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Americans warned bank ‘bail-ins’ coming

Experts say institutions will grab deposits without warning

28 Sep 2013
by Clark Kent

With the United States facing a $17 trillion debt and an acidic debate in Washington over raising that debt limit on top of a potential government shutdown, Congress could mimic recent European action to let banks initiate a “bail-in” to blunt future failures, experts say.

Previously the federal government has taken taxes from consumers, or borrowed the money, to hand out to troubled banks. This could be a little different, and could allow banks to reach directly into consumers’ bank accounts for their cash.

Authority to allow bank “bail-ins” would be in lieu of approving any future taxpayer bailouts of banks that would be in dire need of recapitalization in order to survive.

Some financial experts contend that banks already have the legal authority to confiscate depositors’ money without warning, and at their discretion.

Financial analyst Jim Sinclair warned that the U.S. banks most likely to be “bailed-in” by their depositors are those institutions that received government bail-out funds in 2008-2009.

Such a “bail-in” means all savings of individuals over the insured amount would be confiscated to offset such a failure.

“Bail-ins are coming to North America without any doubt, and will be remembered as the ‘Great Leveling,’ of the ‘great Flushing’ (of Lehman Brothers),” Sinclair said. “Not only can it happen here, but it will happen here.

“It stands on legal grounds by legal precedent both in the U.S., Canada and the U.K.”

Sinclair is chairman and chief executive officer of Tanzania Royalty Exploration Corp. and is the son of Bertram Seligman, whose family started Goldman Sachs, Solomon Brothers, Lehman Brothers, Bache Group and other major investment banking firms.

Some of the major banks which received federal bailout money included Bank of America, Citigroup and JPMorgan Chase.

“When major banks fail, they are going to bail them out by grabbing the money that is in your bank accounts,” according to financial expert Michael Snyder. “This is going to absolutely shatter faith in the banking system and it is actually going to make it far more likely that we will see major bank failures all over the Western world.”

Given the dire financial straits the U.S. finds itself in, these financial experts say that Congress could look at the example of the European Parliament, which recently started to consider action that would allow banks to confiscate depositors’ holdings above 100,000 euros. Generally, funds up to that level are insured.

Finance ministers of the 27-member European Union in June had approved forcing bondholders, shareholders and large depositors with more than 100,000 euros in their accounts to make the financial sacrifice before turning to the government for help with taxpayer funds.

Depositors with less than 100,000 euros would be protected. Considering protection of small depositors a top priority, the E.U. ministers took pride in saying that their action would shield them.

“The E.U. has made a big step towards putting in place the most comprehensive framework for dealing with bank crises in the world,” said Michel Barnier, E.U. commissioner for internal market and services.

The plan as approved outlines a hierarchy of rescuing struggling banks. The first will be bondholders, followed by shareholders and then large depositors.

Among large depositors, there is a hierarchy of whose money would be selected first, with small and medium-sized businesses being protected like small depositors.

“This agreement will effectively move us from ad hoc ‘bail-outs’ to structured and clearly defined ‘bail-ins,’” said Michael Noonan, Ireland’s finance minister.

The European Parliament is expected to finalize the plan by the end of the year.

The purpose of this “bail-in,” patterned after the Cyprus model, is to offset the need for continued taxpayer bailouts that have come under increasing criticism of the more economically well-off countries such as Germany.

Last March, Cyprus had agreed to tap large depositors at its two leading banks for some 10 billion euros in an effort to obtain another 10 billion European Union bailout.

While this action prevented the collapse of Cyprus’ two top banks, the Bank of Cyprus and Popular Bank of Cyprus, it greatly upset depositors with savings more than 100,000 euros.

WND recently revealed that the practice of “bail-ins” by Cyprus a year ago was beginning to spread to other nations as large depositors began to see their balances plunge literally overnight.

A “bail-in,” as opposed to a bailout that countries especially in Europe have been seeking from the International Monetary Fund and the European Union, is a recognition that such outside monetary injections won’t be forthcoming.

Sinclair said that the recent confiscation of customer deposits in Cyprus was not a “one-off, desperate idea of a few Eurozone ‘troika’ officials scrambling to salvage their balance sheets.”

“A joint paper by the U.S. federal Deposit Insurance Corporation (FDIC) and the Bank of England (BOE) dated December 10, 2012 shows, that these plans have been long in the making, that they originated with the G20 Financial Stability Board in Basel, Switzerland, and that the result will be to deliver clear title to the banks of depositor funds,” Sinclair said.

He pointed that while few depositors are aware, banks legally own the depositors’ funds as soon as they are put in the bank.

“Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay,” Sinclair said.

“But until now, the bank has been obligated to pay the money back on demand in the form of cash,” he said. “Under the FDIC-BOE plan, our IOUs will be converted into ‘bank equity.’ The bank will get the money and we will get stock in the bank.”

“With any luck,” Sinclair said, “we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.”

Such plans already are being used, or under consideration, in New Zealand, Poland, Canada and several other countries.

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The debt bomb just got bigger

The amount of debt worldwide is more than all of the bank accounts in the world, and the current financial situation in Cyprus is the inevitable next phase: Confiscation.

All pretense is now gone that central or global bankers can ‘securitize’ growth by packaging and repackaging debt; by hypothicating and rehypothicating debt; by regulating and rergulating debt. Since the bond market rally began in the early 1980s (yes, it’s that old) each crisis has been met by central and global bankers – the IMF, EU and ECB, to name a few – and their Wall St. and City of London brethren with an increase in debt, and an extension of the debt’s maturity.

The result has been – as of 2007 – the biggest mountain of on-balance sheet and off-balance sheet debt in history: A staggering $220 trillion in debt in America’s $14-trillion economy alone (when you include all public, private and contingent liabilities of unfunded entitlement programs). Deals in the global debt derivatives market now stand in excess of $1 quadrillion, riding above a global GDP of approximately $60 trillion.

But starting in 2007, and then becoming spectacularly apparent in 2008 with the Lehman collapse, the ability of the world’s taxpayers to pay either the interest or principal on this debt has hit a brick wall. And for several years now, governments around the world have tried the same old tricks of ‘extend and pretend.’ Repackage and extend the maturity, and pray that tax receipts start picking up enough to pay some of the debt off. It didn’t work. The debt bomb just got bigger. Now in Cyprus we see the inevitable next phase: Confiscation.

To pay off the debts that were incurred to finance the biggest wealth grab in history, we see in Cyprus, as well as central and global banking institutions around the world, a trend to just reach in and grab people’s money from their ‘insured’ bank accounts. We should have figured out this was coming when JP Morgan (read: Jamie Dimon) reached in and illegally stepped ahead of customers at MF Global and grabbed over $1 billion, with the help of his crony pal Jon Corzine.

Have we learned our lesson yet? They have more debts to pay than there is money in all the bank accounts in the world. This means that chances are, you – whoever you are, and whatever country you live in – will have a sizable percent of your savings stolen by banksters.

Since the crisis hit (and for several years leading up to it) we’ve been recommending on ‘Keiser Report’ to put as much money as you can in gold and silver. Our advice then and now is: The only money you should keep in a bank is money you’re willing to lose.

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Cyprus: Ocean Rig Receives LoA for its UDW Drillship

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Ocean Rig UDW Inc., a global provider of offshore deepwater drilling services, headquartered in Cyprus, today announced that it has received a Letter of Award for its ultra deepwater drillship “Ocean Rig Olympia”, from a major oil company.

The Letter of Award is for a three- year contract for drilling offshore West Africa, with an estimated backlog of approximately $652 million. The Letter of Award is subject to completion of definitive documentation and receipt of regulatory approvals. The  contract is expected to commence in direct continuation of the Ocean Rig Olympia’s  existing contract in West Africa. The customer would have the option to extend the  contract for two periods of one year each, with the first option exercisable within one  year from the commencement date under the drilling contract, and the second option  exercisable within one year after the date of exercise of the first option.

With this latest fixture, Ocean Rig no longer has any rigs available in 2012.

Source

ReCap: Worldwide Field Development News Dec 23 – Dec 29, 2011

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This week the SubseaIQ team added 2 new projects and updated 11 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.

Mediterranean
Noble Finds Gas Pay in Cyprus
Dec 28, 2011 – Noble Energy has made a natural gas discovery at the Cyprus Block 12 prospect, offshore the Republic of Cyprus. The Cyprus A-1 well encountered about 310 feet (94 meters) of net natural gas pay in multiple high-quality Miocene sand intervals. The well reached a depth of 19,225 feet (5,860 meters) in a water depth of 5,540 feet (1,689 meters). Results from drilling, formation logs and initial evaluation work indicate an estimated gross resource range of 5 to 8 Tcf, with a gross mean of 7 Tcf. Noble plans to appraise the find. Noble Energy operates the discovery with a 70 percent working interest; while Delek Drilling and Avner Oil Exploration each hold 15 percent.
Project Details: Cyprus (Aphrodite)
Europe – North Sea
Aker Solutions to Supply Subsea Equipment for Svalin Development
Dec 29, 2011 – Statoil awarded Aker Solutions a contract to engineer, procure and construct a subsea production system for the Svalin development in the Norwegian sector of the North Sea. The scope of work includes two subsea trees, one four-slot integrated template structure with process distribution manifold, subsea and topside production control systems, wellhead systems and remote connection systems. Final equipment deliveries are slated for 3Q 2013. Svalin is a fast-track oil field project situated in a water depth of 394 feet (120 meters).
Tendeka Secures Sand Control Frame Agreement for Troll field
Dec 28, 2011 – Statoil has granted Tendeka a major frame agreement for the provision of sand screens and inflow control devices and services for use in the Troll field. The contract is for an initial three-year period with a further two optional extensions, each of two years. Tendeka’s scope of work includes the provision of sand screens with associated inflow control technology and services for deployment in the field. Troll produces 400,000 barrels a day from three platforms northwest of Bergen. Troll, a natural gas and oil field, lies in the northern part of the Norwegian sector of the North Sea, about 40 miles (65 kilometers) west of Kollsnes, near Bergen. Statoil, holding a 30.59 percent, operates the field; Petoro holds 56 percent; A/S Norske Shell holds 8.1 percent; ConocoPhillips holds 1.62 percent; and Total holds 3.69 percent.
Project Details: Troll Area
EnCore Reaches TD in Tudor Rose
Dec 28, 2011 – EnCore Oil has encountered an oil column in the Tudor Rose well within the targeted Beauly formation and oil water contact at 3,236 feet (986 meters) total vertical depth. The operator gathered wireline samplings and conducted pressure testing of the hydrocarbon-bearing zone. Initial wellsite analysis of the samples suggest a viscosity of 600 to 800 Centipoise, which is likely too viscous to be commercially exploitable. EnCore says further onshore analysis is required before the provisional evaluation can be confirmed. The well will be plugged and abandoned. The Tudor Rose well is located on Block 14/30a in the UK sector of the North Sea. EnCore operates the block with a 40 percent interest; while Nautical Petroleum holds 20 percent; Endeavour holds 20 percent; and EnQuest holds 20 percent.
Project Details: Tudor Rose
Endeavour Acquires UK Producing Assets
Dec 27, 2011 – Endeavour has entered into a purchase and sale agreement to acquire ConocoPhillips’ interest in three producing UK oil fields in the central North Sea for $330 million. Endeavour will increase their current ownership interest in the Alba field, a late Eocene reservoir that has been producing since 1994. Additionally, the company will add ownership interests in the MacCulloch and Nicol fields. Endeavour’s aggregate working interest in the Alba field will be 25.68 percent following the closing of the acquisition. The company anticipates assuming operatorship of the MacCulloch field, subject to final partner agreement.
Project Details: Alba
Antrim Sidetracks Erne Discovery
Dec 27, 2011 – Antrim Energy announced that the Erne discovery well sidetrack, 21/29d-11Z, encountered about 24 feet (7 meters) of net oil pay and 14 feet (4 meters) of net gas pay in a high-quality sandstone reservoir. Initial interpretation is that the well has penetrated a separate accumulation from that in the 21/29d-11 discovery well, but further work is necessary to confirm this, stated the operator. The 21/29d-11Z well will now be suspended for potential future re-entry and use in the development of the Erne discovery. The 21/29d-11Z well was designed to appraise the Erne oil discovery in the Eocene Tay formation, and was drilled up-dip of the discovery location to a total depth of 5,124 feet (1,562 meters). Erne is located in Block 21/29d in the UK sector of the North Sea. Antrim Energy operates Block 21/29d.
Project Details: Erne
BG Discovers Oil in PL 373 S
Dec 27, 2011 – BG Norge has made an oil discovery in the North Sea in Production License 373 S. The wells, 34/3-3 S and 34/3-3 A, proved oil in early Jurassic sandstone. The objective of the well 34/3-3 S was to prove hydrocarbons in the Cook formation of the early Jurassic age in the Jordbaer Vest prospect. Oil was proven in the upper part of the Cook formation with very good reservoir quality. The objective of the 34/3-3 A sidetrack was to delineate the 34/3-3 S discovery by confirming the extent of the reservoir rocks, and also proving oil in the lower part of the Cook formation. The well proved oil both in the upper and lower Cook formation with very good reservoir quality. Extensive data acquisition programs have been carried out in both wells. Preliminary estimates place the size of the discovery between 1.5 and 4 million standard cubic meters of oil equivalents. The licensees will consider developing the discovery with the Knarr development, which was approved in June 2011.
Project Details: Knarr (Jordbaer)
Statoil Considers Skrugard Development in the Barents Sea
Dec 27, 2011 – Statoil and partners are considering developing the Skrugard discovery in the Barents Sea by a floating production unit with additional capacity to process and transport from other prospects in the vicinity. Statoil says a feasibility study has identified a technical and commercial solution for Skugard, resulting in the rapid development of the discovery. The production unit will have separate oil and storage and offloading capability with a production capacity of 95,000 bopd. The field development calls for 14 oil producers and pressure support will be provided via injection wells for water and gas. Skugard is estimated to hold around 250 MMbbl of recoverable oil equivalents, with a considerable upside potential. Statoil plans to drill an exploration well on Havis, a prospect located roughly five kilometers from the Skrugard discovery, but within the same license. After drilling the Havis well, the rig will drill an appraisal well on Skrugard. Skrugard is located in Production License 532, which Statoil operates, holding a 50 percent interest. Partners in the license include Eni Norge (30 percent) and Petoro (20 percent).
Project Details: Skrugard
Australia
BHP Billiton Confirms Rig Slot for Tallaganda-1 Well
Dec 28, 2011 – The WA-351-P joint venture has approved the budget to drill the Tallaganda-1 well in the block. The operator, BHP Billiton, has secured the Atwood Eagle semisub to drill the well and expects to commence well operations at Tallaganda-1 in the first quarter of 2012. The Tallaganda-1 prospect straddles both the WA-351-P and WA-335-P permits and will test the gas potential of sandstones in the prolific Triassic age, Mungaroo formation, in a well defined horst block.
Project Details: Tallaganda
Africa – West
Makouala Marine-1 Fails to Hit Commercial Pay
Dec 28, 2011 – Lundin Petroleum says the Makouala Marine-1 well has encountered limited oil-bearing pay in the targeted Sendji formation reservoirs. The operator will now plug and abandon the well. This well was the second of a two-to-three well campaign in the area. Makouala Marine-1 is located in Block Marine XIV, offshore Congo. Soco International operates the block.
Project Details: Makouala Marine
Asia – SouthEast
Otto Executes Final Farm-in Agreements for SC 55
Dec 28, 2011 – Otto Energy has executed the final farm-in agreements supporting BHP Billiton’s earlier decision to enter into Service Contract 55, offshore Palawan, Philippines. Once the execution is finalized, Otto will receive a final payment relating to back costs associated with SC55 of US $7.3 million, of which $5 million has already been received. Otto will submit the required assignment documents to the Philippine Department of Energy for their approval of the transfer of participating interest to BHP Billiton. Upon completion of the farm-in, Otto’s working interest in SC 55 will reduce to 33.18 percent.
Cairn to Enter Second Phase of Exploration
Dec 27, 2011 – Cairn Lanka Limited has successfully completed the first phase of the exploration campaign in Sri Lanka Block SL-2007-01-001. The exploration program involved the acquisition, processing and interpretation of 433,175 acres (1,753 square kilometers) of 3D seismic data and a three-well deepwater drilling program. The seismic program exceeded the first phase commitment by 20 percent, and the drilling program exceeded the drilling depth commitment by 50 percent. Cairn said this program resulted in two successive gas and condensate discoveries; the CLPL-Dorado-91H/1z well and, the CLPL-Barracuda-1G/1 well. The third well, CLPL-Dorado North 1-82K/1 was plugged and abandoned as a dry hole. This drilling program has found an established working petroleum system in the frontier Mannar Basin. Cairn Lanka intends to enter the second phase of exploration.

Source

Noble Energy Discovers Significant Gas Discovery Offshore Cyprus

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Noble Energy, Inc. announced today a natural gas discovery at the Cyprus Block 12 prospect, offshore the Republic of Cyprus. The Cyprus A-1 well encountered approximately 310 feet of net natural gas pay in multiple high-quality Miocene sand intervals.

The discovery well was drilled to a depth of 19,225 feet in water depth of about 5,540 feet. Results from drilling, formation logs and initial evaluation work indicate an estimated gross resource range(1) of 5 to 8 trillion cubic feet (Tcf), with a gross mean of 7 Tcf. The Cyprus Block 12 field covers approximately 40 square miles and will require additional appraisal drilling prior to development.

Charles D. Davidson, Noble Energy’s Chairman and CEO, said, “We are excited to announce the discovery of significant natural gas resources in Cyprus on Block 12. This is the fifth consecutive natural gas field discovery for Noble Energy and our partners in the greater Levant basin, with total gross mean resources for the five discoveries currently estimated to be over 33 Tcf. This latest discovery in Cyprus further highlights the quality and significance of this world-class basin.”

Davidson went on to say, “We would like to thank the Government of Cyprus for their productive cooperation and support in achieving an important outcome for the people of Cyprus and Noble Energy. We look forward to working closely with the Government of Cyprus to develop this discovery in a manner that maximizes value for all stakeholders.”

Noble Energy operates the well with a 70 percent working interest. Delek Drilling and Avner Oil Exploration will each have 15 percent, subject to final approval by the Government of Cyprus.

Source

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