Category Archives: Greece
Greece is a country in southeastern Europe.
Iran cuts oil exports to six EU countries
Iran has stopped crude supplies to Spain, Italy, France, Greece, Portugal and the Netherlands, reports Iran’s Press TV.
Tehran has fulfilled its threat to retaliate for the EU’s oil embargo, agreed by the bloc on January 26. The sanctions gave the EU members time till July to find new suppliers.
Officials within Iran immediately called to cork the black gold stream to Europe, targeting economies weakened by the ongoing financial crisis. On Wednesday, these calls became reality.
Related articles
- Iran could ban EU oil exports next week (mb50.wordpress.com)
- Iran ‘definitely’ closing Strait of Hormuz over EU oil embargo (mb50.wordpress.com)
- EU firms renew Iran oil deals to win sanction reprieve (mb50.wordpress.com)
- Sanction Show Signs Of Taking Toll On Iran | Fox News (foxnews.com)
- Iran Gave Syria $1 Billion To Aid Regime Against Sanctions, Documents Reveal | Fox News (foxnews.com)
- U.S. naval carrier group positioned closer to Iran (theextinctionprotocol.wordpress.com)
- Turkey Pledges to Stick with Iranian Oil (ibtimes.com)
Embargo On Iranian Oil Delayed By Six Months
A European Union embargo on Iranian oil will likely be delayed by six months, Bloomberg‘s Thomas Penny reports.
The E.U. is holding for countries including Italy, Greece and Spain to find alternative sources.
New York oil prices have fallen 1.8% on the news.
Iran is the second largest OPEC oil producer, with 3.6 million barrels recovered per day last month.
Related articles
- EU firms renew Iran oil deals to win sanction reprieve (mb50.wordpress.com)
- Japan agrees to cut dependency on Iranian oil as US scores significant coup against regime (telegraph.co.uk)
- EU split over Iran oil embargo (laaska.wordpress.com)
- Oil dips to near $101 as Iran embargo talks falter (mysanantonio.com)
- EU governments consider delay on any Iran oil ban – Reuters (reuters.com)
EU firms renew Iran oil deals to win sanction reprieve
By Ikuko Kurahone and Dmitry Zhdannikov
(Reuters) – Italian, Spanish and Greek companies have extended most of their oil supply deals with Iran for 2012, so that most of Tehran’s supplies to the European Union are likely be exempted from sanctions for at least the first half of the year.
Trading sources told Reuters that Italy’s Saras (SRS.MI), ERG (ERG.MI) and Iplom, Greece‘s Hellenic (HEPr.AT) as well as Spain’s Repsol (REP.MC) have either extended or have not scrapped existing term supply contacts with Iran for 2012.
“We kept our 2-year deal with Iran,” said a trader with a refiner.
“At the moment it is business as usual, but of course we are considering potential alternatives. Asking the Saudis for more crude is one possibility,” said a trader with an Italian company.
Italy, Spain and Greece take some 500,000 barrels per day out of European Union’s imports of Iranian oil of around 600,000 bpd, according to the latest available data.
Diplomatic sources told Reuters the three countries, the EU’s most fragile economies, were pushing for a grace period for up to 12 months as an immediate switch to oil from other producers may prove too costly and painful for them.
Some diplomats said that when EU foreign ministers meet on January 23 to decide on sanctions, they will most likely agree on a compromise of six months for the grace period, and no longer.
Only existing deals would be granted that period while new or spot deals would not be exempted from sanctions.
European entities will also be allowed to continue receiving repayments in oil for debts they are owed by Iranian firms. These include Eni (ENI.MI) and Norway’s Statoil (STL.OL) to whom Tehran owes $2 billion and $0.5 billion respectively and pays in oil and petroleum gas (LPG).
“We expect a slow and gradual implementation of what will eventually become a full embargo,” said Mike Wittner from Societe Generale. “Europe has the same concerns about its fragile economy and an oil price spike as the U.S., probably even more.”
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on Iran’s oil exports: link.reuters.com/pyw35s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Iran’s standoff with the West over its nuclear program has complicated Tehran’s oil exports and often prompts it to sell crude at steep discounts, appealing for struggling European refiners.
Most contracts are long-term annual supply deals and spot market sales are rare as U.S. sanctions against Iran make quick and smooth trade finance at banks almost impossible.
The EU is moving to impose sanctions at a time when the United States, which has banned Iranian oil imports since 1979, is acting to add Iran’s central bank to the sanctions list – a measure that will make it even more difficult to trade oil with Tehran, according to traders.
But even a full European oil embargo may not seriously weaken Iran, Its budget reaches breakeven with oil prices of just $81 per barrel as opposed to Thursday’s market level of
$114.
“If Iran is not able to send to other customers the oil that it would not sell to the EU, it could lose between 25-30 percent of its export volume but with oil prices 40 percent higher than its budget, it will probably not be enough to make a big difference for Iran,” said analyst Oliver Jakob of Petromatrix.
“To have an impact on Iran, the oil embargo needs to come together with much lower oil prices,” Jakob said. “What is required to have an impact on the regime is to have Iran lose a third to a half of its export volume and oil prices down to $60.”
LOOKING FOR ALTERNATIVES
U.S. officials have already travelled to China, South Korea and Japan to persuade Iran’s biggest customers in Asia to cut purchases. In Europe, real cuts will take time.
“A preliminary agreement hammered out by diplomats could be watered down before being signed by ministers. That is normally what happens in the EU in all spheres,” said Sam Ciszuk, a Middle East analyst at KBC Energy.
Diplomats and traders say the grace period would give European companies time to find alternative sources of crude, but the process would be far from smooth.
“Some (EU members) are saying: ‘help us find alternative suppliers and find a way to sustain the discounts we currently have’,” one diplomatic source said.
The problem of replacement supplies to Europe could be partially solved with the help of Saudi Arabia. European diplomats have spoken to the kingdom’s leadership who have signaled readiness to fill a supply gap, although concerns mount about the producer’s spare capacity nearing its limit.
But there is no reason why Riyadh would agree to supply crude at a discount to a buyer like Greece, traders said. Many in the oil market have already pulled the plug on supplies for fear that Athens might default on its debt.
Greek officials have said their country imports up to 40 percent of its oil from Iran and wants to continue the flow without disruption and on the same funding terms.
Italian refiner Saras said it received about 10 percent of its feedstock from the Islamic Republic in 2011.
“A ban on Iran exports would cause a shortage in heavy crude oils, putting further pressure on already high oil prices, and compressing margins for all refiners,” said Massimo Vacca, Saras’ head of investor relations.
Related articles
- Iran plans more war games in strait as sanctions bite (mb50.wordpress.com)
- Japan ‘to reduce oil imports from Iran’ (telegraph.co.uk)
- PressTV: Russia rejects Iran oil sanctions (jhaines6.wordpress.com)
- PressTV: Russia warns EU over Iran oil sanctions (jhaines6.wordpress.com)
- EU mulls Iran sanctions (laaska.wordpress.com)
- World oil prices rally on Iran, Nigeria concerns (vanguardngr.com)
Bank run in Greece
We got ourselves a new twist on an old-fashioned bank run! By gum, it’s been a while.
Spiegel is reporting that Greeks, anxious over their financial crisis and the possibility of being booted from the European Union, are raiding their savings accounts.
The story notes that since the start of 2010, Greek banks lost nearly 30 percent of their total savings amounts, with September and October seeing a combined loss of 14 billion euros.
Greeks are either living off those savings or sending it out of country.
Related articles
- Bloodletting begins: anxious Greeks emptying their bank accounts (theextinctionprotocol.wordpress.com)
- How the ECB could be forced to print money (blogs.reuters.com)
- European Bank Runs And Underestimated Physical Gold Demand (citizeneconomists.com)
We Have Entered The First Of Four Phases That Will Bring The End Of Fiat Money
Last week, the G-20 meetings did not produce an expanded bailout fund for the eurozone. While this may bode well for the long-term solvency of the member-states (moral hazard and all), it has also triggered a market reaction that I expect to help destabilize the common currency. Wednesday’s market moves suggested that this development is good for the dollar and bad for gold. Allow me to step back from the stampeding herd to evaluate whether they are, in fact, moving in the right direction.
The argument for the dollar and against gold is simplistic, and I will evaluate it against the four-stage collapse I see ahead for the Western currencies.
Arguing that gold is a hedge only against inflation, and taking current inflation figures at face value, mainstream analysts have concluded that gold is grossly overvalued – that it may, in fact, be the latest asset bubble to arise. However, these analysts fail to account for why gold is a hedge against inflation: it is ultimately an insurance policy against runaway currency collapse. In other words, it’s intended as a longer-term, wealth-preserving purchase. Yes, some pit traders may be trying to make a quick buck shorting gold and going long on dollars, but for individual investors, following suit would leave them vulnerable to what may prove to be ahead. That is, a phased destabilization of the euro, leading to a possible collapse of the US dollar. In such circumstances, even today’s volatile prices for gold and silver would look attractive.
Phase One of the threatened catastrophe is sovereign debt crisis, which is effectively camouflaging a currency crisis. The Greek default is significant as the first crack in the dam. But Greece is a relatively small problem. The bigger threat is Italy, with its $2.4 trillion of debt and a 10-year bond yield having just surpassed the critical 7 percent level. This is the ruinous milestone at which the cost of new debt money surpasses the economic growth rate plus inflation. Italy faces massive debt refunding, falling buyer interest, and no hope of a bailout. If Italy were to default, it could threaten rapid contagion to Portugal, Ireland, Spain, and other larger eurozone countries, including perhaps France. In such an event, most international banks and institutional investors, including those in the US, could suffer severe, possibly total, losses on their holding of certain sovereign bonds. MFGlobal is but one speculative example of a looming secular trend. Worse still, the writers of credit default swap (CDS) derivatives, including many German Landesbanks (state-level banks) and major US banks, could suffer crippling losses.
This would lead to Phase Two of the collapse: a renewed and far larger banking crisis. This, in turn, could bring stock markets tumbling and threaten major institutional investors, including politically sensitive pension and insurance companies. In addition, banks would become extremely wary of lending to each other. Likely, the interbank market would freeze, but far more severely than in 2008. It could result in curtailed lending and even the recall of short-term corporate funding and call-loans. This could cause a dramatic spike in US bank failures. Unwary depositors who have failed to watch their banks closely could find their insured funds frozen, perhaps for months, as the FDIC reorganizes the problem banks – and perhaps even waits for its own bailout. This would add further downward pressure to economic growth.
Meanwhile, the cascading banking crisis would likely push Europe into a severe recession, even a depression. As the EU accounts for some 22 percent of world trade, a European depression would no doubt drag down the US even further. In response, the price of precious metals may face severe selling pressure as liquidity becomes paramount.
This would present an opportunity for long-term gold and silver investors.
Phase Three would be a restructuring or dissolution of the euro and possibly a stampede into the US dollar, sending its price and US Treasuries temporarily upwards. With a far stronger dollar, the price of most commodities, including precious metals, may fall temporarily in dollar terms. We are seeing a preview of this dynamic with today’s news on Italy.
However, to reallocate one’s portfolio in reaction to such a move could put an investor in jeopardy. That is because Phase Four, the most alarming, would be investors’ realization that the US dollar lies at the root of the international currency collapse and is itself vulnerable. Likely, this panic flight from the dollar would develop suddenly, and perhaps in undreamed of volumes. Doubtless, the speed and size of a stampede out of paper currencies and into precious metals will take many investors by surprise – just as the Credit Crunch in 2008 did. As the realization of currency catastrophe spreads, the price of silver may start to rise faster than even gold.
There’s an old saying that “the higher you fly, the harder you fall.” The US government is, by any measure, the luckiest government in centuries. It has risen to unforeseen heights of monetary excess – and has been rewarded for doing so. But it looks like lower flying planes are starting to stall out, and one can only imagine – from this height – how fast and how far the US may fall.
My humble advice is not to try to time it, but rather to use your golden parachute before it’s too late.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. Please feel free to repost with proper attribution and all links included.
Read more posts on Euro Pacific Capital »
Related articles
- Hold Your Gold (adask.wordpress.com)
- Global Piracy & Counterfeiting Consultants Calls Chinese Counterfeiters Producing Fake Precious Metal Coins a Global Epidemic with Potential Disastrous Consequences (prweb.com)
- The Question(s) Of Italy’s 2451.8 Tons Of Gold (zerohedge.com)
- Weekend Investor: New gold bugs are young and restless (marketwatch.com)
- Coming Dollar Collapse – Where Not to Be (adask.wordpress.com)
- What is the difference of the fiat currency from gold-backed currency (wiki.answers.com)
Greece Investigates Shale Gas
The Ministry for the Environment, Energy and Climate Change announced a special preparatory research project to be awarded to the Greek state-owned Institute for Geology and Mineral Exploration (IGME), in order to explore potential shale gas reserves in the territory. More specifically, the Deputy Minister Ioannis Maniatis revealed in a press conference that after a series of preliminary examinations by a scientific committee on the issue, the decision was taken based on similar initiatives by other European countries.
Moreover, the Greek Ministry released a report examining best practices in other countries and concluding that the present day technology can be of use regarding the potential Greek reserves. Special note was highlighted in the examples of Poland, France and Bulgaria. Moreover it was made known that in the near future Greece may join the Shale Gas Resource initiative.
Furthermore Maniatis noted to the press “The research regarding shale gas is an integral part of the national strategy for energy that focuses on the use of gas either of a conventional or unconventional nature”. Moreover he added that ” The prospects for shale gas worldwide are impressive, since in the year 2000 just 1% of the global production of natural gas came from that source, whilst nowadays that figure has multiplied, and for that reason and for the purpose of Greek energy security the Ministry will proceed if adequate reserves exist in Greece, keeping in mind the present optimistic data”.
IGME, responsible for state-directed geological research in the country and the outlook for the shale gas, will survey for a three-month period beginning in early 2012, before any initial findings are announced. Further, it is possible that the research will be funded by EU structural capital and will also involve the cooperation its Bulgarian counterparts who are already researching in their own country.
Related articles
- Potential Shale plays in World (nextbigfuture.com)
- Natural gas shale play development now going global (mb50.wordpress.com)
Ocean Rig Bidding to Rent 5 Drillships to Petrobras, Brazil
DryShips Inc confirmed market speculation that its Ocean Rig UDW drilling unit was bidding to rent out five new drillships to Brazilian state oil company, Petrobras .
Shares of Athens-based DryShips were up 9 percent at $2.95 on Tuesday morning on Nasdaq, a day after it posted estimate-beating third-quarter profit.
Through its majority-owned Ocean Rig unit, DryShips owns and operates 9 ultra-deepwater drilling units, comprising 2 ultra-deepwater semisubmersible rigs and 7 ultra-deepwater drillships.
“We are a part of the tender process for the Petrobras domestic tender. The contracts are still being negotiated, it’s still at a very early stage,” Chief Operating Officer Pankaj Khanna said on a conference call.
He said the 15-year contract at a rate of $620,000 per day would be “very profitable,” adding that the company was confident of receiving financing for 85 to 90 percent of the transaction.
“It would be really positive for earnings in the future, especially given that the current rates are at $500,000 per day for a one-year contract,” analyst Salvatore Vital of Sterne, Agee & Leach told Reuters.
Earlier in the year Ocean Rig, which started trading on Nasdaq on October 6, won a $1.1 billion deepwater drilling contract from Brazil’s Petrobras.
Source: Reuters
Related articles
- Brazil: Petrobras Discovers Hydrocarbons in Campos Basin (mb50.wordpress.com)
- Deepwater Millenium Drillship Not Moving to Brazil. Stays in Ghana (mb50.wordpress.com)
- Drillship animation in the Gulf of Mexico (video) (mb50.wordpress.com)
- Petrobras production hurt by ‘global bottleneck’ for rigs (mb50.wordpress.com)
- Modec Receives FPSO Order from Petrobras, Brazil (mb50.wordpress.com)
- South Korea: Rowan Companies Inc, Announces Option to Build GustoMSC Drillship (mb50.wordpress.com)
ISDA: We Can’t Tell You If The Greek Bond Swap Will Trigger A Credit Event Yet
The International Swaps and Derivatives Association — responsible for determining when a credit event (that would trigger credit default swap payouts) occurs — just updated its Q&A on Greek sovereign debt to account for the newest changes to the private sector bond swap discussed last night.
Their prognosis? If the swap is indeed voluntary, then there won’t be a credit event, even with haircuts of 50%.
But the likelihood that most bondholders will agree to those kinds of losses without significant coersion is slim. Numbers on participation when that haircut was just 21% were at best around 85%, under the 90% Greece demanded.
The ISDA says it can’t make a final decision on whether or not there will be a credit event until a formal decision is made:
UPDATE OCTOBER 27: The determination of whether the Eurozone deal with regard to Greece is a credit event under CDS documentation will be made by ISDA’s EMEA Determinations Committee when the proposal is formally signed, and if a market participant requests a ruling from the DC. Based on what we know it appears from preliminary news reports that the bond restructuring is voluntary and not binding on all bondholders. As such, it does not appear to be likely that the restructuring will trigger payments under existing CDS contracts. In addition, it is important to note that the restructuring proposal is not yet at the stage at which the ISDA Determinations Committee would be likely to accept a request to determine whether a credit event has occurred.
Read their full Q&A on Greek sovereign debt here.
Related articles
- How gross and net CDS notionals really work (ftalphaville.ft.com)
- Credit Event Or No Credit Event, This Will Get Messy (zerohedge.com)
- Barclays Explains Why A 50% Greek Haircut “Would Be Considered A Credit Event, Consequently Triggering CDS Contracts” (zerohedge.com)
- So. Many. Bailout questions (ftalphaville.ft.com)
- Farce Is Complete As ISDA Finds 50% “Haircut” Is Not A Credit Event (zerohedge.com)
- Who wants to be a Greek bond holdout? (ftalphaville.ft.com)
Continents of the World
Mb50's "Liquid Mud" Rant 