Good morning, ladies and gentlemen. Welcome to the conference call, which will be devoted to the financial performance of the Grupa Azoty group companies in the second quarter and the first half of 2022. Today's speakers will include Marek Wadowski, Vice President of Grupa Azoty S.A. Mrs. Justyna Majsnerowicz, Vice President of Grupa Azoty Puławy. Remotely, Mr. Michał Siewierski , Vice President of Grupa Azoty Police. We also have Mr. Grzegorz Kuberski, Corporate Controlling Department Director. Today's presentation has already been published on our website, so you are very much welcome to download it. Now, I'll give the floor over to Mr. Marek Wadowski. Welcome. We will comment on our performance after the first half of 2022. To start, we will have a summary of the reporting period.
Let me first emphasize that our financial situation in the period was still under the very heavy influence of Russia's aggression on Ukraine, which caused a lot of disturbance across all the markets, especially in the gas market. In the reporting period, we negotiated and signed the contract with Polish gas and oil company, PGNiG, for the supply of natural gas, and the supplies are based on the contract. However, our price settlements are based on exchange prices. The situation in the gas market has a major influence on our performance across the group. We delivered our strategy, we have been continuing delivering it.
We launched the construction of alternative fuel laboratory, and we are now ready to assess our compliance with the fertilizers and water quality based on the new requirements of the European Union, and we also continued our projects related to renewable energy sources. It is worth pointing out at this point that we condemn all Russia's acts of aggression against Ukraine, and we have no relations whatsoever with the Russian Federation. We are verifying our customers based on EU sanctions and the requirements. We have implemented verification procedures, and we are demanding that all the requirements are met by our contractors and our business partners based on the principle of reciprocity. Our performance in the second quarter was solid.
However, we need to point out that after the end of this quarter, in August, due to major problems and on the gas market, based on a very dynamic growth in gas prices, we were forced to either stop or limit to a great extent of our production processes, especially in terms of fertilizers. Which by extension will mean that the results in the coming quarter, in the next quarter, will not be as good as in this second quarter of the year. In terms of the first half of the year, as you can see, our performance has been quite solid. However, we do not expect that this performance will be maintained as the year goes by. A couple of words about our macro environment in the market.
As I said before, Russia's aggression against Ukraine was the main factor that had an influence and an impact on our performance, especially due to skyrocketing cost of gas prices as well as in general, gas market volatility. This has a major impact on our operations and our performance because in addition to high gas prices, we're also impacted and influenced by the volatility and unpredictability of production costs of our products across the portfolio. Looking at our macro environment, we need to point out that the forecasts for economic growth around the world have been going down, especially obviously due to the war in Ukraine as well as high inflation. The interest rates are growing, which obviously has an impact on the economic situation globally.
The worsening of the global forecast has an impact on Grupa Azoty, but the same applies to the situation in China and the economic slowdown in China also has an impact on our performance. We'll discuss it later on. I have mentioned gas prices in the periods we are showing in this slide, the major increase in natural gas prices. We are not talking about single-digit growth. We are talking about multiple increases. For instance, around or nearly 300% year-on-year. We are talking and showing average prices here, however, you need to remember that we have great volatility as well. Until the outbreak of war in Ukraine, the volatility situation was different than after the war. The volatility index was at 64%, but it went up later on.
This has a major impact on our situation, and after the end of the quarter, the gas prices have been going up as well. We noted this, obviously, and coupled with an impact on the demand, it made us introduce cuts on our production processes. It is worth pointing out that the situation across the European Union is also quite demanding. As you can see on the map, a number of producers of fertilizers were forced to either reduce or stop their production. According to the estimates of Fertilizers Europe, as at September fifteenth, around 67% of capacities, production capacities, are down. This shows you the scale of this phenomenon. It has no territorial limits, so basically across all of Europe, production capacities were either stopped or major cutbacks were introduced. This can.
What it tells you is that Grupa Azoty is a player in the market. It's worth pointing out also that Grupa Azoty, in the reporting period, focused its operations on the European market and on the local market, the Polish market. We want to submit the demand from the local partners, that is farmers. Throughout the first half of the year, we continued our production at maximum capacities. We only stopped our production or reduced our production only at the end of this period, the first half of the year. As a reminder of our information published before, we were forced to, first of all, cut back on our production of melamine at Puławy. Secondly, the production of fertilizers, which were reduced to a considerable extent.
It's worth pointing out that all those cutbacks were introduced in such a way as to make sure that we still have nitroses and ammonia water and other feedstock products that were very important for us and for our clients as well. Moving on to macro situations, situation in the market, financial markets. The main driver here was an increase in interest rates, which applied practically to all countries and all markets, which was a response to the inflation rates going up. Combined with high inflation, the increases in interest rates have an impact together on consumers and their purchasing power.
Obviously, not immediately, but with certain delay, and this is what we are experiencing right now, weakening demand from our consumers, especially from producers who use our products or semi-finished goods, semi-products in the production of, for instance, construction materials or interior finishing materials. As I've mentioned before, a major increase in our costs in the first half of the year. We're showing the second quarter alone in this slide, but this applies to the second quarter and the first half. You can see that the major item here were gas prices going up by nearly 300%. However, other feedstocks prices went up considerably as well, such as phosphates, potassium chloride, benzene, phenol or propylene. Basically, all feedstocks we use for the production and our production processes went up in terms of the prices.
Right now, the average share of gas prices in production of our fertilizers is around 80%, whereas last year, the first quarter last year, the second quarter last year, was significantly lower. Of course, this depends on the product, but you can see quite clearly that the share and the cost of gas prices in our production went up considerably. Combined, as I said before, with a major volatility on the market, this means a lot of problems in our production processes and our performance in this area. In the first half of the year, the situation looked quite similar to the second quarter alone. As you can see, the costs of practically all feedstocks had a major impact on our performance. Moving on to segments, starting with fertilizers, agro segments.
In the period, you will notice an increase, a major increase in the prices of feedstocks, which obviously translated into prices of fertilizer products and instability, that is the volatility, that I mentioned before. Across all markets. The instability of the gas market had a major impact on the behavior and the trends among the producers of fertilizers, who decided to either cut down the production or stop it altogether. As I said before, Grupa Azoty continued production processes in the period, throughout the period, and we, as I said, focused basically mainly on the local market in Poland. In terms of compound fertilizers, the situation is different, with the mark-up margins going down on the back of rising prices of other feedstocks in addition to gas prices.
In terms of compound fertilizers, gas prices do not play such major role. However, the prices of potassium chloride, phosphates, or other feedstocks, such as sulfate compounds, went up. The imports of nitrogen fertilizers went down in the period. As you can see, it's significantly lower in comparison with previous years. As I said before, we focused on the local sales. Throughout the period under consideration, we have been using or utilizing our production capacities to the maximum extent, even though our export sales was based on significantly higher prices. A short recap of our market situation, environment in the Agro segment.
What happened across our eastern border had a major impact on this segment of our operations through, first of all, volatility in the market, but obviously on the high increase in gas prices and other prices of feedstocks. Moving on to the chemicals segment, which is a segment that reported very solid results both in the second quarter of the year as well as in the first half of the year. The main driver here in the chemicals segment was the production of urea, technical urea, which generated the highest EBITDA in the segment. We are talking about a very, very solid period for the chemicals segment. However, the slowdown, the general economic slowdown, especially in the construction sector of the economy, means that the third quarter of the year will not look as good.
We had to stop the production of melamine at Puławy, which was due to the fact that in the European Union, we see a cheaper melamine supply from China, where, as I said, there has been an economic slowdown as well in the market. The first half of the year was quite good for the chemicals segment. However, as we have entered into the second part of the year, second half of the year and the third quarter of the year, we see that the situation is quite different, and it has an impact on the consumers' behavior.
In the chemicals segment, as a summary, we would like to point out that truth be told, what I have just said, that is the economic slowdown in terms of our macro situation, this does not apply to melamine only. For instance, it applies to Tytanpol or plasticizers as well. We expect that the periods to come will not be as good, and our performance in this particular segment will not be as solid. In the plastics segment, in the first half of the year, in terms of our macro environment, we saw that it was quite beneficial. We saw high demand across practically all our application areas, except for one, the automotive business. However, in all our other businesses, in terms of our consumers and customers, the situation was quite solid.
However, it's changed after, again, after the end of the first half of the year and the demand from white goods sector, construction sector, foil production, and other businesses and industries. This demand, unfortunately, is going down, and it will have an impact on our performance in the third quarter. As a recap, in terms of our plastics segment, the macro situation was quite good in the first half of the year. However, after the close of the first half of the year, we can see quite clearly that the situation has deteriorated. Per segment, in terms of our performance, you can see a general recap on this slide. You can see quite clearly that EBITDA and its improvement was contributed, first of all, by the chemicals and Agro segments.
Especially in the Agro segment, we had a very solid, very high margin. We're talking 22%, mainly, as I said before, due to the production of urea, technical urea, and its sales. The second quarter looks quite similar, so the contributors to EBITDA were mainly the chemicals segment and the Agro segment. The chemicals segment reported the margin of 21.6% for the entire half, first half of the year. Moving on to discussion of our performance by segment, starting with the Agro segment. As I said before, our performance was impacted by the high and unstable gas prices, as well as high prices of other feedstocks, as well as the regulations that came into force. We had to take into account that there were certain contributing factors that boosted the demand that.
I'm talking about additional payments to growers, farmers. We focused on, as I said, meeting the demand in the local market, basically. Moving on to the volumes. Volumes, sales volumes went down, especially in terms of compound fertilizers, obviously mainly due to a breakdown in Police, at Police. Moving on to the next segment. In the chemical segment, we reported a very solid performance, and you can see quite clearly that our revenue went up, especially in terms of urea, technical urea, and the sales volumes of technical urea, which went up. EBITDA was determined basically and mainly by this particular factor, by the sales of technical urea. However, in OXO alcohols and melamine, we reported solid results as well.
However, the situation changed recently, mainly due to the worsening of the market sentiment and the forecast for the upcoming situation in the market. In terms of the plastic segment, it reported a solid performance as well, mainly on the back of solid demand. However, we will see major challenges after the close of the second quarter and the first half of the year. Thanks to our solid financial results, we managed to maintain a stable financial standing. Our financing limits are absolutely sufficient for us to remain on the safe side in terms of our financial standing. net debt-to-EBITDA at 0.8, which is quite good. Very good. In this particular area, we can see quite clearly that we have the capacity that we need to finance our operations as well as to deliver our strategy.
A couple of words about our investments, CapEx projects in the second quarter of the year. Our CapEx spending is at more than PLN 700 million, up year-over-year versus the second quarter of last year. However, the interpretation of this increase is difficult because we are proceeding with our strategy in terms of our CapEx spending and investments as planned. We can see that the increase comes from this particular aspect, but the situation is very good. In the first half of the year, our investment figure was similar to last year's. Obviously, the main driver here in terms of our spending, investment spending, was our investment at Polimery Police. The Polimery Police project, the stage of advancement is at 94, actually more than 96 at this point.
The project is proceeding as planned based on the updated timetable, which we notified with our current report. We assume that it will be brought on stream in the second quarter of 2023. Obviously, we will have a startup commissioning. Right now we're having a number of tests on the facility in order to check whether everything operates as planned. We also have a construction part of the project that is still going on in accordance with the schedule. You can see a number of pictures here. Historically speaking, you can see what it looked like in 2021 and the current state on the construction site, so you can compare it and it shows quite clearly that we are progressing as planned.
We have a port that was necessary for this investment to be brought on stream and to function properly. Our other investments include the new energy concept at Kędzierzyn, which is based on the modification of our utilities production in order for us to utilize heat or energy generated during the production process more efficiently. The construction of a power unit, power generation unit based on coal at Puławy is another project that's worth mentioning, but it will be discussed in greater detail later on. The performance by company across the Grupa Azoty group. Our performance shows here that all Grupa Azoty Group's companies contributed to our performance, and each of them reported solid performance in the period. COMPO EXPERT needs to be mentioned at this point.
It reported a solid performance in the period across all its markets, both in terms of the second quarter of the year and in the first half of the year. Moving on therefore to discussing individual companies' performance, and we'll start with Mrs. Justyna Majsnerowicz, who will discuss the performance of Grupa Azoty Puławy. Thank you for this introduction. Let me first recap on our situation in the context of today's political and economic situation. The second quarter and the entire first half of the year was a period when we reported solid performance and we are maintaining a stable financial standing.
At the same time, the second half of the year was a very difficult period due to an increasing trend in terms of the price of main feedstocks, especially natural gas and benzene, obviously. However, what we saw in June was only an introduction to what we needed to experience in the second quarter of the year. After the fertilizer period, that is from April to July, we carried out production at full capacity. We met our production targets and plans while maintaining a close outlook on the situation in the gas market. We were faced with a high increase of natural gas prices going up to EUR 200 per MWH , even reaching around EUR 300 per MWH in August.
Our strategic supplier of natural gas is PGNiG, that is a Polish oil and gas company. In July, we signed an annex to our agreement with PGNiG, under which it will remain our strategic supplier of natural gas by 30th of September 2023. Our price is based on market index for natural gas. In July, the situation in the gas market, that is high gas prices, as was the situation in the market in terms of melamine, made us stop one of our units, melamine production, and introduce cutbacks on the second unit. All in all, our melamine production was at 20% of our maximum capacity.
The continuing increases in gas prices, as well as the market situation, which was mainly due to Russia's aggression on Ukraine, as well as a considerable increase in melamine imports, especially from China, also forced us to take a decision to stop melamine production altogether at one point, and then considering continuing anomalies and disturbances as well as an unprecedented increase in gas prices, in August, we were forced to temporarily stop other production units. In August, we decided to stop our production of ammonia to 20%, to 10%, and we stopped our production in other installations as well, with the exception of certain units such as NOXy. Despite such cutbacks and limitations in production, we decided to have a strategic goal not to forget our infrastructure.
We are progressing with all our investment plans, as expected, and Grupa Azoty Puławy secures the continuity of production of strategic businesses and industries in Poland. We are talking about transport, we're talking about construction, we're talking about production of natural resources. Since we are aware of the broader impact of the cutbacks of our production on the local market, we had to think what to do in order to optimize the situation, and we'll need to take into account the seasonality of our production. Let me remind you at this point that fertilizers in the third quarter of the year are not sold because the highest demand is obviously spring time. We have to remember about how to secure critical customers, such as bar production.
We published our current report on August twenty-second, and we're continuing with this strategy. Moving on to our performance, the summary of quarter two, Grupa Azoty Puławy reported stable results. Our consolidated EBITDA came in at PLN 441 million, going up by 271% year-on-year. EBITDA was mainly impacted by increasing prices, rising prices of our products, and the same applies to other categories or items in our profit and loss account. Our revenue went up by 107%, especially on the back of higher prices of our products. Our EBITDA margin went up year-on-year by around nine percentage points, despite a nearly four-fold increase in gas prices.
Moving on to the first half of the year, our consolidated EBITDA came in at PLN 1,073 million, going up by 376.7% year-on-year. Again, our EBITDA was driven mainly by rising prices of our products. Revenue went up by PLN 2 billion, well, that is, 136%, mainly on the back of rising prices of our products. What is important in terms of our EBITDA structure year-on-year, we reported some change here, and it was a major change, because in the first half of 2021, more than 80% of our EBITDA contribution came from fertilizer products, especially nitrogen fertilizers, in comparison with around 60%. Other contributors included melamine, 10%, chemicals, and plastics.
This was a very positive change, which was driven by a very profitable segment, the Chemicals segment, and the profitability of melamine and caprolactam. Let me remind you that in the first half of 2021, they were not as profitable. They were not profitable at all. We achieved that despite a very challenging market condition, disadvantages, demand versus supply trends, and the macro environment, which remained challenging. What's worth pointing out is that the average gas price year-on-year versus the first half of the previous year was very considerable, which obviously has an impact on our costs and our production. As I said, as we said before, the cost of gas account for up to 80% of our costs in general. Moving on to the performance by segment.
You can see that the greatest contributor in our performance is the Agro segment, and after the second quarter of 2022, it represented 88% of our revenue and came in at PLN 1.96 billion, which means that they went up by 122%. The 22% versus last year. Obviously, the main drivers were technical urea, fertilizers, and melamine. Our revenue, the revenue of the second business segment, that is plastics, represent 9% of our revenue. They came in the second quarter of 2022 at PLN 202 million, going up by more than PLN 50 million year-on-year. Such an increase was mainly due to an increase in caprolactam prices. In terms of our EBITDA structure, at the EBITDA level, the plastics segment reported a positive performance at PLN 15 million, versus a loss reported year-on-year.
The Agro segment reported an EBITDA at PLN 414 million, which meant that it went up year-on-year quite considerably. Moving on to discussion of segment performance for the first half of the year. In the first half of the year, obviously, the main contributor to our revenue was the revenue generated by the Agro segment, accounting for nearly 90% of our revenue, general revenue, and going up year-on-year by 152%, which was due mainly to rising prices of technical urea, melamine, and fertilizers. Revenue in the plastic segment represented 8% of our total revenue and came in at PLN 390 million, going up year-on-year by 57%.
What is important here in the discussion of segment performance at Puławy is the fact that the composition of the Agro segment is pretty specific. The Agro segment is a very broad segment at Puławy. In addition to nitrogen fertilizers, it includes chemicals and melamine. This presentation, this composition of the Agro segment is directly correlated to the technological processes in the segment because fertilizers, chemicals, and melamine are produced in combination and there are certain overlaps between our production lines, and then they are directed to various markets and different markets. We need to point out that the contribution from non-fertilizer products in the overall revenue of the segment represents 30%. The key non-fertilizer products that had a major contribution to our performance in the segment and an increase in EBITDA includes technical urea, melamine, and NOx's.
My predecessor mentioned about the increase in margins and revenues for technical urea production, urea production. This situation was mainly driven by the situation in Ukraine and the limited, reduced demand in the market, which obviously translated into a major increase in the prices of technical urea. Moving on to our investment projects and CapEx projects. We are proceeding with our CapEx projects that we planned, the CapEx program that we planned, and the key investments at Grupa Azoty Puławy included the construction of a granulated fertilizers unit based on ammonium nitrate. This is a strategic project. It's almost drawing to its end, and we do believe that it will be closed this year. The budget is at PLN 430 million.
The second major CapEx project is the construction of coal-fired power generation unit, and the CapEx is at PLN 1.2 billion, and the stage of completion is at 86% in terms of material stage of completion. Our partner in this project, Polimex Mostostal, informed the market that the project will not be brought on stream in October this year. Currently, we are negotiating, and we are analyzing the situation at Puławy with our partner in terms of their financial claims, Polimex's Mostostal financial claims and the claim to change the schedule of this project. The next investment is an upgrade of the existing nitric acid unit and the construction of a new nitric acid production unit. This is a package of investments for the upgrade of certain lines sequentially.
We're talking about the time scale of this production, time horizon of this production, upgrade project is 2021, and the total budget is nearly PLN 700 million. The last one is our mandatory investment, that is, the upgrade of our steam generator, and the budget is PLN 145 million, and it is to be closed by the end of 2023. Our total spending on our CapEx project in the first half of the year, it came in at PLN 121 million, and this difference between the spending year-over-year is closely correlated to the timetable for the completion of our investment plans.
In the first half of 2021, we had high spending related mainly to the construction of our granulated fertilizer unit and the power unit, power generation unit. Thank you very much for your attention. That will be all about Puławy. We'll now move on to Mr. Michał Siewierski , representing Grupa Azoty Police. Thank you, and welcome to all of you. Now, my presentation on the situation of Grupa Azoty Police, I will start it with the short summary of main impacts of the second quarter, which includes an unprecedented and major increase in feedstock prices. The fact that we continued with our production at maximum capacity, we maintained a solid performance in terms of our financial performance.
We signed an annex to a factoring agreement with ING, and we appointed new members of the management board for the ninth term of office. Moving on to our performance in the second quarter, we need to point out that the consolidated EBITDA came in at 295 for the second quarter of 2022. Our EBITDA margin came in at 18.3%, which is up by 8.4 percentage points year on year. In the second quarter of 2022, our group reported net results at PLN 189 million, which was considerably more than last year's reported net profit.
Our consolidated performance was mainly impacted by major market turbulences, which was obviously due to the continuing of Russia's aggression on Ukraine, which obviously deteriorated challenging situation in terms of feedstock prices and availability of certain feedstocks. In relation to the second quarter of 2021, we saw a major increase in our feedstock prices, especially potassium chloride, ilmenite, and other feedstocks, which obviously offset a major increase of our product prices as well. In terms of nitrogen products used for technical processes, obviously it has had a major impact as well. The consolidated EBITDA for the first half of the year was at PLN 341 million. However, our net result, net profit was at PLN 205 million, which was considerably higher year on year.
Our performance was driven by major and dynamic changes in the market, especially due to the continuing aggression against Ukraine. Our financial situation was impacted by high and dynamic changes in prices in fertilizers, nitrogen products and pigments. At the same time, we saw an impact of rising prices of many products and feedstocks such as ilmenite, titanium slag and so on, which had an impact on our performance. This is combined by a high increase in prices, especially of feedstocks, which obviously had an impact on our EBITDA margin, which did not change that much year-over-year. Our margin went up from 9.2% to 12.8%.
Our performance was driven by lower production sales or lower sales of our products, especially due to a breakdown in the power generation units in terms of boilers. In the second quarter, all our segments reported a positive performance. The fertilizer segment reported EBITDA at PLN 270 with a margin at 18.3%. The market was driven by dynamic trends in prices of a lot of the number of feedstocks we use in our production. As a result of these changes and the situation across the market in general, driven obviously by Russia's aggression on Ukraine, was an increase in our product prices. The situation in the fertilizer segment was impacted obviously by the high prices of certain products used for technical processes.
In pigments, our EBITDA margin came in at 13.8%, and EBITDA came in at PLN 17 million. Our current financial situation was affected by high prices of gas as well as ilmenite, which is the key feedstock used in our production, as well as a significant drop in demand for titanium white. Our consolidated EBITDA in fertilizers came in at PLN 306 million, going up considerably year-on-year. Our revenue in the fertilizer segment represented 8% of our sales. The fertilizer segment was impacted and continued to be impacted by the dynamic increases in prices of our feedstocks used in production year-on-year, especially in terms of phosphates, potassium chloride, sulfate or natural gas, obviously. As a result of these changes, we saw a major increase in our product prices.
Our performance was affected positively or impacted positively by an increase in terms of our prices of products, however, it was offset by the prices of feedstocks and as well as lower sales, which was mainly due to the breakdown of boilers in our power generation unit. In terms of our pigment segment, EBITDA came in at PLN 24 million, going down year-over-year by PLN 9 million. The revenue in the pigment segment represented 9% of our sales revenues across the group. Higher contribution of titanium white year-over-year allowed us to offset this negative impact of rising prices of ilmenite and slag or natural gas prices.
In terms of titanium white, the sales results went down, especially year-on-year, especially we saw a drop in demand as well as a production cutback due to the breakdown of boilers. In terms of our investments, obviously, our priority project both for Grupa Azoty Police and Grupa Azoty in general are Polimery Police. The stage of completion in terms of material completion is at 94%. In the first half of the year, we continued the supplies of plant and equipment. In May 2022, we closed another milestone, which was the close of the supply of LLI equipment.
We also have certain upgrades at Police, which includes the modernization of our power main transformation station in Police, which we need to connect and supply propane dehydrogenation as well as polypropylene units. The stage of completion is right now at 95%. The next investment is recycling of hydrogen originating from the propylene unit to be used at ammonia unit, and the stage of completion is about 48%. The last but not least is making the production of demineralized water independent of variable salinity of the Odra River and increasing the ability to produce special waters in the water preparation units. The budget for this project is 108 million PLN, and the stage of completion is beyond 95% as we speak.
As far as the first half of the year is concerned, our CapEx spending for tangible fixed assets, PP&E, as well as intangible assets is at 39%. We need to remember that we had the breakdown here into individual components. In the first half of the year, we obviously continued the implementation of 42 projects, and we started new projects as well. Thank you very much for your attention. As a summary, a short summary, a recap of our performance in the first half of the year, mainly we need to point out that this period was determined by the consequences of military aggression of Russia against Ukraine and the related unprecedented increase of feedstock, especially obviously, of natural gas. Despite this high volatility as well as extraordinarily high prices, we maintained our production at maximum capacity.
We focused on the Polish market, and at the same time, as we said before, a number of European producers decided to introduce major cutbacks of their production. We, however, managed to maintain solid performance, especially in the chemicals segment, as well as the margins in this segment as well. However, this major increase in feedstock prices, especially of natural gas prices, after the reporting period, forced us to cut down on our production at Tarnów, Puławy, and Kędzierzyn as well. I'd like to mention and point out that we were one of the very last producers in the European Union to introduce those cutbacks.
The performance and the results in the coming quarters of the year will be heavily affected by those cutbacks, and we expect that our performance will not be as solid as in the period we are discussing today. Thank you very much for your attention. We are now ready to move on to the Q&A session. First of all, I will ask you, those investors present in the room, if you have any questions on any issues that we did not discuss. If there are no questions from the participants in the room, we will move on to the questions that we received from our online participants. Most of these questions were related to the situation and the production of fertilizers across the group.
What are the prospects of restoring the production after the cutbacks? And do you see any positive model margins on the back of the fact that producers across Europe cut down on their production as well? The situation remained the same as we reported on August 22nd, 23rd. We continue with the limited production of fertilizers, mainly on the back of the situation in the natural gas market. In order for the production to be restored, we need to have changes in our macro environment. Right now, a dominant driver here are the prices of obviously natural gas, but also our market environment must be favorable enough for the group to be able to cover at least the variable cost of the production of fertilizers.
Unfortunately, the situation affects the Grupa Azoty only, but also other European producers, which means that at this point we are keeping a watchful eye on the market situation. As soon as it picks up, we will definitely restore it, even increase production. We will notify you, obviously, in due time, but unfortunately, as of today, the situation has not improved. Thank you very much. We also have a number of questions on, obviously, gas prices. Is it possible that you will get preferential gas prices from PGNiG? Grupa Azoty has a contract signed with PGNiG, Polish Gas and Oil Company. We extended the period of our cooperation, we extended the contract, and the contract assumes that the gas prices will be settled based on the prices quoted in the market, so exchange prices.
It is very important for us that the situation in the market is favorable. If the contract changes in terms of how we sell our prices, we will definitely notify you of any such changes or amendments to the contract. But as of today, we are selling our prices based on gas quotations from the market, and the situation has not changed in that respect. Thank you very much. That would be all in terms of the Q&A session. We would like to now thank all the speakers for discussing the situation across the Grupa Azoty Group. Thank you for your participation both on-site and online. Mr. Marek Wadowski will be available at 2:00 P.M. to you on investors chat. You are welcome to that.