(EC-92), and declining demand in Eastern
Europe and the former U.S.S.R. also
have been contributing factors.  The
Mideast downturn through 1992 was
primarily a result of events surrounding
the Persian Gulf Crisis and ensuing
Operation Desert Storm initiatives of
1990 and 1991.
It is estimated that between 1991 and
1993,  domestic  nitrogen  fertilizer
consumption has declined 3.3 million tons
N (42%) in the former U.S.S.R.; 0.3
million tons (-17%) in Eastern Europe,
compared with -62 % during the previous
3 years; and 1.1 million tons (-11%) in
Western Europe.
The dissolution of the centrally
planned economy of the U.S.S.R.
commanded global attention in 1992 and
resulted in the evolution of 15
independent republics.   The  new
republics have been plagued by a
combination of high inflation and drastic
cuts in domestic nitrogen fertilizer
production and consumption. The region
continues to dominate global nitrogen
trade, accounting for 3.5 million tons N,
or 39% of global ammonia exports, and
2.5 million tons N, or 27 % of global urea
exports in 1993. The former U.S.S.R.
has traditionally experienced pressures to
generate hard currency and is thus
motivated to be an aggressive trader. In
1993, ammonia exports were level at 4.3
million tons of product, although urea
trade was off 7% to 5.5 million tons.
Ammonia was produced in 10 of the
15 new independent republics in 1993, of
which Russia accounted for 60% of the
13.6-million-ton N total; the Ukraine,
24%; Uzbekistan, 8%; Belarus, 5%;
Estonia, Georgia, and Lithuania, 2 %; and
the remainder, 1%. The ammonia plants
were designed for output but not
efficiency, and gas costs were reported to
have risen dramatically in 1993. Natural
gas costs in the Russian Republic, for
example, rose from $0.08 per million Btu
in March 1992 to $0.63 per million Btu
in May 1994, an approximate sevenfold
increase. In the Ukraine where Russian
gas is used, the price jumped 35%, from
$1.30 per million Btu in October 1993 to
$1.75 in May-June 1994.
Gas supplies were extremely short in


the Ukraine during 1993, and a
substantial gas debt with Russia ultimately
resulted in the disruption of Russian
ammonia and urea export shipments to
the Ukrainian port at Yuzhnyy on the
Black Sea. The situation was reportedly
resolved late in the year.
If gas were fully deregulated by the
end of 1993 in Russia, as planned, which
now does not seem plausible, feedstock
prices may increase to roughly $60 per
thousand cubic meters, or $1.70 per
million Btu.  This could potentially
escalate ammonia production costs to
about $90 per ton and urea to $100 per
ton, values that may be prohibitive to
export competitiveness on the U.S. gulf
coast. A full-scale revamp of Russian
ammonia and urea plants was needed.
Russian gas was deregulated and priced at
roughly $2.50 per million Btu to Europe.
All Eastern European countries are
now forced to rely heavily on costly,
deregulated Russian gas for ammonia and
urea production and other uses.
Romania, Hungary, Poland, and the
former Yugoslavia, in order of
importance, have sizable gas production,
but still require significant imports.
Bulgaria and Czechoslovakia rely almost
exclusively on Russian gas imports.
Romania, Poland, Bulgaria, the former
Yugoslavia, Czechoslovakia, and
Hungary, in respective order of
importance, are all major participants in
the Eastern European ammonia industry.
In 1992, about 47% of the natural gas
consumed in Eastern Europe was supplied
from domestic production and 53 % was
imported from the former U.S.S.R.
Escalating natural gas prices have driven
ammonia and urea production costs up to
near-prohibitive  levels,  precipitating
critical shortages of nitrogen fertilizers
for domestic use and export.
Operation Desert Storm resulted in
severe damage to nitrogen plants in both
Kuwait and Iraq during January and
February 1991. Information available on
the damage and destruction of nitrogen
production facilities in the two countries
last year indicated that nitrogen output
would be restored on a more timely basis
than previous estimates of approximately
5 years, but now the pendulum has swung


once again to longer term prospects.
Kuwait, in particular, is now planning to
divert much of its scarce natural gas
feedstock supplies to petrochemical and
plastics synthesis.
In Kuwait, a 271,000-ton-per-year N
ammonia plant and 216,000 tons per year
of urea N came back into operation
during 1992 at Shuaiba, but preinvasion
capacity levels may now be delayed
beyond 1994 as previously expected. In
Iraq, the new 272,000-ton-per-year N
ammonia plant at Baiji was operational in
1992, together with a 265,000-ton-per-
year N urea facility. Approximately 63 %
of preinvasion capacity was scheduled to
be restored by 1994.
Iraq and Kuwait, in combination, had
represented about 1.5% of total world
ammonia capacity and 2.5%  of world
urea capacity. In 1989, Iraq and Kuwait
accounted for about 5% of total world
urea and ammonia N    trade.  This,
together with the supply potential of the
other Persian Gulf countries, accounts for
about 15 % of world nitrogen trade in the
form of ammonia and urea.
Industry Structure.-Global ammonia
was produced in 79 developed and
developing countries that had access to
fossil fuel feedstocks, principally, natural
gas, naphtha, petroleum refinery offgases
and condensates, and coal and coke
gases. The supply pattern, in general,
followed the world population trend, with
Asia and Eastern Europe, including the
former U.S.S.R., accounting for more
than 60% of the global ammonia supply
potential and 58 % of production in 1993.
The developed regions-North America
(United States and Canada), Western
Europe, and Oceania-produced ammonia
primarily for domestic use and accounted
for about 25% of world supply potential
and 30% of global production. The
energy-rich countries of the Middle East
accounted for about 4% of the world
supply potential and 4% of global
production in 1993 and exported
significant quantities of ammonia and
urea to the global community. Latin
America and Africa, in order of
importance, accounted for roughly 6 % of
global ammonia supply potential.


NITROGEN-1993












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