LNG MARKET AND PRICES

Almost every current human endeavor from transportation, to manufacturing, to plastics, and especially food production is inextricably intertwined with oil and natural gas supplies. Petroleum is a raw ingredient in some 70,000 manufactured products, including medicines, synthetic fabrics, fertilizers, paints and varnishes, acrylics, plastics, and cosmetics. Natural gas makes much of the world's fertilizer.

"June 3 (Bloomberg) -- United Nations Secretary-General Ban Ki-moon called for a 50 percent increase in food production by 2030, saying that failure to feed the world's growing population will spark civil unrest and starvation.

``The world needs to produce more food,'' he said today in the opening speech at the World Food Security conference in Rome. ``While we must respond immediately to high food prices, it is important that our longer-term focus is on improving world security -- and remains so for some years.''

Leaders of developing nations, such as Brazilian President Luiz Inacio Lula da Silva, criticized the role subsidies that rich countries pay their farmers have played in stymieing food production, while Western leaders called for more aid to help increase output.

The three-day meeting is being held to cobble together solutions to ensure that the highest commodity prices in three decades don't further swell the ranks of the world's 860 million hungry people. Shortages of staples such as rice threaten to fuel civil unrest, said Ban, who also wants an end to farm subsidies, agricultural taxes and export bans.

A 60 percent increase in food prices since the beginning of 2007 has sparked riots in more than 30 countries -- including Cameroon and Egypt -- that depend on imported food. The wealthiest nations pledged $6.3 billion in emergency aid last year, yet critics say that will do little unless accompanied by policies that promote greater output...."

About 97% of nitrogen fertilizers are derived from synthetically produced ammonia. Natural Gas based Nitrogen fertilizer made it possible for us to overpopulate the Earth, and now we're hooked. 40 percent (soon to be 60 percent) of the Earth's inhabitants owe their survival to natural gas, a non-renewable fossil fuel.

A world of 6.4 billion people, on the way to 9 billion or more, needs more protein than the planet's croplands can generate from biologically provided nitrogen. Our species has become as physically dependent on industrially produced nitrogen fertilizer as it is on soil, sunshine and water. And that means we're hooked on natural gas. But 60% of China's nitrogen fertilizer production is currently based on coal.

At present natural gas is the most economic feedstock for the production of ammonia, as the West European figures below show.

West Europe	Natural Gas	Heavy Oil	Coal
Energy consumption	1.0	1.3	1.7
Investment cost	1.0	1.4	2.4
Production cost	1.9	1.2	1.7
Source: EFMA

Approximately 4% of total annual natural gas consumption in the USA and West Europe is used to produce raw materials, especially ammonia. In some countries, however, the use of gas for ammonia production accounts for a large proportion of national gas consumption. In India, for example, this proportion is roughly 40%.

“In 2000, US farmer's cost for NH3 was $242/ton. This year’s cost (2008) has nearly doubled to $580/ton.

Fertilizers are serious business in China, where nearly 50 million tonnes of fertilizer are annually consumed. Of By 2011, fertilizer production could top 63.5 million metric tons, according to China’s National Agricultural and Rural Economic Development [NARED]. Of this, China hopes to produce 42 million metric tons of nitrogen fertilizers.

According to the International Plant Nutrition Institute, more fertilizers will be required to overcome the poor soil nutrients in China and India. Significant percentages increases in nitrogen-based fertilizers are anticipated.