Low Oil Prices, Capital Outflows Lead to Formation of Payment Balance Deficit in Azerbaijan

The COP29 conference revealed significant divisions between wealthy governments, with limited domestic budgets, and developing countries. The European Union, the United States, and other developed nations raised their climate financing offer for developing countries to $300 billion per year during COP29 last Saturday, attempting to break the increasingly tense negotiations.

On November 23, President Ilham Aliyev signed a decree to improve governance in electricity and water supply management and address related issues. According to the decree, the Cabinet of Ministers of the Republic of Azerbaijan must take necessary steps within a month to transfer the functions of the State Energy Agency of the Nakhchivan Autonomous Republic  (NAR) to the state-owned companies Azerenergy (the state monopoly for electricity production and transportation) and “Azerishig” (the state monopoly for electricity distribution).

Azerbaijan currently exports oil to approximately 30 countries, and by December, the number of countries importing Azerbaijani gas is expected to reach 12, Azerbaijan's Energy Minister announced on November 22 in Istanbul during the energy forum at the session titled "Challenges and Opportunities for a Sustainable Future." However, the minister did not reveal the names of the new gas importers. At present, 10 countries officially import Azerbaijani gas: Georgia, Türkiye, Greece, Italy, Bulgaria, Romania, Hungary, Serbia, Croatia, and Slovenia.

Azerbaijan's oil production is expected to reach 640,000 barrels per day in 2025, according to forecasts from the International Energy Agency (IEA). The IEA has kept its oil production forecast for Azerbaijan unchanged from its previous assessment made last month. The agency predicts that Azerbaijan’s oil production will start at 610,000 barrels per day in the first quarter of 2025, increase to 630,000 barrels per day in the second quarter, and reach 650,000 barrels per day in the third quarter.