Natural gas on the Netherlands’ TTF hub traded at $1,106 per 1,000 cubic metres, up more than 2.6% in a single day. The price far exceeds the levels built into Azerbaijan’s state budget and Central Bank forecasts.
Prices on the Dutch TTF gas exchange kept climbing, with 1,000 cubic metres of natural gas reaching $1,106. The single-day gain of more than 2.6% puts the benchmark sharply above the TTF price assumptions underpinning Azerbaijan’s official budget documents.
The rally is being driven mainly by ongoing tension in the Middle East, which has disrupted liquefied natural gas shipments from Qatar. Europe also entered the winter season with weaker reserves than usual: storage facilities are roughly 75% full, more than 10 percentage points below the five-year average. Colder weather, which has pushed several countries to start drawing on reserve stocks, has added further upward pressure on prices.
The elevated TTF gas price creates extra foreign-currency earning potential for Azerbaijan. According to Azerbaijan’s State Customs Committee, the country sold 17.994 billion cubic metres of natural gas between January and September this year, earning $6.449 billion in revenue. Compared with the same period last year, sales volume fell 2.9% and revenue dropped 3.7%, putting the average export price at around $358 per 1,000 cubic metres.
Gap between official forecasts and market reality
The State Oil Fund’s draft budget for next year assumes a European gas price of $440 per 1,000 cubic metres and an oil price of $65 per barrel. That $65 oil figure also remains unchanged in the government’s baseline scenario covering 2027-2030.
The Central Bank of Azerbaijan, in a report issued in July, put next year’s average gas price forecast at $327 and oil at $87.7 per barrel. For 2027, the Central Bank projected $294 for gas and $82.8 for oil. The current TTF price is several times higher than these figures.
It would be wrong, however, to assume all of Azerbaijan’s gas sales are made at today’s market price. Actual revenue depends on the pricing formulas written into existing contracts, when those prices are reset, and the volumes sold. How much impact the current high prices have on annual financial results will depend on how long they persist.
Read also: Azerbaijan earns $6.4 billion from natural gas exports in nine months
