In 2022 the line recognition of impairment allowances of property, plant and equipment and intangible assets, goodwill and other assets concerned mainly recognition of impairment allowances in Refinery segment and Upstream segment. Additional information in note  14.4.

Net settlement and valuation of derivative financial instruments not designated as hedge accounting purposes

For 2022 and 2021 the change of net positions of valuation and settlement of derivative financial instruments related to operating exposure (non-designated instruments for hedge accounting purposes) mainly related to the valuation and settlement of commodity swaps hedging the refining margin, time mismatch on purchases of crude oil and valuation and settlement of CO₂ forward contracts as a part of "transaction" portfolio. Moreover this line includes the effect of valuation and settlement of commodity swaps for securing oversized stocks and bitumen hedging and securing the physical sale of finished products purchased by sea as well as electricity hedging transactions and gas. The result on a physical item, hedged by the Group with forward transactions is reflected in the profit/(loss) on sales under manufacturing costs (cost of crude oil used to manufacture refining products based on weighted average acquisition prices) and revenue from sales of refining products. Therefore, the result on the settlement of derivative financial instruments relating to the operational exposure should always be considered together with the profit/(loss) generated by the Group on the sale of a physical position.

Starting from 1 January 2022, the Group began to apply hedge accounting in relation to the hedging of time mismatches resulting from the purchase of crude oil by sea and the sale of refining products, therefore currently the valuation and settlement of commodity swaps concluded in 2022 as part of the commodity risk management strategy related to a time mismatch between the date of purchase of crude oil by sea and the date of processing and sale of refining products in the effective part are recognised under the hedge accounting equity item, and when the hedged item is realised they are recognised respectively in sales revenue or manufacturing cost. The application of hedge accounting from the beginning of 2022 to hedge a time mismatch resulting from the purchase of crude oil by sea and the sale of refining products also changed the net position of the ineffective part related to the valuation and settlement of the operating exposure. In 2022, the measurement and settlement of derivative financial instruments were also affected by derivative transactions of the merged companies of the Lotos Group and the PGNIG Group.

Since 1 July 2022, ORLEN has begun to apply hedge accounting for purchases to hedge risk of change of market prices of CO₂ allowances. In connection with the above, the effective part of change in fair value of hedging instrument is related to statement of financial situation in position revaluation reserve due to the application of hedge accounting, whereas the non-effective part of change in fair value of hedging instrument is related to profit and loss statement into other operating income or other operating expenses. Accumulated gains or losses related to the hedging instrument recognized in the revaluation reserve, accumulated until the date of termination of the hedging relationship, are reclassified in the period of recognition of the hedged item to intangible assets or assets held for sale, respectively. As at 31 December 2022, the value from the valuation of CO₂ hedging instruments presented in the item Hedging reserve amounted to PLN (22) million.