Year-on-year to the level of $9.8 per barrel. Higher fuel consumption as a result of losing COVID restrictions translated into increase in sales volumes by 9% year-on-year and 10% quarter-on-quarter. In Q2, we processed 6.8 million tons of crude oil, 10% more than in the previous year, which is a 78% utilization ratio. Crude oil throughput was adjusted to the fuel demand as usual, also to the maintenance shutdowns that we had in our petrochemical segment. Our financial situation is still very strong. In Q2, we generated PLN 5.1 billion cash flow from operations that I mentioned at the beginning. We realized CapEx at the level of PLN 2.4 billion. As a result, we reduced our net debt by PLN 2 billion compared to Q1, to the level of PLN 11.5 billion.
Covenant net debt to EBITDA remains at the safe level of 0.87. In May, PKN Orlen, as the first company in Poland, issued seven-year bonds worth EUR 500 million with 1.125% coupon. The issue of green bonds met with really great interest from investors here. The subscriptions were made for a total amount of nearly EUR 3 billion, which means that demand was six times higher than the volume of assumed issue. Funds from the issue, of course, will be source of financing investments in renewable energy sources, including offshore and onshore wind farms, as well as charging infrastructure for electric and hydrogen cars and waste recycling installations. In May as well, annual general meeting of PKN Orlen approved the dividend payment for 2020, recommended by the management board at the level of PLN 3.5 per share. The dividend will be paid on the 5th of August.
Additionally, in the second quarter, State Treasury with PKN Orlen, PGNiG, and Grupa Lotos confirmed non-cash structure of the merger, and it was positively assessed by Fitch Ratings. European Commission extended deadline to select the partner for remedies within acquisition of Grupa Lotos till 14th November this year. PKN Orlen applied to anti-monopoly body for consent to acquire PGNiG. We opened a brand-new R&D center in Płock. We commenced the expansion of olefin complex in Płock, so the largest petrochemical investment in Europe. Just to remind you, total value of the investment is estimated at the level of PLN 13.5 billion. Orlen became the most valuable Polish brand, worth PLN 10 billion. Orlen Lietuva took control over the only railway terminal at the Polish-Lithuanian border, which is used for reloading petroleum products manufactured in Mažeikiai to be delivered to Polish and Ukrainian markets.
We opened the first store with a wide gastronomic offer format under the name Orlen w ruchu, which means Orlen in motion, in Warsaw. By the end of the year, another 40 points will be opened in the largest Polish cities, and there will be a total of 900 of them. We also actively support the development of innovation in Poland. We launched ORLEN Skylight Accelerator, the first corporate accelerator program in Poland for technology startups with an international range, addressed to young innovative companies from around the world with ready-made products and services, with the purpose of which is to support the further dynamic growth of PKN Orlen business areas like petrochemical production, energy, and retail sales.
As a part of sustainable development, so ESG, we launched a Hydrogen Eagle program, assuming the construction of international network of hydrogen hubs powered by renewable energy sources and the construction of over 100 hydrogen refueling stations for individual clients, public, and also cargo transport. Orlen Południe is finalizing investment in ecological glycols and together with PGNiG, is developing career of biomethane production. As the largest sponsor of Polish sport and culture, we published the first sponsorship report. It's worth to underline also that seven time in a row, we received the CSR Golden Leaf by Polityka, which confirms that we consistently implement the ideas of social responsibility and sustainable development. In June, the fourth edition of My Place on Earth program was launched. Under which Orlen Foundation will donate another PLN 2 million to support local communities.
During last three editions, aid in the amount of PLN 7 million was granted to nearly 900 organizations all over Poland. I will go into the details of the second quarter. Let's move to slide number five. Macro environment. In second quarter, model downstream margin increased by $2.5 per barrel compared to last year to the level of $9.8 per barrel. It was mainly the effect of the increase of petrochemical margin by 74% year-on-year to the record high level of almost EUR 1,500 per ton, and also a higher BDO differential by $1.9 per barrel.
Refining margin was still under the pressure as a result of lower cracks on diesel by -40%, Heavy Fuel Oil by -145%, and higher cost of own consumption due to increase in crude oil prices by more than 130%, with a simultaneous increase in gasoline cracks by 148%. Operating results were supported by weaker Polish zloty versus euro at negative impact of stronger zloty versus dollar. Next slide number six, shows GDP and fuel consumption. We may say that we expect higher fuel consumption year-on-year on all domestic markets as a result of losing restrictions in movement related to COVID, which, of course, translates into higher GDP. In Q3, we expect fuel consumption dynamics to flatten compared to the last year, which is already shown in July data on fuel sales. I will present financial and operating results.
Let's start from slide eight. One comment from my side before I go into the details: for better comparability, operating results for the second quarter and also six months 2020, were cleaned from one-off gain on the bargain purchase of Energa shares recognized in the second quarter at the level of over PLN 4 billion. For your convenience, we added a few slides in the supporting section. Slide 30, split of EBITDA LIFO by segment, including impact of net realizable value hedge in total, including CO2 hedge. Slides 31 and 32, fully dedicated to the issue of valuation and settlement of CO2 contracts. It's worth to dig in and have a look on this because this is summary what we presented in the whole presentation.
In the second quarter, we recorded revenues increased by 73% year-on-year due to higher quotations of refining and petrochemical products resulting from crude oil price increase by $39 per barrel, and also higher sales volumes by 9%. We achieved PLN 3.2 billion EBITDA LIFO, which is higher by PLN 1.2 billion compared to the previous year, mainly due to, first of all, positive macro impact, higher sales volumes, higher trade margins in wholesale, and non-fuel margins in retail. Usage of historical layers of inventories as a result of maintenance shutdowns and also higher Energa Group results. Those effects were partly offset by negative impact of inventories revaluation, as well as lower fuel margins in retail and higher costs. Positive impact of changes in crude oil prices on valuation of inventories in the second quarter. LIFO effect amounted to PLN 1 billion.
What caused an increase in the reported EBITDA to the level of PLN 4.2 billion. Net financials amounted to PLN 0.1 billion. As a result of the surplus of positive differences at negative interest cost and net impact of settlement and valuation of derivative financial instruments. Taking all into account, in the second quarter, we achieved PLN 2.3 billion net profit, which is a record high one in the quarterly results. Next slide number nine, presents a split of EBITDA LIFO by segment. Starting from the refining, it generated almost PLN 300 million, EBITDA LIFO. Result lower by PLN 316 million year-on-year due to negative macro impact and revaluation of inventories' net realizable value at positive impact of higher sales volumes, higher trade margins, and usage of historical layer of inventories.
Petchem generated over PLN 1 billion, so higher by PLN 770 million year-on-year due to positive macro impact and usage of historical layers of inventories at negative impact of lower sales volume. Energy generated over PLN 1.2 billion, so higher by PLN 475 million year-on-year due to positive macro impact and higher Energa Group result at negative impact of lower sales volume. Retail generated PLN 8,128 million, which is higher by PLN 102 million year-on-year. Here we have a positive impact of higher sales volume, higher non-fuel margins at negative impact of lower fuel margins and higher cost of running the business. Upstream generated PLN 60 million, so higher result by PLN 50 million year-on-year due to positive macro impact, at negative impact of lower sales volumes and cash flow hedging transactions.
Corporate functions, here we’ve got lower cost by PLN 112 million, and this includes mainly donations and expenses on COVID, which we spent last year. Now let’s go into the details. Slide number 10. In the second quarter, refining, as I said, recorded almost PLN 300 million. As you see on the bottom chart, that challenging macro remains the main factor standing behind the weaker performance of the refining segment year-on-year. This is due to decrease in cracks on diesel and heavy fractions, strengthening of Polish zloty versus U.S. dollar, negative impact of cash flow, hedging transactions and higher cost of internal usage resulting from higher crude oil price.
These negative effects were partially compensated by positive impact of higher Brent-Urals differential, higher gasoline and jet cracks and valuation and settlement of CO2 contract as a part of transaction portfolio in the amount of PLN 260 million year-on-year. This is shown in the supporting slides, as I said, number 30, 31 and 32. Positive volume effect fully compensated negative macro effect, so sales volumes in the second quarter increased by 11% year-on-year to the level of 5.8 million tons. We recorded higher gasoline sales by 15%, diesel by 12%, jet by almost 120%, at lower sales of LPG by 6%, HSFO by 5%. Others include mainly PLN -1.2 billion, so lack of a positive impact of inventory revaluation, net realizable value from the second quarter last year.
This quarter, net realizable value is not material and is equal to just PLN 14 million. PLN 0.5 billion is a usage of historical layers of inventories, higher trade margins at higher cost of CO2 emission. Slide number 11 shows operating data of refining segment starting from crude oil throughput. Crude oil throughput was adjusted to the fuel demand and the maintenance shutdowns in petrochemical segment. In the 2Q, we processed 6.8 million tons of crude oil, 10% more than in the previous year, mainly due to a significant increase in Unipetrol utilization ratio. Throughput in Unipetrol increased by 0.8 million tons year-on-year due to low base from Q2 2020.
We had cyclical shutdown of refining and petchem in Litvínov, we also had a delayed start of refinery in Kralupy after the shutdown from March last year. Currently also, this is the impact of higher demand for fuel. In petchem, shutdown of steam cracker, PE2 and PE3 installations due to lack of the feedstock and also plant maintenance shutdown. PKN Orlen recorded decrease by 0.2 million tons year-on-year due to maintenance shutdown of CDU units, hydrogen plant and metathesis. Utilization ratio in the second quarter was adjusted to olefin shutdown, and last year ago, of course, the limited demand for fuel as a COVID impact. In Orlen Lietuva, throughput was at comparable level at lower utilization by -1 percentage point year-on-year.
As for sales volumes, sales amounted to 5.8 million tons, so increased by 11%, of which Poland by 11%, Czech Republic 34%, Lithuania by 1%. Higher sales in all the markets was the result of losing COVID restrictions. Now let's move to slide number 12. In the second quarter, petchem delivered over PLN 1 billion of EBITDA LIFO, also 4x higher than a year ago. This is the effect of record high petrochemical margin, valuation of settlement of CO2 contract as a part of transactional portfolio in the amount of PLN 287 million year-on-year, and weakening of Polish zloty versus EUR. Margins increased on all the petrochemical products.
Despite record high margins, of course, we were not able to take the full advantage of the market situation due to realization of plant maintenance shutdown of Olefins unit in Płock. We recorded a decrease in sales volumes in Poland by -27% year-on-year at higher sales in Czech Republic by 58% and Lithuania by 367%. Total petchem sales in the second quarter amounted to 1 million tons and was lower by -4% year-on-year, of which lower sales of Olefins by -69%, PVC -22%, at higher sales of polyolefins by 23%, fertilizers by 12%, and PTA by 3%. The result on PTA sales was over 30% higher year-on-year at comparable unreal results to the second quarter 2020.
Slide number 13 shows operational data of petrochemical segment, and we may say that the utilization of petrochemical installations in the second quarter was lower in Poland and Lithuania due to realization of plant maintenance shutdowns in Płock and Włocławek due to shutdown of olefin unit and as a result of wider scope of works during the spring maintenance shutdown comparing to the last year. In the Czech Republic, utilization ratio increased by 69 percentage points year-on-year as a result of low base in Q2 2020. To remind you, last year, Unipetrol had a cyclical shutdown of Litvínov Refinery. Let's move to slide number 14. Energy.
Energy generated over PLN 1.2 billion EBITDA in the second quarter to more than 60% comparing to the previous year, mainly due to Energa Group result being higher by PLN 537 million year-on-year and the valuation of CO2 contract settlement within transactional portfolio in the amount of PLN 217 million. Positive effects were limited by negative impact of margin on electricity due to higher gas prices and also CO2 prices year-on-year by PLN -142 million and also lower sales volumes by PLN -140 million. Sales of electricity decreased by 6% year-on-year, mainly due to 1.5 month shutdown of CCGT in Płock. Now let's move to operational data of energy segment. Slide number 15. This slide definitely confirms that we focus on developing low and zero emission energy sources.
In the second quarter, ORLEN Group produced less electricity by 7%, mainly due to CCGT Płock's shutdown and production increase in conventional energy in Ostrołęka, following, of course, the higher demand from state-owned grid operator. Total production amounted to 2.6 TW hours, of which 70% was from renewable sources and gas-fired power plants. Current installed capacity of ORLEN Group is 3.4 GW of electricity, of which 2 GW in ORLEN Group and over 1.4 GW in Energa Group, sorry. Compared to the previous quarter, new renewable sources capacity was added at the level of 0.1 GW of electricity, new plants, Kanin and Nowodwory.
Electricity sales decreased by 6% year-on-year to the level of 6.6 TW hours. This is mainly due to lower sales in wholesale aimed at portfolio optimizations and also a drop of electricity usage by business clients and higher usage by households during COVID period. Electricity distribution, which is fully realized via Energa-Operator, increased by 16% due to the level of 5.8 TW hours. This is mainly due to low base from previous year, economic recovery and also higher number of energy connection points. CO2 emission in energy segment in the second quarter amounted to 1.9 million tons, which is over 50% of ORLEN Group emission that is amounted to 3.7 million tons in the second quarter. Slide number 16. Retail.
Retail generated in the second quarter, EBITDA in the amount of PLN 828 million, which is higher by 14% year-on-year. In the second quarter, we recorded decrease in fuel margins, mainly on Polish, Czech, and German markets at comparable level of margins in Lithuania year-on-year. Retail sales volumes increased by 13%, of which gasoline by 19%, diesel by 11%, and LPG by 13%. Non-fuel margin in the second quarter was higher year-on-year in all markets, especially sales of hot snacks and hot beverages. Currently we have 278 points of alternative fueling, which is more by 104 comparing to the last year. Slide number 17 shows operating data of retail segment. At the end of the second quarter, we were running 2,854 fuel stations, of which circa 80% was equipped with non-fuel concept, Stop Cafe and Car Connect.
Number of fuel stations increased by 22 year-on-year. We also opened new stations on all of the markets we operate except Germany. Due to loosening COVID restrictions, retail recorded sales volume by 13% year-on-year. The higher sales, we may say it was observed in all of the markets. Market share increased in the Czech Republic and Slovakia, and dropped on other markets. We consequently developed fuel sales in second quarter. Another two locations were opened, and at the end of the quarter, we were running 2,239 coffee corners, which is more by 77 locations year-on-year. In Warsaw, as I've mentioned at the beginning, we have launched the first Orlen w ruchu concept. We are expanding portfolio of alternative fuel stations.
At the end of second quarter, we had 278, which means increased by 104 locations, of which 89 in Poland, 15 in Czech Republic, at comparable number in Germany. Our clients can use 232 EV chargers, 191 in Poland, 34 in Czech Republic, seven in Germany. We have also two hydrogen stations located in Germany and 44 CNG stations in the Czech Republic. Slide number 18. Upstream. Upstream in the second quarter delivered PLN 60 million EBITDA LIFO, which is higher by PLN 50 million year-on-year. This is the effect of rising prices of all hydrocarbons. At negative impact of hedging transactions, the level of PLN -40 million.
Moreover, what I see, we recorded sales volumes decreased by -9% year-on-year as a result of drop in average production by -0.9 000 BOE per day year-on-year. In Canada by -1.0000 BOE per day at higher production in Poland by 0.1000 BOE per day. Slide number 19, operational data of upstream segment. We may say that we have 174 million BOE of 2P reserves of crude oil and gas. This data at the end of last year. Average production in the second quarter reached 17.9000 BOE per day. CapEx in the second quarter amounted to circa PLN 52 million, of which 35% in Poland and 65% in Canada. In Poland, within development of existing assets, we conducted works on Miłosław, Edge, and also projects realized with PGNiG.
Drilling works included construction of drilling sites for Broknik well on the Miłosław project, as well as design and preparatory works for drilling future wells on Płotki project. Within seismic activity works, we completed processing of seismic data of Kortowo, Miastko 3D, and started interpretation. This is the Edge prospect. We completed seismic interpretation of 2D data on the Karpaty project. In Canada, investment works regarding development of Ferrier and Kakwa assets were continued. Two wells were fracked and added to the production in Kakwa. Drilling of one well was started in Ferrier. Currently works to prepare locations for further wells are in progress. The process of acquiring new concessions right in the highly prospective part of Lochend assets was completed. That's all from my side. Now I hand over to Michał. Thank you.
Thank you. Thank you, Konrad. Good morning, everyone. Let's start with slide number 21. Cash flow looks very strong in this quarter. We have recorded historical high net inflow from operations in second quarter of PLN 5.1 billion. The EBITDA, including LIFO effect, was contributing the most with PLN 4.2 billion, but also categories were contributing positively to operating cash flow. We have improved our working capital by PLN 4.4 billion. Mainly driven by the strict control of payables and receivables. We have recorded a positive cash flow from settlement of deposits, mainly related to CO2 hedging activity. Net outflow from investment reached PLN 2.9 billion in second quarter, out of which PLN 2.4 billion was CapEx. Over the last six months, we have recorded PLN 7.7 billion of EBITDA. Working capital actually stays at a very similar level to end of 2020.
We have spent PLN 4.2 billion on CapEx and additional PLN 1.4 billion on purchase of CO2 emission rights in March this year. This purchase was partially offset by cash inflow from settlement of deposit of PLN 1 billion altogether over the last six months. I would like to recall that currently we have over 14 million contracts for CO2 in our portfolio. Other position covers mainly cash spendings on acquisitions, advanced payments to our contractors, income tax paid, leasing payments, interest paid, and dividends received. In total, we have decreased our net debt by PLN 1.6 billion versus end of 2020. The improvement of debt over the last quarter is even stronger. You can see it on slide number 22.
We decreased debt by PLN 2 billion versus end of March 2021, even though we have recorded PLN 244 million of project finance non-recourse related to acquisition of onshore wind farms in Kobylnica, Subkowy and Nowodwory. Due to a very strong EBITDA and decrease of debt, we recorded lower net debt to EBITDA ratio of 0.87, which was to mention that this quarter we are not taking the calculation profit on the bargain purchase of Energa, which was recognized in second quarter of 2020 for calculation of this ratio. Ratio is purely calculated now based on the EBITDA without this one-off and on the net debt level, of course, excluding hybrid and project finance, non-recourse project finance. As Konrad mentioned, we have issued in second quarter our inaugural Euro green bond of EUR 500 million.
The profits coming from this issuance will be used mainly for development of renewables, hydrogen fueling and EV charging infrastructure and recycling installations. Currently, over 30% of our outstanding debt is sustainable or green debt. In May, Fitch placed our ratings on the positive watchlist following new announcements and more details on the merger with PGNiG and Lotos on the non-cash base. That's all from my side. Thank you very much. I hand over to Marek, who will give you more light on CapEx.
Thank you, Michał. Let's move to the slide number 23, which is CapEx. As a reminder, planned CapEx for 2021 amounts to PLN 9.5 billion, of which PLN 7.7 billion is accountable to ORLEN Group and PLN 1.8 billion for Energa Group. We plan to spend over 50% of expenditures on growth. After six months, the realized CapEx amounts to PLN 4.2 billion, of which PLN 0.9 billion was spent in Energa Group. The biggest share attributed to petchem segment is PLN 1.4 billion, and to energy segment, that's PLN 1.2 billion. In the refining segment, the capital expenditures amounted to PLN 0.9 billion. In retail, it was PLN 0.5 billion, and in upstream, it was roughly PLN 100 million.
CapEx is in line with the schedule. At the moment, we are confident that it will reach the annual target that we set at the beginning of the year. Main growth projects realized in the second quarter are as follows. In refining, the construction of vis breaking unit in Płock and construction of propylene glycol installation in Trzebinia. In petchem, as a part of petchem development program, the extension of olefin unit capacity in Płock and in Anwil, the extension of fertilizers production in energy segment and the project for construction of offshore wind farm on the Baltic Sea, modernization of current assets and connection of new clients in Energa Group and development of ORLEN Charge network. In retail, we opened six stations, six were closed. We opened 10 non-fuel Stop.Cafe or Car Connect points altogether.
The last section of slide number 25 describes the current macro environment. This data is as for 23rd of July. In the first quarter 2021 until the date, we observe a fall. The downstream margin decreased by $1.2 per barrel quarter-to-quarter to the level of $8.6 per barrel due to lower petchem margin and lower refining margin at higher BU differential. Crude oil price increased by $6 per barrel quarter-on-quarter to the average level of $5 per barrel due to positive growth prospects for global oil demand such as increased demand for jet fuel, economic recovery in U.S. and European countries, and another week of reducing U.S. crude oil inventories by 7.9 million barrels to the level of 437 million barrels.
The information about the increase in crude oil production in OPEC+ by 400,000 barrels a day from August had a negative effect on oil prices as well. In terms of diesel cracks, those decreased by -16% quarter-on-quarter with an average of $31 per ton. In the last week, we observed a rebound in diesel cracks to the level of $39 per ton. Those are due to increasing demand related to the easing of restrictions and increasing mobility. Disruptions in the fuel supply chain in Europe, those were caused by heavy rains and floods, labor shortages in the U.K. transport industry, and a decline in inventories in the U.S. and ARA region. As for gasoline cracks, those increased by 11% quarter-on-quarter with an average at the level of $160 per ton, currently reaching even almost $180 per ton.
Those are mainly the same reasons as for diesel cracks rebound, and more than that, the possibility of introducing a ban on gasoline exports in Russia following a record increase in Russian gasoline prices. HSF crack, those decreased by -15% quarter-on-quarter with an average of -$175 per ton. Those were mainly due to higher crude oil price and limited demand for bunker fuel. Brent-Urals differential, that one increased by $0.5 per barrel quarter-on-quarter with an average of $2.5 per barrel, mainly due to the drop in demand for Urals crude oil in Baltic port. Sorry, guys, for the interruption. Let's just make sure it won't happen again. Okay. As for the petchem margin, this one decreased by EUR -110 per ton quarter-on-quarter with an average of EUR 1,363 per ton.
Currently, we're observing the levels of EUR 1,303 per ton, those were caused mainly due to the decreases in polymers quotations last week and rising crude oil prices. Petchem is very strong due to low supply related to the accumulation of postponed shutdowns from 2020, low imports to Europe, production problems in Europe which is in Germany, and lower feedstock costs such as Naphtha and LSVGO. Now let's move to the next slide number 26. It's a slide where we describe the market environment, let's start with the Brent crude oil prices, which increased due to the OPEC+ pricing policy, mainly because of Saudi Arabia's resistance to increase production so that it would not keep up with the dynamic growth in demand that we currently observe.
In mid-July, OPEC+ overcame internal divisions and agreed to increase production, which caused fears of an oil surplus as COVID-19 infections continued to rise in many countries. In the coming weeks, we expect oil prices to fall and stay at the average price below $70 per barrel until the end of 2021. The fall in oil prices will not be smooth as currently over 60% of crude oil production is able to flexibly react to changes in the market situation. For example, in case of OPEC+, it's actually possible immediately, and in U.S., after one or two quarters. The shortening of the price cycles in this crude oil market from several years to several quarters will be accompanied by increased price volatility.
As for refining margins, the strong increase in demand for crude oil and liquid fuels which we have been dealing with since the beginning of the second quarter of 2021, combined with the seasonal effects, have improved refining margins, relieving the pressure to reduce refining capacity. The improvement in margins was limited by the dynamic increase in oil prices to nearly $80 per barrel. Current perspective of a decline in crude prices may temporarily improve refining margins, but in the long term, the global excess of refining capacity will continue to keep the margins under pressure. The latest projections indicate that in 2050, world will need 7 million barrels per day of crude oil and liquid fuels less than it was expected before the pandemic prognostics. The reason behind the reduction in demand forecast is the dynamic development of EVs and alternative fuels.
Overall in the short- term, we expect margins to improve temporarily as crude oil prices decline. However, in the longer- term, margins will be under pressure as the excess capacity in the global refining industry has increased, as we mentioned before. As for the petchem margin, because this one might be crucial for the first quarter in our case, the increasing demand as supply constraints pushed margins to the record high levels in second quarter 2021. Actually, margins were never seen before at these high levels. In the following quarters, we expect margins to deteriorate. However, they will remain at high levels, much higher than in previous years. Petchem is strictly correlated with GDP, which is currently growing strongly following a deep decline last year. Out of the gas, current natural gas spot prices in Europe are the highest since at least 2008.
The reasons for such high fixed prices are, in our opinion, as follows. This is due to limited gas supply, which is low level of stocks in Europe and limited availability of LNG loads going to Asia, increased demand for natural gas in the world overall. Splitted by regions, in Europe, it is built by high prices of coal and CO2 emissions allowances, which make the production of electricity from gas-fired plants more effective, and the need to replenish gas reserves before the winter period. Those are the effects we see in Europe. In Asia, it is a consequence of the high demand for gas for energy purposes. It's an effect of high temperatures that are being noted in Asia and in Brazil. Drought limits the possibility of energy production from hydro sources and forces the replacement with gas power plants.
If level of stocks will not increase before the winter season to the level observed in previous years, that may support gas prices as well in the coming winter quarters. Electricity, the fundamental components for electricity prices have recently been a pro-growth nature. From the beginning of the year, the Base Y 2022 contract prices increased from around PLN 250 to a maximum of over PLN 360, which translates to an increase of approximately 30%. Due to the structure of the Polish energy market, a strong correlation with CO2 allowances is of great importance, as it is now an unquestionable support factor for energy prices, with the prospect of further growth.
The prices of coal on the global market have recently reached new heights, despite the active European policy, which in the long run should limit the profitability of using fossil fuels and strive to move away from coal. However, the changes may be delayed in the near future by the perspective of a cold winter and weather extremes. Currently, strong demands throughout Asia and limited supply from Indonesia and South Africa are also of pro-growth nature, which also directly affects coal prices in Europe and indirectly also in our domestic market. The support from high gas prices and the general high demand for electricity are also important, and this in turn results from a relatively warm summer, low wind generation, and high temperatures. In the coming months, energy prices should also be supported by, among others, the situation in the gas market.
Relatively low levels of stocks in Europe and uncertain price perspective for the coming months with limited supply and high LNG prices will be a weaker constraint on rising coal prices and another factor supporting energy prices. The perspective of a cold winter, high demand may be another factor causing an increase in electricity prices. As a result of easing the restrictions, we observe an economic recovery and an increase in fuel demand, which should be sustained in our opinion. In terms of regulation, nothing has changed since the last quarter, and that will be all on my part. Thank you for your attention, and now we will move the Q&A session. We are open for your questions.
Dear ladies and gentlemen, we will now begin our question and answer session. If you have a question for our speaker please press star zero and one on your telephone to enter the queue. Once your name has been announced, you can ask a question. If you find your question has been answered before [ Unintelligible] if you are using a speaker equipment today please release the handset before making your collection. One moment please for the first question. We have a first question. It's from Ekaterina Smyk of Bank of America. The line is now open for you.
Yes, good morning. Thank you very much for the presentation. I have three questions. The first one is on the ongoing Lotos PGNiG merger. Sorry, the preliminary works. Appreciate the State Treasury approved the non-cash structure of the transaction. What is the current status of it, and when do you expect to announce to get the final sort of proposal for the shares or parity? The second question is on your volumes outlook for the third quarter or the second half of the year, how your maintenance looks like, and whether you expect to recover volumes significantly compared to the first half, which was affected by maintenance. The third question is on the offshore wind project. This is basically the first call since the news on the contract for difference award for the project.
What are the next sort of steps you need to achieve to get this project to the construction phase? Sort of what are the utilization rates you expect to achieve at the project, and what is the IRR you currently look for given the known level of the subsidy at this stage? Thank you.
Okay. As for the questions regarding the merger with Lotos and PGNiG, I'll just start with the PGNiG one. In this transaction, we filed the presentation to the Polish anti-monopoly trust. We are working. We are waiting for their decision, and after that, we'll be able to start the whole procedure. As for the State Treasury confirmed that they accept the non-cash solution for this transaction, it stays viable. Nothing has changed. As for the shared swap parity, we have not comment yet on that. We'll be more than ready when we receive information from UOKiK, and we'll be ready to go through with this process altogether. Still, we think that this transaction could be finished in this year. We are currently waiting for the decision of UOKiK.
As for the Lotos, as you know and as we informed before, we postponed or prolonged the date to present our buyers or contractors to the European Commission. The new date that is set up for now is 14th of November. That's the new date for the participants that will take the remedies from us. Also it doesn't mean that it will prolong the whole transaction for another four months. We are pretty ready with all the formal steps afterwards. I just say that the best thing to do for now is to wait for the 14th of November, maybe sooner, when we present who and on what terms we'll take the remedies and realize the remedies in that transaction. Of course, as for parity swap, this is too early to discuss on that topic.
Okay. Konrad Jarosz speaking. I take the second question about the volumes perspective on the second half of this year. Definitely we may say that the second half of this year will be definitely less packed with maintenance shutdowns comparing to H1 this year. In the third quarter, we are planning to process 8.4 million tons of crude oil, which is roughly speaking, 95% utilization ratio, and this is also higher comparing to Q3 2020. In Płock, we going to have maximum utilization rates, despite the fact that in September we have some plant maintenance shutdowns. On the refining part, we have reforming and H-Oil maintenance, roughly speaking, 30 days.
On the petrochemical side, we have maintenance shutdowns of PX PTA unit up to 30 days. In Orlen Lietuva and Unipetrol, utilization will be at the level of roughly speaking, 85%, of course, adjusted to the market situation. In Orlen Lietuva in September, we are planning to conduct maintenance shutdowns of vacuum flasher, roughly speaking two weeks. In Unipetrol, we have plant maintenance shutdowns of P3 unit almost the whole month and also polypropylene units slightly above 10 days. In terms of volumes, we may say that the demand, first of all, is very sound. Yes. However, in the first quarter, we are expecting to mitigate the dynamics in the consumption of fuels in Poland comparing year-on-year due to the fact that we do not have any restrictions in movement. This is the similar situation that we had last year.
Q3 '20 last year was also free from any restrictions. Those significant double-digit dynamics that we observe in the second quarter definitely is not applicable to Q3. Total sales in Poland in July, what we see right now is on the comparable level to the July last year. On the wholesale level, sales of fuels is roughly speaking, higher by 1% year-on-year. This is effect of higher sales of gasoline by roughly speaking, 10%, jet by more than 130%, at lower sales of diesel by roughly speaking, -3%. On the retail side, we observe currently lower sales by 3% year-on-year due to the fact that we observe lower demand for the gasoline and also diesel year-on-year. In terms of petrochemicals, we may say that petrochemical sales is currently on the comparable level year-on-year.
All the, let's say, plant maintenance shutdowns of petrochemical units realized in the second quarter has already finished in June, and it was of course according to the plan. In terms of maybe the market, the margins, trading margins, yes? Macro from quotations you follow. However, in terms of trading margins, IP spot on the wholesale level, in Poland, we may say that it's on the record high in terms of the gasoline. We observe increase by roughly speaking, 35% year-on-year. This is the effect of high demand at lower supply. We have summer season, we have maintenance shutdowns of Leuna refinery and some logistic constraints on the Germany at lower IP on the diesel at the level of -15% comparing to the last year. In terms of retail margins, they are quite sound in Czech Republic, so 10% increase.
We have comparable margins currently in Germany at lower margins on the Polish market by 6%. Of course, the pressure definitely is from crude oil price, which is higher by roughly speaking, 75% year-on-year. Higher crude oil prices, I always underline means higher prices of final product. It's hard to, let's say, spread the margins in such a, let's say, challenging environment of crude oil price. Now, question number three, if I may ask Justyna to answer this question, please. The floor is yours.
Yes. Thank you. Hi, Erwin. Okay, back to the Baltic Power project. We expect to start the construction in 2023. We still got two years of hard work ahead of us before we'll be ready to start the construction. There's still a lot of things to be done. You ask what needs to be done before we start the construction. Right now, we are running the geotechnical service. Yes. From that, we will be able to prepare the design for the whole wind farm. Yes. We are still ahead of receiving the environmental decision. We expect to receive very soon the environmental decision for the offshore wind farm, but it will not include the cable. We need to apply for the decision also for the cable, and this is a separate process. We need to organize the financing.
We are underway in the process of doing so. You mentioned that we received the decision of the regulator regarding the CfD, this is correct. The Polish regulator issued the decision for Baltic Power, this isn't the final decision. We still need to apply to the European Commission to confirm the support for our project. After the opinion from Commission decision, we will need to come back to the Polish regulator to again reconfirm the level of support. As you can see, there's still a lot of UOKiK. Our schedule is quite ambitious, we expect that we'll be ready in the middle of 2023 to make the final government decision then start the construction. This is about the schedule.
We cannot reveal our expectations regarding the IRR because there are a lot of analysis and study undergoing, and we'll be probably ready with the numbers in a year or one and a half years. I don't remember the last part of the question, if you could repeat.
Yeah. Basically, I think that pretty much answers my entire question. That's very detailed. Thank you very much to all of you.
Our next question is by Michał Kozak, Trigon. The line is now open for you.
Thank you. I have question about PGNiG exploration licensing in upstream in Poland after merger with Orlen. Will these licenses automatically move to merged PKN, or you will need to buy it in a separate public tender, pay additional cash for it? Will PGNiG sell these licenses first before merger or just give it back without getting cash? The question relates to general succession and government law.
Thanks for turning to Department of Strategy of PKN Orlen. We are aware of the challenges that you have described, and we are now working about the best solution for both PKN Orlen and PGNiG to solve this problem. We'll have an internal answer for this question in roughly one and a half months from now.
Thank you. The second question from my side, Lotos will put refineries in a case to a general meeting vote soon. Will you present proposed share swap ratio and chosen company for Gdańsk Refinery before that voting?
Hi, Michał. Regarding the share swap ratio, it will be too early to show you the swap ratio at this general meeting regarding the proposal of the Gdańsk Refinery. It won't be disclosed yet.
Thank you. My third question, do you need to get additional approval to Lotos transaction from European Commission due to changing structure of this transaction to full merger with Lotos?
Yeah. The decision of EU Commission does not include the transaction structure itself. It could be as well be made with the cash or non-cash on the same decision. It's only for the acquisition itself, not the structure.
You don't need an additional approval, yeah?
Correct.
Okay, my last question. Thank you. My last question, there is some media speculation that you are interested in acquisition of Achema Fertilizer company in Lithuania. Could you give us any comment on this, and could you also refer to potential acquisitions in media sector like Polska Press? Are you interested in such moves? Thank you.
Okay. We have Jarek from M&A department on the line. Jarek, if you could answer the question, and I heard you had the comments to the previous one as well, so go ahead.
Yeah. Maybe I will start from previous question regarding the decision of the European Commission. European Commission has to approve our final solution regarding the remedies package. We will deliver our proposals regarding remedies, then they have the right to confirm that we're fulfilling their requirements. The present question regarding Achema, I think there's nothing new today to add to the situation. Nothing has changed so far.
You are interested in the target or not?
Yeah, I guess, Jarek. Yeah, if you could. Jarek? Okay.
No.
Yeah.
Yeah, go ahead.
In general, something what can be interesting for us, looking at the fertilizers market as a whole, but there is no transaction at the moment.
Are you interested in acquisition of fertilizer companies in Poland, for instance?
I'm not able to confirm this as the possible we want today. There's no such products open.
Yeah. Michał, I think that the best answer to your question would be that, we know that you like to send us some ideas, what could be great for us, as for M&As throughout history. Basically, we do not disclose any information regarding any activities or M&A activities regarding fertilizers acquisitions in Poland or Lithuania. Of course, our M&A is very active in Poland and abroad. If there will be any transaction to be realized, you will be all first to know about the situation, because we'll basically public it. As for now, I would just assume that our M&A guys make a lot of ideas and valuations, but there are no projects ongoing regarding those assets you mentioned.
Yeah. Understood. Thank you.
Our next question is by Mr. Patricio of UBS. The line is now open for you.
Yes, sir. I'm Patricio from UBS. Thank you for the presentation. Thank you for the couple of slides around CO2. I have two questions on that topic and then just one on petchem. Just on CO2, I was wondering whether you could give us some guidance for the third quarter around CO2 hedging, what we should expect in terms of both the P&L and cash flow impact. Secondly, in the longer- term, given the EU Commission's proposals around the EU ETS and accelerated decline of free allowances in the next years, whether that changes your hedging policy. Would you be looking to hedge further out and more aggressively? Finally, just on petchem and the third quarter, because we're seeing still very high margins. You mentioned that you should have icon volumes back to normal.
I was wondering whether you can fully capture this high level of margins or whether it's actually gonna be difficult to pass on these very high prices to customers, or if there is maybe some delay and then we see the benefit more in the later part of the year? Thank you.
Okay. Taking the questions of petchem margin. As Marek said during the conference call, the margins are still very high of course they are quite lower comparing to the hesterical level that we are expecting in the second quarter. Despite the fact that margins deteriorated, they still remain at high levels, much higher than in the previous year. In terms of the volume, volumes definitely should be also better comparing, of course, to the second quarter because we finalized all the petchem maintenance shutdowns that we had planned. You may expect that if macro will not deteriorate severely, and we do not expect such a situation, we are assuming that it may go down, but down to EUR 1,200 per ton. Third quarter should be really a good one for petchem division.
In terms of your question on CO2, Michał Perlik speaking. The impact of CO2 on the results in the next quarters will depend mainly on the price of CO2. Assuming that the price will stay at the comparable level we have at the moment, so EUR 50, EUR 55, then we will not recognize any substantial result on the settlement valuation of CO2 futures, so they should be around zero. On the other hand, we will recognize pretty the same results on the creation and revaluation of the provision for CO2 as settlement of subsidies for CO2 received. The net effect would be around half a billion zlotys quarterly. Of course, if the prices are going up, then we are recognizing profits on our contracts, on our CO2 contracts, but also the provisions are going up proportionally.
I understand your second question was about free allowance that will be granted to us over the next few years. Correct? Yes.
Yeah. That's right.
We already know that under the ETS4, for the next four years, we will get approximately the same number of free allowance as we get previously. Nothing is changing here. Of course, we are gradually opening new position, new contracts to secure our position in 2023 and 2024.
Understood. Thank you.
Our next question is by Oleg Gałbur of Raiffeisen. The line is now open for you.
Yes. Hello, thank you for the presentation and congratulations on the strong quarterly results. I have three questions, and if you don't mind, I'll ask them one by one. The first question refers to the slide number 30, from which I have calculated that the refining segment saw a negative impact of hedges, excluding CO2, of some PLN 370 million. I'm a bit puzzled by this high level of hedging losses, especially with the recent level of product prices, including gasoline and diesel remaining at, let's say, level below the peak COVID. If you could comment on this.
Excuse me. I understand your question was about the hedging on the crude oil deliveries via vessels. Yes?
Well, my question is, first of all, refers to slide 30, where you provided a split by segment of EBITDA, LIFO EBITDA. When looking at the refining segment, I see that hedges, yeah, had a net impact of PLN -170 million, including the CO2 of PLN +260 million, which means that the product hedges had a negative impact of PLN 370 million. I was wondering whether you can explain this high level of losses.
Yes. This is mainly related to our hedging strategy on the timing mismatch of deliveries of crude oil, which is coming to us via vessels. We are basically hedging all the vessels that we are importing to Poland and Lithuania. This is the result which is strictly related to sharp increase of oil prices over the last quarter and also over the last half of the year, because the same effect you can see starting 1st quarter this year.
Okay. I see. The impact is mainly on the P&L, not so much on the cash flow. Is that correct?
Actually, when considering this position, you should also remember that on the other side, we have crude oil, which is offsetting physical crude oil, which is offsetting our hedging position. The hedging strategy on the time mismatch deliveries always bring us zero cash effect because we have either more expensive crude oil, by buying cheaper but when it comes to us, it's more expensive, so we have a profit on the pure crude oil, physical oil, but we have a loss on the hedging instrument. Or the opposite situation, that we are buying crude oil with a higher price. When it comes to us, the price is lower, but it is offset by profit on the hedging. The strategy is set in a way that it's always zero. We hedge the time between we buy the crude oil and between it is delivered to us.
The rest of the effect is visible in the margin. The same story is with CO2 hedging. When the prices are going up, then we have a profit on the hedging instrument, but we have a higher provisions, higher reserves. When the prices are going down, we have lower provisions, but we have also lower profits or losses on the hedging. This is not trading, this is hedging, and it's always offset by the physical position.
Yes. Thank you very much. Actually, that was my next question regarding the impact of this settlement, CO2 contract settlement on the cash flow, which in the second quarter, as you presented on slide 32, was almost PLN 700 million. Once again, if you can explain in more details, because I can understand the impact on the P&L, but actually what is causing such a strong impact on the cash flow?
Yes. We had over 12, almost 13 million contracts open on the ICE. There is a deposit behind. When the prices are going up, we are getting cash for the difference between the initial price when the contract was open and the current price on the market. You can see on the right-hand chart that over the last Sorry, I can see that we have not updated this slide. Over the last three months, the price went up from EUR 42- EUR 55. They went up by around EUR 13 times the number of contracts we have open, and this is a pure cash income to us. The prices will start going down, then we have to bring the cash to the deposit.
Understood. Okay. All clear. Thank you. Lastly, if you could share your view on the petchem market, and more specifically from what you see, which were the sectors driving the demand and the margins of the petchem products? Why would you expect the petchem margin to contract in the second half of this year? Is it mainly because of the increasing supply, or is the movement on the consumption side? Sharing your thoughts will be very helpful. Thank you.
Adam Czyżewski. Why we expect contracting margins, the reason is that we expect a high demand for petchem products. This is related to high GDP growth. In general, petchem products are correlated with GDP because they are used in many applications. Last quarter, we had extraordinary margins because there was a lot of supply chain breaks and supply chain restrictions, which elevated margins. Now, like for example, a lot of maintenance shutdowns, et cetera. Also, this was this strong winter in Texas, which closed down the petrochemical production. Now we expect that this extraordinary one-off event will not happen. Therefore, we will have higher supply. Second thing is that we observe increase in feedstock prices. Especially with petchem based on oil, which is caused by the increase in oil prices. Gas prices also go up.
Thank you.
As a reminder, if you want to ask a question, please press zero and one on your telephone to enter the queue. Our next question is by Mr. Gistla of ENI. The line is now open for you.
Yes. Hello. I have two questions. First, the energy segment, because in the breakdown, I see some PLN 112 million impact from subsidiaries accounted on equity method. Could you please explain what is the subsidiary accounting in this segment? Is that profit, or what is the source of this impact?
Where do you see this information? Is this from the presentation or from the?
It's the Excel spreadsheet you delivered segment by segment. In the detailed energy segment breakdown, look at this line showing profit from investments accounted for under equity method. So far it was rather neutral, and now I see PLN 112 million.
This is Baltic Power.
Baltic Power doesn't have many impacts.
Okay. Let us please check, and I will return to you with the answer shortly. Okay?
Okay. My second question refers to the PTA results this quarter, because when I look at the model benchmark margins on this product, they are not very impressive. This quarter you managed to improve your results quarter-on-quarter. Could you comment on this product a little bit?
If you look on PTA, what I see, the margins were slightly higher on PTA comparing to the first quarter. Yes. Because you relate the second quarter to the first quarter, yes, of this year. What I see, the margins were slightly better than it was in the previous quarter, and also volumes were higher.
Okay. I understand. Thank you very much.
You're welcome.
There are no further questions, and so I hand back.
Okay. Thank you, operator. If there are no more questions, I would like to thank you for the participation in the conference call, and of course, this concludes our presentation. Thank you, and have a nice day. Thank you.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.