The production of nitrogen fertilizers, the main manufacturing segment of Grupa Azoty, is heavily dependent on natural gas. The price of gas influences the profits from sales of products manufactured in the works, as well as the competitive position of the company on the market.
Grupa Azoty consumes about 2.2 billion m3 of gas per year. Almost a half of this figure is consumed by Grupa Azoty PUŁAWY, which uses the resource to produce ammonia. The cost of purchasing natural gas constitutes about 30% of company expenditure (44% in Grupa Azoty PUŁAWY). Consequently, prices of the resource and the diversification of its supply constitute a key element of Company activity.
Changes in the organization of gas purchasing
PGNiG is the main supplier of gas for Grupa Azoty. The value of our commercial exchange reached 1,146 million PLN from December 2014 to August 2015. Despite this fact, at the same time we succeeded in purchasing as much as 50% of the necessary supply on more favorable conditions than in the case of long-term agreements with PGNiG (as compared to 38,6% in Q4 2014). This is possible thanks to purchases made via Polish Power Exchange and contacts with other companies. PGNiG also offers favorable discounts, based on gas quotations on Polish Power Exchange.
By using every opportunity to purchase gas on better terms, Grupa Azoty is capable of becoming increasingly capable of competing with international entities, which used to buy gas from cheaper suppliers. At the same time, we cut production cost and develop the concept of custom, “smart” fertilizers, helping to strengthen our position of a leader on the national and European markets.