UPDATE 3-Norway's Yara raises dividend as quarterly earnings top forecast

* Solid fertiliser demand driven by rising grain prices

* Jump in energy cost curbs profit

* Q4 adjusted EBITDA -3% to $511 mln vs $484 mln consensus

* Uncertainty over supply bigger than usual -CEO

* Shares rise 1%, outperforms Oslo stock market (Adds CEO quotes, analyst, updates shares)

OSLO, Feb 9 (Reuters) - Norwegian fertiliser company Yara proposed raising its ordinary annual dividend by a third to 20 Norwegian crowns ($2.36) per share on Tuesday and reported fourth-quarter core profits above expectations.

The Oslo-listed firm, one of the world’s largest producers of nitrogen fertilisers, said increased deliveries and production had offset the impact of higher energy prices.

Nitrogen fertiliser prices have been rising ahead of the planting season in the northern hemisphere, and the momentum is positive for 2021, Chief Executive Svein Tore Holsether told Reuters.

“Farmer profitability is moving in the right direction because several crop prices are going up significantly and we’ve seen that also reflected in global fertiliser prices,” he said.

While global output of fertilisers is set to increase this year, the risk of outages is also greater due to the COVID-19 pandemic, he added.

October-December earnings before interest, tax, depreciation and amortisation (EBITDA), excluding non-recurring items, fell 3% year on year to $511 million, but beat the $484 million expected by analysts polled by Refinitiv.

Yara said it expects to pay $100 million more for natural gas, a key component in the production of nitrogen fertilisers, in the first quarter of 2021 compared to a year earlier, and $145 million more in the second quarter.

Its global weighted gas price was $4.7 per million British Thermal Units (MMBtu) in the quarter, an increase of 17.5% from a year earlier.

“Overall, we think that Yara is set for a period of bumper profitability in (2021) commensurate with the 7-year highs in crop prices,” Citi analysts wrote.

Yara, which last year announced its aim to cut all CO2 emissions from its 500,000 tonnes-a-year Porsgrunn ammonia plant in Norway, said it was developing the initiative further by establishing a new Clean Ammonia unit.

The company is looking to make ammonia from “green” or clean hydrogen - produced using renewable electricity rather then natural gas - for agriculture, shipping and other uses.

The company’s shares rose 1.0% by 0957 GMT, outperforming a 0.5% drop in Oslo’s benchmark index. ($1 = 8.4718 Norwegian crowns) (Editing by Terje Solsvik, Ed Osmond, Kirsten Donovan)