro environment as well as our forecasts in terms of this year -- next year.
Slide 26 presents our current macro figures for the first quarter of the year. Our model downstream margin went down by EUR 0.10 per barrel mainly due to lower refining margin as well as Brent/Ural differential combined with model petrochemical margin going up mainly due to rising prices of crude oil. The price of crude oil is going up, as you might know, due to a very tense geopolitical situation.
The crack margins also are going up. The Brent/Ural differential, one goes down by USD 0.5 per barrel mainly due to higher demand for crude. And the petrochem margin went down mainly due to higher prices.
In terms of our outlook for the macro environment. In 2022, we expect that the average crude oil prices will go up to around USD 75, USD 80 per barrel as well as higher refining margins. We expect those margins to increase to the level of USD 4 or USD 5 per barrel. We expect a comparable Brent/Ural differential, but we also expect decreases in petrochemical margins.
We also decreased -- expect decreases in gas prices after the heating season. We expect an increase in electricity prices to around PLN 450 per megawatt-hour as a result of expected increase of price of CO2 emission rights and high gas prices. As you might know, the global economy is recovering after the pandemic.
In terms of GDP outlook, we expect GDP growth. We expect the GDP to grow. And also, the same applies to fuel consumption as well as petrochemical product consumption and demand.
In terms of the regulations, we need to remember about the government's anti-inflation package, which will reduce, for instance, the excess tax on fuels. Also, it provides for exemption from retail sales tax as well as VAT reduction on fuels, which will translate then into lower fuel prices. And also, this should stimulate demand for fuels.
Thank you very much for your attention. I do believe this would be all on my part. Thank you for your attention. And I do believe that we're now ready to move on to your questions.
Thank you very much for this part of the presentation. And as usual, we received a number of questions to our dedicated e-mail address. Obviously, we will not be able to answer them all, but our press office will prepare answers to all of your questions later on.
But we will start with the topic that is of interest to you all, that is, dividend. There are a couple of questions concerning dividend.
Mr. [ Apanovitch ] asks whether the conclusion of the acquisition process for Grupa LOTOS and also potentially -- PGNiG will have an effect on dividend payout for 2021 or 2022.
Well, let me answer that question. We are a reliable company. Even in very challenging years, we were able to pay dividend. And secondly, this is all provided for in our strategy for 2030. We included the acquisition of LOTOS in that strategy. We are talking about the payment of dividend at PLN 3.5 per share or PLN 1.5 billion for 2021.
Obviously, we need to remember, this is our recommendation. The decision -- the ultimate decision is up to the General Shareholders' Meeting in March. We will publish our annual report, and we will present our recommendation there.
But again, we want to keep our promises. We find our shareholders important. It's the shareholders that we work for in order to make them satisfied with our performance. So again, we want to uphold our earlier declarations and promises in the area of dividend payment.
[indiscernible], Polska Press. When will you publish your hydrogen strategy? And can you give us an insight into your main assumptions in that area?
Thank you for that question. Again, ORLEN is a major producer of hydrogen -- industry-grade hydrogen. And let me remind you that hydrogen is important and essential for petrochem installations. We produce a lot at Plock and Grudziadz but also abroad.
On the other hand, you need to remember that hydrogen grade hydrogen -- that industrial grade hydrogen is important for our clients because it is a green solution. So we look at hydrogen as a very promising and transport solution. And we are talking about not only Poland but also Czech Republic and Slovakia.
So in both those areas, our work is well underway in order to apply hydrogen technologies in practice. This is one of the major components of our strategy until 2030. And those 2 components will be included in the hydrogen strategy of PKN ORLEN, which we are planning to publish shortly. One of the elements of that strategy is, as Mr. Szewczak has already mentioned, a major -- is a major project, hydrogen project, Hydrogen Eagle.
Biznes Alert, Mr. Marszalkowski asks another question. What is your ambition in terms of offshore projects? 3 applications for allowances, is this all? And how is your relationship with -- what does your relationship with PGNiG look like?
We applied for new licenses in the Baltic Sea. We do believe that opening the very procedure of the licenses is good news for the entire sector. And we want to tap the opportunities but also the effect of economies of scale, and we want to apply for more licenses. We're talking about 11 available licenses.
But I have mentioned the economies of scale because in addition to the very -- the strictly economic effect, this will enable us to maximize the local content effect, by which, I mean the Polish -- participation of Polish suppliers in the value chain or supply chain for the offshore project.
And let me remind you that our -- the Polish strategy for 2020, 2030, we want to see new offshore projects in the Baltic region. And PKN ORLEN wants to be the leader of this transformation. So by the end of the decade, we are planning to spend on advanced energy projects, including offshore projects, PLN 37 billion.
Another question from Biznes Alert. In the context of energy crisis, wouldn't it be worthwhile to wait with the acquisition of PGNiG?
For those who wait, what comes up next may lose and may be very surprised because growth around the world is fast-paced. And only a powerhouse, a big player spends any chance to meet those challenges. And we have great ambitions, but we also are very consistent in our actions.
We do believe that the energy transformation poses a lot of challenges. And solar companies cannot bear that burden in terms of the financial burden of, for instance, great investments to come and which are necessary to survive. As PKN ORLEN, we want to be the pioneer and we want to spearhead that growth.
But we are also very cautious and we -- our strategy is well thought. Major powerhouses, multi-utility powerhouses around the world have already integrated and diversified, integrated their areas of business that they have under control.
So we have already applied for the Antimonopoly clearance and waiting for the decision. This is not only about certain decisions for government administration. But also, we need to remember that this is a great and challenging process of the merger. We are talking about 2 separate companies, 2 listed companies, which means additional requirements.
So the greatest burden, the greatest effort is actually after we have -- we can expect those efforts after the clearance of the Polish Antimonopoly Office in order to actually achieve those tangible synergies, translating into our growth, translating into our strength and the possibility to secure new financing because you need to remember that a big company can fare better in this very challenging market situation.
Thank you very much for your answers, and thank you for your involvement. This will be all in terms of our today's conference call, summarizing PKN ORLEN's performance after the fourth quarter of the year and the entire year of 2021. Thank you very much for the presentation, and thank you for your involvement. Goodbye.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]