<PAGE>

================================================================================

                                   FORM 10-Q

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                      ----------------------------------


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the quarter ended September 30, 2001

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the transition period from _____ to _____

    Commission file number 1-10877

                          TERRA NITROGEN COMPANY, L.P.
             (Exact name of registrant as specified in its charter)

                Delaware                              73-1389684
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
    incorporation or organization)


                Terra Centre
       PO Box 6000, 600 Fourth Street
              Sioux City, Iowa                          51102-6000
    (Address of principal executive office)            (Zip Code)


                         Registrant's telephone number:
                                 (712) 277-1340

     At the close of business on October 31, 2001, there were 18,501,576
     Common Units outstanding.

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
X Yes   ___ No

================================================================================

<PAGE>

                          PART I. FINANCIAL INFORMATION

                          TERRA NITROGEN COMPANY, L.P.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                       September 30,       December 31,      September 30,
                                                           2001               2000               2000
                                                      --------------      -------------      -------------
<S>                                                   <C>                 <C>                <C>
ASSETS
   Current assets:
       Cash and cash equivalents                         $      10          $  17,941          $ 19,627
       Accounts receivable                                  25,170             24,739            33,964
       Inventory - finished products                        27,632              9,431            14,330
       Inventory - materials and supplies                    9,636              9,950             9,287
       Prepaid expenses and other current assets             7,902              3,117             1,483
----------------------------------------------------------------------------------------------------------
   Total current assets                                     70,350             65,178            78,691

   Net property, plant and equipment                       139,336            147,597           148,701
   Other assets                                              6,846             11,259            13,978
----------------------------------------------------------------------------------------------------------
Total assets                                             $ 216,532          $ 224,034         $ 241,370
==========================================================================================================

LIABILITIES AND PARTNERS' CAPITAL
   Current liabilities:
       Short-term note payable to affiliates             $  20,709          $     ---         $     ---
       Accounts payable and accrued liabilities             17,906             19,680            31,880
       Customer prepayments                                    ---              3,076             3,804
       Current portion of long-term debt and
        capital lease obligations                            1,000              1,000             1,420
----------------------------------------------------------------------------------------------------------
   Total current liabilities                                39,615             23,756            37,104

   Long-term debt                                            6,985              8,250             8,500
   Long-term payable to affiliates                           5,316              5,316             5,316
   Partners' capital                                       164,616            186,712           190,450
----------------------------------------------------------------------------------------------------------
Total liabilities and partners' capital                  $ 216,532          $ 224,034         $ 241,370
==========================================================================================================
</TABLE>



See Accompanying Notes to the Consolidated Financial Statements.

                                       2

<PAGE>

                          TERRA NITROGEN COMPANY, L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per unit amounts)
                                   (unaudited)
<TABLE>
<CAPTION>
                                        Three Months Ended              Nine Months Ended
                                           September 30,                   September 30,
                                        2001           2000             2001           2000
                                   -------------  -------------    --------------  -------------
<S>                                <C>            <C>              <C>             <C>
Revenues                             $  47,543      $  58,997         $ 201,294      $ 214,092
Other income                               264            248               547            548
------------------------------------------------------------------------------------------------
Total revenues                          47,807         59,245           201,841        214,640
Cost of goods sold                      56,665         54,281           205,072        186,735
------------------------------------------------------------------------------------------------

Gross profit                            (8,858)         4,964            (3,231)        27,905
Operating expenses                       2,135          1,053             6,876          6,923
------------------------------------------------------------------------------------------------

Operating income (loss)                (10,993)         3,911           (10,107)        20,982

Interest expense                          (405)          (275)             (817)        (1,262)
Interest income                            ---              1               203             73
------------------------------------------------------------------------------------------------

Net income (loss)                    $ (11,398)     $   3,637         $ (10,721)     $  19,793
================================================================================================
Net income (loss) allocable to
 limited partners' interest          $ (11,170)     $   3,564         $ (10,507)     $  19,396
================================================================================================

Net income (loss) per limited
 partnership unit                    $   (0.60)     $    0.19         $   (0.57)     $    1.05
================================================================================================
</TABLE>



See Accompanying notes to the Consolidated Financial Statements.

                                       3

<PAGE>

                          TERRA NITROGEN COMPANY, L.P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                        Nine Months Ended
                                                                           September 30,
                                                                      2001               2000
                                                                 -------------      -------------
<S>                                                              <C>                <C>
Operating activities:

Net income from operations                                        $ (10,721)          $  19,793
Adjustments to reconcile net income to net cash
 flows from operating activities:
    Depreciation and amortization                                     9,609               9,539
    Changes in operating assets and liabilities:
    Receivables                                                        (431)             (4,118)
    Inventories                                                     (17,887)             15,494
    Prepaid expenses                                                 (4,785)                100
    Accounts payable, accrued liabilities and
    customer prepayments                                             (4,850)              9,679
    Change in other assets                                            4,413                 616
-------------------------------------------------------------------------------------------------
Net cash flows from operating activities                            (24,652)             51,103

Net cash flows from investing activities:

    Capital expenditures                                             (1,348)               (964)

Financing activities:

    Net changes in short-term borrowings                             20,709             (39,601)
    Issuance (repayment) of long-term debt
     and capital lease obligations                                   (1,265)              9,076
    Partnership distributions paid                                   (8,306)                 --
    Other                                                            (3,069)                 --
-------------------------------------------------------------------------------------------------
Net cash flows from financing activities                              8,069             (30,525)
-------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                (17,931)             19,614
Cash and cash equivalents at beginning of period                     17,941                  13
-------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                        $      10           $  19,627
=================================================================================================
</TABLE>



See Accompanying Notes to the Consolidated Financial Statements.

                                       4

<PAGE>

                          TERRA NITROGEN COMPANY, L.P.
                  CONSOLIDATED STATEMENTS OF PARTNER'S CAPITAL
                                   (unaudited)
<TABLE>
<CAPTION>
                                                            Limited     General       Accumulated    Total
                                                            Partners'   Partner       Other          Partners'
                                                            Interests   Interests     Comprehensive  Capital
(in thousands, except for Units)                                                      Income
---------------------------------------------------------------------------------------------------------------
<S>                                                         <C>         <C>           <C>            <C>
Partners' capital at January 1, 2001                        $ 196,571   $   (9,859)   $       --     $ 186,712
Net Income                                                    (10,507)        (214)                    (10,721)
Cumulative effect of change in accounting
 for derivative financial investments                                                     14,200        14,200
Change in fair value of derivatives                                                      (17,269)      (17,269)
                                                                                                       --------
Comprehensive income (loss)                                                                            (13,790)
Distributions                                                  (8,140)        (166)                     (8,306)
---------------------------------------------------------------------------------------------------------------

Partners' capital at September 30, 2001                     $ 177,924   $  (10,239)   $   (3,069)    $ 164,616
===============================================================================================================

Limited partner units issued and
 outstanding at September 30, 2001                                      18,501,576
                                                                        ==========
</TABLE>


<TABLE>
<CAPTION>
                                                            Limited     General       Accumulated    Total
                                                            Partners'   Partners'     Other          Partners'
                                                            Interests   Interest      Comprehensive  Capital
(in thousands, except for Units)                                                      Income
---------------------------------------------------------------------------------------------------------------
<S>                                                         <C>         <C>           <C>            <C>
Partners' capital at January 1, 2000                        $ 180,837   $  (10,180)   $       --     $ 170,657
Net Income                                                     19,396          397            --        19,793
---------------------------------------------------------------------------------------------------------------

Partners' capital at September 30, 2000                     $ 200,233   $   (9,783)   $       --     $ 190,450
===============================================================================================================

Limited partner units issued and
 outstanding at September 30, 2000                                      18,501,576
                                                                        ==========
</TABLE>



See Accompanying Notes to the Consolidated Financial Statements.

                                       5

<PAGE>

                          TERRA NITROGEN COMPANY, L.P.

             Notes to Consolidated Financial Statements (Unaudited)

1.   Basis of Presentation

     The consolidated financial statements contained herein should be read in
     conjunction with the consolidated financial statements and notes thereto
     contained in the Terra Nitrogen Company, L.P. ("TNCLP") Annual Report on
     Form 10-K for the year ended December 31, 2000. TNCLP and its operating
     partnership subsidiary, Terra Nitrogen, Limited Partnership (the "Operating
     Partnership"), are referred to herein, collectively, as the "Partnership".

     The accompanying unaudited consolidated financial statements reflect all
     adjustments, which are, in the opinion of management, necessary for the
     fair statement of the results for the periods presented. All of these
     adjustments are of a normal and recurring nature. Results for the quarter
     are not necessarily indicative of future financial results of the
     Partnership.

     Net income per limited partnership unit is computed by dividing net income,
     less a 2% share allocable to the General Partner for the nine months ended
     September 30, 2001 and 2000, respectively, by 18,501,576 limited partner
     units. According to the Agreement of Limited Partnership of TNCLP, net
     income is allocated to the General Partner and the Limited Partners in each
     taxable year in the same proportion as Available Cash for such taxable year
     was distributed to the General Partner and the Limited Partners. If there
     is no cash distribution, net income is allocated to the Limited Partners
     and the General Partner generally based on their respective ownership
     percentages. Distributions of Available Cash are made 98% to the Limited
     Partners and 2% to the General Partner, except that the General Partner is
     entitled, as an incentive, to larger percentage interests (up to 50%) to
     the extent that distributions of Available Cash exceed specified amounts.

2.   Distributions to Unitholders

     The Partnership makes quarterly cash distributions to Unitholders and the
     General Partner in an amount equal to 100% of its Available Cash. No
     distributions were made during the first nine months of 2000. The
     Partnership paid cash distributions totaling $8.3 million ($0.44 per common
     unit) in the first nine months of 2001.

3.   Financing Arrangements

     The Partnership has an arrangement for demand deposits and notes with an
     affiliate to allow for excess Partnership cash to be deposited with or
     funds to be borrowed from Terra Capital, Inc., the parent of the General
     Partner. At September 30, 2001 and 2000, no amounts were deposited with
     Terra Capital, Inc. The amount of the demand note was $20.7 million at
     September 30, 2001 and bore interest at the rate paid by Terra Capital on
     its short-term borrowings. There were no outstanding demand notes at
     September 30, 2000.

                                       6

<PAGE>

4.   Natural gas costs

     Natural gas is the principal raw material used in the Partnership's
     production of nitrogen products. The Partnership enters into forward
     pricing arrangements for natural gas provided that such arrangements would
     not result in costs greater than expected selling prices for nitrogen
     products. The Partnership's normal natural gas procurement policy is to
     effectively fix or cap the price of between 25% and 80% of its natural gas
     requirements for a one-year period and up to 50% of its natural gas
     requirements for the subsequent two-year period through supply contacts,
     financial derivatives and other forward pricing techniques. In response to
     extremely volatile natural gas costs during the last six months of 2000 and
     uncertainties regarding the ability of finished goods to recover the
     increases to gas costs, the Partnership amended its policy and eliminated
     the minimum hedge requirement through the end of 2001. The financial
     derivatives are traded in months forward and settlement dates are scheduled
     to coincide with gas purchases during that future period. These contracts
     reference physical natural gas prices or appropriate NYMEX futures contract
     prices. Contract prices are frequently based on the Henry Hub Louisiana
     price, but natural gas supplies for the Partnership's production facilities
     are physically purchased from various suppliers which often creates a
     location basis differential between the contract price and the physical
     price of natural gas. Accordingly, the use of financial derivatives may not
     exactly offset the change in the price of physical gas.

     The Partnership has entered into forward pricing positions for a portion of
     its natural gas requirements for the remainder of 2001 and part of 2002,
     consistent with its policy. As a result of its policies, the Partnership
     has reduced the potential adverse financial impact of natural gas price
     increases during the forward pricing period, but conversely, if natural gas
     prices were to fall, the Partnership will incur higher costs. Contracts
     were in place at September 30, 2001 to cover approximately 11% of natural
     gas requirements for the succeeding twelve months. Unrealized losses from
     forward pricing positions totaled $0.5 million as of September 30, 2001.
     The ultimate amount recognized by the Partnership will be dependent on
     prices in effect at the time of settlement for unrealized positions at
     September 30, 2001. The Partnership also had $1.9 million of realized
     losses on closed contracts relating to future periods that have been
     deferred to the respective period.

5.   Idled facilities

     On June 7, 2001 the Partnership reported it would suspend production of
     ammonia and urea at its Blytheville, Arkansas plant due to its inability to
     generate cash flow under existing price and cost conditions. The restart of
     production at that facility began on October 1, 2001.

6.   Derivative Financial Instruments

     Statement of Financial Accounting Standards (SFAS) 133, "Accounting for
     Derivative Instruments and Hedging Activities" requires that all derivative
     instruments, whether designated in hedging relationships or not, be
     recorded in the balance sheet at fair value. The Partnership has designated
     its natural gas derivative instruments as cash flow hedges with changes in
     fair value recorded in other comprehensive income (OCI) until the natural
     gas it relates to is used in production when it is then reclassified from
     OCI to earnings.

     On January 1, 2001, the Partnership adopted SFAS 133 which resulted in a
     cumulative $9.9 million increase to current assets, a $4.3 million
     reduction to current liabilities and a $14.2 million increase

                                       7

<PAGE>

     to accumulated OCI which reflected the effective portion of the derivatives
     designated as cash flow hedges. The increase to current assets was to
     recognize the value of open natural gas contracts and the reduction to
     current liabilities was to reclassify deferred gains on closed contracts
     relating to future periods. The changes in the components of accumulated
     OCI during the nine months ended September 30, 2001 follow:

<TABLE>
<CAPTION>
                                                Net Unrealized    Realized Gain (Loss)          Accumulated
                                                   Gain (loss)             Deferred to                  OCI
                                                on Natural Gas          Future Periods
     (in thousands)                           Hedging Activity
     ------------------------------------------------------------------------------------------------------
     <S>                                      <C>                 <C>                           <C>
     Balance January 1, 2001                         $   9,900                $  4,300            $  14,200

     Net unrealized gain (loss)
         arising during period                         (12,358)                  1,018              (11,340)
     Transfer net (gain) loss realized
         to production costs                             2,206                  (4,300)              (2,094)
     ------------------------------------------------------------------------------------------------------
     Balance March 31, 2001                          $    (252)               $  1,018            $     766
     ------------------------------------------------------------------------------------------------------

     Net unrealized gain (loss)
         arising during period                          (5,631)                 (1,405)              (7,036)
     Transfer net (gain) loss realized
         to production costs                             3,178                  (1,018)               2,160
     ------------------------------------------------------------------------------------------------------
     Balance June 30, 2001                           $  (2,705)               $ (1,405)           $  (4,110)
     ------------------------------------------------------------------------------------------------------

     Net unrealized gain (loss)
          arising during period                         (1,464)                 (2,524)              (3,988)
     Transfer net loss realized
          to  production costs                           3,624                   1,405                5,029
     ------------------------------------------------------------------------------------------------------
     Balance September 30, 2001                      $    (545)               $ (2,524)           $  (3,069)
     ======================================================================================================
</TABLE>

     In addition to the $1.9 million of realized losses on closed gas contracts,
     the Partnership had $0.6 million of losses related to fertilizer swaps at
     September 30, 2001.

7.   Recently Issued Accounting Standards

     In June 2001, the Financial Accounting Standards Board ("FSAB") approved
     the issuance of Statement of Financial Accounting Standards ("SFAS") No.
     141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
     Intangible Assets." These standards, issued in July 2001, establish
     accounting and reporting for business combinations. SFAS No. 141 requires
     all business combinations entered into subsequent to June 30, 2001 to be
     accounted for using the purchase method of accounting. SFAS No. 142
     provides that goodwill and other intangible assets with indefinite lives
     will not be amortized, but will be tested for impairment on an annual
     basis. Adoption of these standards will not impact the Partnership.

     In June 2001,  the FASB  approved the issuance of SFAS No. 143,
     "Accounting  for Asset  Retirement  Obligations."  This  standard requires
     the Partnership to record the fair value of a

                                       8

<PAGE>

     liability for an asset retirement obligation in the period in which it is
     incurred and is effective for the Partnership's fiscal year 2003. The
     Partnership has not yet quantified the impact arising from adoption of this
     standard.

     In August 2001, the FASB approved the issuance of SFAS No. 144, "Accounting
     for the Impairment of Long-lived Assets." This standard requires the
     Partnership to recognize an impairment loss if the carrying amount of a
     long-lived asset or asset group is not recoverable and exceeds its fair
     value and is effective for the Partnership's fiscal year 2002. The
     Partnership has not yet quantified the impact arising from adoption of this
     standard

                                       9

<PAGE>

         Management's Discussion and Analysis of Financial Condition and
                              Results of Operations

                              RESULTS OF OPERATIONS

               Three months ended September 30, 2001 compared with
                      three months ended September 30, 2000

Volumes and prices for the three-month periods ended September 30, 2001 and 2000
follow:

                            2001                        2000
                    Volumes      Unit Price     Volumes       Unit Price
                   (000 tons)      ($/ton)     (000 tons)       ($/ton)
                  ------------  ------------  ------------   ------------
Ammonia                 36         $ 175            56          $ 181
UAN                    510            75           520             86
Urea                    28           110            30            145

Revenues for the quarter ended September 30, 2001 decreased $11.4 million, or
19%, compared with the same quarter in 2000 as the result of lower prices and
volumes for all Partnership products. Sales prices and volumes declined from the
2000 third quarter due to significantly higher U.S. fertilizer inventories in
response to lower consumption during last spring's planting season.

Third quarter gross profits decreased $13.8 million from 2000. Lower 2001 sales
prices and volumes reduced gross profits $7.5 million from the 2000 second
quarter. Cost increases in the form of higher natural gas costs, which increased
from $3.47/MMBtu in 2000 to $3.55/MMBtu in 2001 (net of forward pricing gains or
losses) decreased gross margins by $0.6 million. The Partnership realized $5.0
million in hedging losses during the 2001 third quarter compared to hedging
gains of $9.8 million during the same 2000 period.

Operating expenses were $1.1 million higher in 2001 than in 2000 primarily as
the result of an increase in the third quarter expense allocation from the
General Partner. Net interest expense was $131,000 higher than the 2000 third
quarter due to higher borrowing levels.

                                       10

<PAGE>

               Nine months ended September 30, 2001 compared with
                      nine months ended September 30, 2000

Volumes and prices for the nine-month periods ended September 30, 2001 and 2000
follow:

                            2001                         2000
                    Volumes      Unit Price     Volumes       Unit Price
                   (000 tons)      ($/ton)     (000 tons)       ($/ton)
                  ------------  ------------  ------------   ------------
Ammonia                145         $ 256          317          $ 149
UAN                  1,323           104        1,863             75
Urea                   171           152          215            130

Revenues for the nine months ended September 30, 2001 decreased $12.8 million,
or 6%, compared with the same period in 2000. Lower sales volumes as the result
of fewer planted corn acres, wet field conditions that precluded normal
application of fertilizers and increased competition from record import levels,
reduced 2001 revenues by $72 million from the first nine months of last year.
Significantly higher prices for all products, however, offset $58 million of the
revenue decline. The higher prices reflected lower industry supplies through the
2001 first quarter as a result of periodic production curtailments by most
nitrogen producers in response to the past winter's very high natural gas costs.

Gross profits during the 2001 first nine months decreased $31.1 million from
2000. Higher sales prices increased gross profits by $58 million. These
increases were more than offset, however, by higher natural gas costs, which
increased from $2.85/MMBtu in 2000 to $5.19/MMBtu in 2001 (net of forward
pricing gains or losses) and lower sales volume. The Partnership realized $5.1
million in hedging losses during the 2001 first nine months compared to hedging
gains of $18.8 million during the same 2000 period.

Operating expenses were essentially the same in 2001 as in 2000. Net interest
expense of $614,000 was $575,000 less than the 2000 first nine months due to
lower borrowing levels.

Capital resources and liquidity

Net cash flows used in operations in the first nine months of 2001 totaled $24.7
million with $23.5 million used to increase working capital balances and $1.2
million of operating loss after non-cash charges. Most of the working capital
increases are related to carryover inventory balances as the result of lower
sales volumes during the 2001 first nine months.

The Partnership's principal needs for funds are for support of its working
capital and capital expenditures. The Partnership intends to fund its needs
primarily through net cash flows from operating activities, and, to the extent
required, from funds borrowed from others, including borrowings from Terra
Capital, Inc., the parent of the General Partner. The Partnership believes that
such sources of funds will be adequate to meet the Partnership's working capital
needs and fund the Partnership's capital expenditures for at least the next 12
months.

                                       11

<PAGE>

Quarterly distributions to the Partners of TNCLP are based on Available Cash for
the quarter as defined in the Agreement of Limited Partnership of TNCLP.
Available Cash is defined generally as all cash receipts less all cash
disbursements, adjusted for changes in certain reserves established as the
General Partner determines in its reasonable discretion to be necessary. In
consideration of the Partnership's working capital and operating cash needs, the
General Partner determined there was no Available Cash available for
distribution at September 30, 2001.

Capital expenditures

Capital expenditures totaled $1.3 million for the first nine months of 2001. For
the remainder of 2001, the Partnership plans to spend less than $3 million for
routine equipment replacement.

Limited Call Right

If at any time less than 25% of the issued and outstanding units are held by
non-affiliates of the General Partner, the Partnership, at the General Partner's
sole discretion, may call or assign to the General Partner or its affiliates its
right to acquire, all such outstanding units held by non-affiliated persons. The
General Partner and its affiliates owned 75.1% of the Common Units at October
31, 2001. If the General Partner elects to acquire all outstanding units, TNCLP
is required to give at least 30 but not more that 60 days notice of its decision
to purchase the outstanding units. The purchase price per unit will be the
greater of (1) the average of the previous twenty trading days' closing prices
as of the date five days before the purchase is announced or (2) the highest
price by the General Partner or any of its affiliates for any unit within 90
days preceding the date the purchase is announced.

FORWARD LOOKING PRECAUTIONS

Information contained in this report, other than historical information, may be
considered forward looking. Forward looking information reflects Management's
current views of future events and financial performance that involve a number
of risks and uncertainties. The factors that could cause actual results to
differ materially include, but are not limited to the following: Changes in the
financial markets, general economic conditions within the agricultural industry,
competitive factors and price changes (principally, sales prices of nitrogen
products and natural gas costs), changes in product mix, changes in the
seasonality of demand patterns, changes in weather conditions, changes in
agricultural regulations, and other risks detailed in the Partnership's
Securities and Exchange Commission filings, in particular the "Factors that
Affect Operating Results" section of its most recent Form 10-K.

                                       12

<PAGE>

                           Part II. Other Information

Item 6. Exhibits and Reports on Form 8-K

        (a) Exhibits:

             None

        (b) Reports on Form 8-K:

             None

                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                 TERRA NITROGEN COMPANY, L.P.

                                          By:    TERRA NITROGEN CORPORATION
                                                 as General Partner


                                          By:    /s/ Francis G. Meyer
                                                 -------------------------------
                                                 Francis G. Meyer
                                                 Vice President
                                                 (Principal Accounting Officer)


Date:    November 14, 2001

                                       13