January 28, 2012

Germany calling for Greece's Indentured Service


Germany has made a request that is extraordinary. The Financial Times has a pair of articles on this:

German Government Calls for Greece to Cede Sovereignty to Eurozone "Budget Commissioner"

Please consider Call for EU to Control Greek Budget

The German government wants Greece to cede sovereignty over tax and spending decisions to a eurozone “budget commissioner” to secure a second €130bn bail-out, according to a copy of the proposal obtained by the Financial Times.

In what would amount to an extraordinary extension of European Union control over a member state, the new commissioner would have the power to veto budget decisions taken by the Greek government if they were not in line with targets set by international lenders. The new administrator, appointed by other eurozone finance ministers, would take responsibility for overseeing “all major blocks of expenditure” by the Greek government.

Even before Germany circulated its proposal, the EU and International Monetary Fund had presented a 10-page list of “prior actions” Athens must implement before the new bail-out is agreed. According to a copy of the document, also obtained by the FT, Greece must cut an additional 150,000 government jobs within three years.
Actual Text of Proposal

The Financial Times posted on its website the complete text of the proposal. Here are snips from Assurance of Compliance in the 2nd GRC Programme
1. Absolute priority to debt service
Greece has to legally commit itself to giving absolute priority to future debt service. This commitment has to be legally enshrined by the Greek Parliament. State revenues are to be used first and foremost for debt service, only any remaining revenue may be used to finance primary expenditure. This will reassure public and private creditors that the Hellenic Republic will honour its comittments after PSI and will positively influence market access. De facto elimination of the possibility of a default would make the threat of a non-disbursement of a GRC II tranche much more credible. If a future tranche is not disbursed, Greece can not threaten its lenders with a default, but will instead have to accept further cuts in primary expenditures as the only possible consequence of any non-disbursement.

2. Transfer of national budgetary sovereignty
Budget consolidation has to be put under a strict steering and control system. Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time. A budget commissioner has to be appointed by the Eurogroup with the task of ensuring budgetary control. He must have the power a) to implement a centralized reporting and surveillance system covering all major blocks of expenditure in the Greek budget, b) to veto decisions not in line with the budgetary targets set by the Troika and c) will be tasked to ensure compliance with the above mentioned rule to prioritize debt service.
If Greece agrees to this proposal is indentured service if not it is broke in a matter of weeks.

January 24, 2012

Daily Photo: Opera Night


Sovereign Defaults Stats

According to a Wikipedia article on sovereign defaults, here a few examples of major European sovereigns that have defaulted over the years:


  • Spain - 15 times! (1557, 1575, 1596, 1607, 1627, 1647, 1809, 1820, 1831, 1834, 1851, 1867, 1872, 1882, 1936-1939)
  • England - a modest 3 times (1340, 1472, 1596)
  • France - 9 times. (1558, 1624, 1648, 1661, 1701, 1715, 1770, 1788, 1812)
  • Greece (1826, 1843, 1860, 1893, 1932)
  • Brazil - 10 times inside the last 115 years (1898, 1902, 1914, 1931, 1937, 1961, 1964, 1983, 1986-1987, 1990)
  • Russia (1839, 1885, 1918, 1947, 1957, 1991, 1998)
  • India (1958, 1969, 1972)
  • China (1921, 1932, 1939)
The complete list in the above link includes a list of 39 African sovereign defaults, 26 Asian sovereign defaults, a whopping 91 European sovereign defaults, and for the Americas, a stunning 154 sovereign defaults.

January 13, 2012

Iran Oil Embargo delayed for six months

Iran is OPEC's second largest oil producer. Bloomberg estimates that Iran pumped 3.58 million barrels of crude a day last month.
Phasing in an embargo is the same as phasing in higher prices smack in the midst of an already guaranteed monster European recession.
Maybe another reason for the delay is that by then they will have accomplished to get rid of the last obstacle (Syria) on the way to Tehran.

Worth reading the timeline and details below since when it will be done all hell will break loose in the Middle East.


Under pretence of looking for other sources of oil, EU Iran Oil Embargo Over Nuclear Work Said Likely to Be Delayed Six Months

A European Union embargo on imports of Iranian (OPCRIRAN) oil will probably be delayed for six months to let countries such as Greece, Italy and Spain find alternative supplies, two EU officials with knowledge of the talks said.

The embargo, which would need to be accepted by the 27- nation bloc’s foreign ministers on Jan. 23, is also likely to include an exemption for Italy, so crude can be sold to pay off debts to Rome-based Eni SpA (ENI), Italy’s largest oil company, according to the officials, who declined to be identified because the talks are private.

A ban on petrochemical products would start sooner, about three months after EU ministers agree to the measure, one official said yesterday. Once a decision is made, member states would be barred from concluding new oil contracts with Iran or renewing those that are due to expire, while existing deals will be terminated within six months, according to a second diplomat today. Long-term contracts constitute the bulk of Europe’s purchases of Iranian oil.

Phasing in the European embargo would satisfy the concern of nations most dependent on Iranian crude, including Italy, Greece and Spain, the first EU official said. Those three nations accounted for 68.5 percent of EU imports from Iran in 2010, according to European Commission data.

As Europe weighs its embargo, President Barack Obama’s administration has sent teams worldwide to consult with countries on managing the supply and demand of oil, according to an administration official who briefed reporters in Washington.

OPEC’s other members would be able to make up for a drop in Iranian oil supply if the EU agrees to an embargo, said Chakib Khelil, the group’s former president. Even so, prices may temporarily rally to as high as $200 a barrel on news of any such blockade, he said today in London.

“It should be possible to replace, at least, the European consumption of Iranian oil,” Khelil said in an interview with Mark Barton on Bloomberg Television’s “On the Move.”

Daily Photo: Distillery Lane


January 12, 2012

Daily Photo: High Street


Argentina crisis escalating


Many of us will remember how 10-years ago, the government of Argentina collapsed and social chaos erupted.
Within a matter of days from the government collapse, the country had burned through several presidents, the currency collapsed, inflation soared, unemployment shot up, crime rates spiked, and the government defaulted on its debt.
Well It seems the government of Argentina is at it again. The economy is rapidly deteriorating, and street-inflation has surpassed 25%.
Naturally, the administration of President Cristina Fernandez insists that inflation is not a problem, despite the Argentine peso losing 25% of its value against the US dollar over the last three-years (and far more against gold).
Meanwhile, Fernandez has imposed capital controls, raided pension funds, nationalized private property, and taken control of the media… all in the attempt to delay the endgame.
A few weeks ago, the government passed a package of new laws, essentially criminalizing public protest under the auspices of combating terrorism. The legislation, snuck in at a midnight session during the holiday period, provides severe punishment for various crimes under a very broad definition of terrorism.
Fernandez herself maintains that the law would -never- be invoked to restrict the legitimate rights of Argentines. This, from a woman who simultaneously passed legislation to seize control of the country’s newspaper industry.
Worth keeping an eye on Argentina since unfortunately we are witnessing the same trend in Italy and other European countries, when it comes to debt and default unfortunately Argentina has a lot to teach the world and Europe on how to mess up a country.

Mafia is Italy's Largest Bank


According to a new report by Italian anti-crime group SOS Impresa, as reported by Reuters, "Organised crime has tightened its grip on the Italian economy during the economic crisis, making the Mafia the country's biggest "bank" and squeezing the life out of thousands of small firms, according to a report on Tuesday."
It is hardly surprising for those accustomed to the sorrow state of Italian affairs to find out that '"With 65 billion euros in liquidity, the Mafia is Italy's number one bank." 



From Reuters:
Organised crime groups like the Sicilian Cosa Nostra, the Naples Camorra or the Calabrian 'Ndrangheta have long had a stranglehold on the Italian economy, generating profits equivalent to about 7 percent of national output.

Extortionate lending had become an increasingly sophisticated and lucrative source of income, alongside drug trafficking, arms smuggling, prostitution, gambling and racketeering, the report said.

"The classic neighbourhood or street loan shark is on the way out, giving way to organised loan-sharking that is well connected with professional circles and operates with the connivance of high-level professionals," the report said.

It estimated about 200,000 businesses were tied to extortionate lenders and tens of thousands of jobs had been lost as a result.
Extortion - new vs old school:
Old style gangsters handing out cash in bars and pool halls had been replaced by apparently respectable bankers, lawyers or notaries, the report said.

"This is extortion with a clean face," it added. "Through their professions, they know the mechanisms of the legal credit market and they often know the financial position of their victims perfectly."

Small businesses, who have struggled to get hold of credit during the economic slowdown, may have been increasingly tempted to turn to the mafia, said the report.

Typical victims of extortionate lending were middle-aged shopkeepers and small businessmen who would struggle to find a new job and who were ready to try anything to avoid bankruptcy, it added.

"They are usually people in traditional retail sectors like food, greengrocers, clothes or shoe shops, florists or furniture shops. These are the categories which, more than any other, are paying the price of the (economic) crisis," it said.
Next up: a surge in prostitution, drugs, xenophobia, child labor, and all those great things that Italy thought it had managed to get away from, and which supposedly were no longer the mark of modern "civilized" society.

January 7, 2012

Full Euro Bond Redemption Schedule for 2012


Goldman has issued a full monthly cheat sheet by country and by maturity type of the €1+ trillion in scheduled 2012 bond redemption. February, March and April will be the most critical period for Italy which will be facing a though competition from France and Germany.

Has Italy Gone Fascist?

Form Zero Hedge, worth reading!


Has Italy Gone Fascist?

In August this year, CLSA’s Russell Napier wrote: “Italy is scary – yields will rise when governments chose to take money from their savers – what Russell calls THE GREAT THEFT - Expect massive capital flight”.  Yet while Russell was commenting on Italy’s opening move in repressing private capital by raising the capital gains tax, but not on gains of government debt, the situation has moved with such speed over the past 5 months that the emergence of the first Fascist regime following the 2008 crisis can probably now be associated with the new Monti government.
It may be time for Italian to get themselves as well as their capital even faster out of Pizzaland.
Here are the latest developments which are coming in at extraordinary speed:
  • The appointment in December of an unelected government. This government has no accountability and no fixed time mandate. It is being sold as being “technocratic”, but is in fact headed by a University Professor who is distinguished for: (i) having been head of the EU Internal Market Commission, where he used the power of the State to fine Microsoft and other corporate that were “getting too big for their boots”;(ii) being a good friend of Romano Prodi, another University Professor from the Communist  heartland of the University of Bologna and creator of the Euro (more on him later);(iii) a paid hand of Goldman Sachs and a friend of Mario Draghi, another Goldman puppet who dispatched of the government of Berlusconi within days of taking the helm of the ECB; (iv) a fervent believer in the pre-eminence of the state over the individual;
  • Prodi, the original architect of this catastrophe, famously made this comment in 2001, indicating that this cabal of Professors are playing a very long game indeed:
I am sure the Euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created.”
Romano Prodi, EU Commission President, December 2001
  • Thanks to his friendship with Monti and the current government, he is very much still involved in shaping just what such instruments can be;
  • The passing of an extraordinary edict making cash transactions of more than Euro 1,000 illegal (not subject to reporting – just plain illegal). Following Prodi’s own desire, the existing regime has indicated that this level will be progressively reduced to a limit as low as Euro 300. Hence cash is maybe for the first time in history no longer legal tender (over Euro 1,000, for now);
  • A requirement that credit card companies report all transactions carried out by Italians, in Italy and abroad to the fiscal authorities;
  • Delays and refusals by banks in allowing customers to withdraw  cash balances of as little as Euro 10,000;
  • Finance Police has placed cameras at the physical borders with Switzerland (see below) to register all license plates. In addition, currency-sniffing dogs have been deployed at the border (http://www.cdt.ch/ticino-e-regioni/cronaca/56250/fiscovelox-riapparsi-no...).

Events in Italy must be watched closely.
And while Russell Napier (correctly) foresees capital controls being imposed and suggested that one parks his cash in Singapore dollars, Italians may want to get themselves out as well before the current group of Professors slams the gates shut. Things are moving even faster than one of the world’s leading financial historians could foresee.

January 6, 2012

Daily Photo: Kerry Hills


SETI announced possible Alien Signal


The SETI website of UC Berkeley has announced that it has found signals that "look similar to what we think might be produced from an extraterrestrial technology. They are narrow in frequency, much narrower than would be produced by any known astrophysical phenomena, and they drift in frequency with time, as we would expect because of the doppler effect imposed by the relative motion of the transmitter and the receiving radio telescope."

From SETI at UC Berkeley:

We've started searching our Kepler SETI observations and our analyses have generated some of our first candidate signals. Each of the signals below is shown in a pair of plots, one from an observation of Kepler Object of Interest (KOI) 817 and one from an observation of KOI-812. During an observation, we alternated between targets to enable us to rule out signals seen coming from two different places in the sky. If we see a signal coming from multiple positions on the sky, like the ones below, it is very likely to be interference. The signals below are undoubtedly examples of terrestrial radio frequency interference (RFI).

What do these plots represent?

These are plots of electromagnetic energy as a function of frequency and time. Brighter colors represent more radio energy at a particular time and frequency. For example, a radio station transmitting at 101.5 MHz would produce a large amount of energy near that frequency.

Why are these signals interesting?

These signals look similar to what we think might be produced from an extraterrestrial technology. They are narrow in frequency, much narrower than would be produced by any known astrophysical phenomena, and they drift in frequency with time, as we would expect because of the doppler effect imposed by the relative motion of the transmitter and the receiving radio telescope.

What's next?

These first results are tests of the algorithms we'll apply to all our observations of Kepler planets. During the coming weeks, we'll be posting more of our results as we process the nearly 50 TB of data we collected in early 2011.






Download all 12 candidate signals in a .pdf file.

Daily Photo: Stone Soul


January 2, 2012

Daily Photo: Dana Valley


Iran military plans for the Strait of Hormuz


Amid Iran's missile escalation announced on the mainstream media today we are wondering what would a closure of the Strait of Hormuz looks like. The Middle East Media Research Institute's blog has caught a release by an Iranian website Mashreq News, which spells out the step by step details of just how such a closure would be enacted.

From MEMRI:

In response to threats by Western countries to impose oil sanctions on Iran, the Iranian website Mashreq News, which is close to Iranian military circles, posted an article on December 15, 2011 outlining military measures that could be taken by Tehran to close the Strait of Hormuz should the regime choose to do so.
The article enumerated the forces and weapons that Iran could employ in such a military operation, including fast attack craft carrying anti-ship missiles; submarines; battleships; cruise and ballistic missiles; bombers carrying laser-, radar- and optically-guided missiles; helicopters; armed drones; hovercraft; and artillery.
It stated that despite Iranian Supreme Leader Ali Khamenei's statements that Tehran would not initiate a military confrontation but would retaliate harshly if attacked, "there is no guarantee that [Tehran] will not launch a preemptory strike on the civilian level, for instance through cyber-warfare or by means of economic pressure, including by closing the Strait of Hormuz and cutting off [this] energy lifeline for an indefinite period of time." It added, "Should additional sanctions be imposed on Iran, especially in the domain of oil export, Iran might keep [its] oil from leaving its territorial waters."
In a further threat, the article stated that Iran would in the future be able to attack the 480-km pipeline with a capacity of 2.5 million barrels/day that the UAE is planning to build in order to bypass the Strait of Hormuz in order to neutralize Iran's ability to disrupt the world's oil supply: "As for the plan... to construct a [pipeline] from the UAE that will be an alternative in times of emergency in case the Hormuz Strait is closed, we should note... that the entire territory of the UAE is within range of Iran's missiles, [so Iran] will easily be able to undermine security at the opening of this [pipeline] using weapons to be discussed this report."
In accordance with Iranian doctrine, the article pointed out that these weapons would actually not be necessary because there would be suicide operations, and added that "the faith of the Iranian youth, and their eagerness to sacrifice their lives, will sap the enemies' courage."
Despite statements by Iranian government spokesmen, including Oil Minister Rostam Qasemi and Foreign Ministry spokesman Ramin Mehmanparast, that the closing of the strait is not currently on Iran's agenda, Majlis National Security Committee member Pervez Sarouri said that the Iran would be conducting 10 days of naval maneuvers, called "Velayat 90," beginning December 24, 2011, to drill closing it.

Satellite view of the Strait of Hormuz connecting the Persian Gulf to the Sea of Oman

The following are the main points of the Mashreq News article on closing the Strait of Hormuz.

Fast Attack Craft
The article stated that since it first introduced fast attack craft for use in the Iran-Iraq war (1980-1988), the Iranian navy has immeasurably improved the craft's "ability to face advanced enemy combat vessels, much less cargo ships. These boats are equipped with sea radar systems; advanced electronic communication systems; sea-to-sea cruise missiles, both short-range – 25 km – and medium range; medium- and large-caliber [sic] torpedoes; and naval mines, along with traditional means of warfare – including semi-heavy machine guns, missile launchers, and shoulder-launched anti-aircraft missiles. These sea craft are capable of blocking the Strait [of Hormuz] for a brief or an extended period, and of facing enemy warships trying to open the route.

"In addition to their high speed and abovementioned equipment, these sea craft are highly maneuverable. Their ability to operate at night, aided by the requisite accessories, as well as in stormy weather, has been demonstrated repeatedly in recent years, in maneuvers both minor and major. Their successful record includes stopping submarines from countries beyond the [Gulf] region that aimed to cross the Strait of Hormuz, and supporting [Iranian] submarines threatened by enemy warships in the Indian Ocean... Iran has various types of naval mines, both stationary and remote controlled. This weapon [i.e. the mines] may, if necessary, be operated by Iranian boats and submarines [located at] various points in the Strait of Hormuz and the surrounding waters."
Submarines
The article continued: "The Iranian navy's acquisition of submarines... some 20 in number... has rendered it more powerful than the navies of the [other] countries in the region. Iran's submarine craft can use torpedoes, mines, and missiles, and can remain submerged for weeks in order to accomplish a mission. Apart from the Russian Kilo class submarines, the Nahang, Ghadir, and Fateh class submarines have been pre-fitted for the waters around Iran, especially the Persian Gulf... These submarines can remain stationary in the water and can evade various enemy radar and sonar systems...
"The Kilo class submarines can carry 24 mines or 18 large torpedoes, while the Fateh class submarines can carry 12 torpedoes and/or eight mines. In addition, there have been reports in the international media stating that Iran has equipped the Kilo class [submarines in its fleet] with Hoot torpedoes...
"The Ghadir class submarines can also successfully participate in the operation [to close the strait]... [These] are small submarines manned by one or several people. Known as 'wet submarines,' they are used for commando operations, laying mines, and firing torpedoes... and can operate in narrow and shallow areas."
Warships
The article stated that "Iran has various classes of missile ships, warships, and destroyers. These marine craft are capable of launching four 'Nour' anti-ship missiles, which have a range of 120-170 km, [even] over 200 km. Additionally, these warships' 114mm and 76mm guns... can threaten various [types of] ships. [Iran's] warships can [also] threaten submarines while simultaneously operating together with the rest of the [Iranian naval] force in closing the Strait of Hormuz."

Anti-Ship Cruise Missiles
It continued: "We divide Iran's missile force into two groups: cruise missiles and ballistic missiles. They possess a wide variety of ranges and destructive capabilities. Coastal launchers for Kowsar short-range missiles and for Nour and Ghadir missiles [with a range of some 200 km] have so far been displayed, and the Naser-1 medium-range missiles are launched from Qare'a triple-barrel missile launchers. These launchers are independent, meaning that if they are deployed near the coast, they could detect and identify naval targets and attack them without the need for supporting systems from [Iranian] air and naval units.

"These systems can cover most of the Strait of Hormuz if deployed and camouflaged 70 to 150 km deep into Iranian territory, or even in the Kerman province [in southeastern Iran]. The Iranian armed forces possess these systems in abundance, and they are ready for deployment."
Ballistic Missiles
The article noted: "...Thus far, three types of anti-ship ballistic missiles have been displayed in Iran: Khaleej-e Fars, Tondar, and Sejil. Khaleej-e Fars missiles, with a 300-km range and a 650-kg warhead, are designed to destroy enemy warships. The missile can be prepared for launch in a few minutes due to its use of solid fuel and advanced guidance systems. It strikes the enemy ships from above, traveling at Mach 3, reaching [the target] in a short time and at an acute angle.

"The triple-barrel launcher for these missiles provides sufficient firepower from the first launch; it increases the operational effect of the missile, while decreasing the enemy's ability to retaliate. Based on photos of the missile, it uses an electronic guidance system, which ensures its effectiveness even against the enemy's electronic warfare. The missile's speed, angle of approach, and impact from above are effective points in its modus operandi. We can estimate that the enemy's chances of intercepting it are miniscule.
"The Tondar missile, whose range is estimated by experts to be 150-250 kilometers, operates alongside the Khaleej-e Fars missiles as a short range ballistic missile... and their combined operation can significantly raise the chances of hitting the target... The [Tondar] missile can cover the Straits of Hormuz from deep inside Iranian territory. The Khaleej-e Fars missile can cover the Western Sistan-Baluchestan area, the Kerman province area, eastern and southern Fars province, and all of the Straits of Hormuz."

"The most terrifying of all Iranian missiles is the Sejil long range missile. It has commonly been considered merely a surface-to-surface missile, but the armed forces recently announced that it can also be used to destroy naval targets. Although not much is known about the missile's guidance and targeting systems, the missile has shown great accuracy in hitting a predetermined target. This missile, with a range of 2,000 km, can reach speeds of Mach 8 to Mach 12 (2,700-4,100 meters per second)... Its warhead weighs at least 500 kilograms, helping it to destroy the target. This missile can be used to cover regions beyond the Strait of Hormuz even if deployed on the northern Iranian coast, or at the most distant point in northwest Iran. It is a two-stage rocket powered by solid fuel, and reaches great speed at the end of the first stage [of launch]. It is difficult for the enemy to detect and track it during the first stage, because it uses several methods to reduce its radar signature... Thanks to its high velocity, the chance of it being hit by enemy defense [systems] is even smaller than the chance that they will hit a Khaleej-e Fars missile.
"Such missiles would be launched from deep inside Iranian territory because scattering launchers over a larger area will make it difficult for the enemy to detect them, will limit the means the enemy will be able to use to destroy them, and will also allow the launchers to be relocated and re-camouflaged.
"Although the enemy is much more likely to detect lower-velocity missiles... the combination of the use of these weapons in areas both closer and farther away from the shore and the increased number of targets... can maintain their effectiveness."
Bomber Jets
The article stated: "Iranian fighter jets can carry various types of air-to-surface missiles that can operate against naval targets, including air-to-surface missiles with optical, laser, and radar guidance; Nour and Ghadir missiles adapted for aerial use; C-801K and C-802 missiles; as well as Kowsar and Naser missiles. [Iranian] Air Force jets can carry up to five such missiles.

"Additional missiles for naval targets include: limited range TV-guided Maverick missiles; Qassad-1 and Qassad-2 optically guided bombs with a range of 30-50 kilometers (Qassad-3 bombs, with a range over 100 kilometers, will become operational soon); and Russian-made KH-25 and KH-29 missiles with laser and optical guidance, which can be mounted on Su-24, Su-25, and MiG-29 jets. Their range is 10km-30km, and they have medium destructive capabilities.
"In addition, KH-58 long-range anti-radar missiles, which can be mounted on Su-24 jets for attacks on enemy warships, will play an important role in closing the Strait of Hormuz.
"The array of missiles and bombs with varying ranges will assist Iran in operating remotely against enemy frigates and warships."
Helicopters
"The Shahed 285 helicopter can carry Kowsar anti-ship cruise missiles, and Mi-171 helicopters can launch Nour long range missiles, and apparently Ghadir missiles as well. These helicopters, along with Cobra attack helicopters, can threaten merchant vessels and enemy warships."

Flying Boats
"Only one model of flying boat has thus far become operational in Iran. In fact, it is a new type of plane that can land on the water, and can be equipped with anti-ship missiles. This boat can take off from the water, from various points on Iran's coast, and can operate against enemy warships together with aerial defense."

Drones
"The Iranian army drones are used for anti-ship missions. The Karar drone can carry four Kowsar missiles. Due to its speed, the drone can increase the potential energy of the missiles and extend their range. The drone has a range of some 1,000 km; it is launched by a rocket, and when it reaches the correct range, it launches the missiles. Karar drones can carry dozens of missiles to the enemy warships.
"The Karar drone is made from materials that allow it to evade radar detection and get close to enemy vessels. Nevertheless, the drone can also use missiles like Naser-1, for large areas."

Artillery and Surface-to-Sea Rocket Systems
The article also claimed that Iranian security officials several times pointed out that guided bombs are actually being used against moving naval targets. It said that the range of Iranian artillery shells is over 40 km, and that they can be used to harm or destroy enemy ships. It added that during maneuvers, Iran had successfully utilized the Fajr-3 and Fajr-5 rocket launchers against naval targets.

Oil tensions rising, Petroplus shutting down refineries in Europe


A few weeks ago Greeks had to rely for their energy needs on Iran since no one else would extend them credit. The European credit strain contagion now appears to be spreading rapidly as Europe's largest independent refiner by capacity, Petroplus Holdings AG, is suspending operations at three plants as banks freeze a $1bn revolving loan facility. S&P cut its rating from B to CCC+ citing a sharp deterioration in the firm's liquidity position.

Bloomberg notes that refining margins are down considerably as headlines show:
  • *PETROPLUS SAYS TEMPORARY ECONOMIC SHUTDOWNS IN JAN. '12
  • *PETROPLUS SAYS RESTART DEPENDS ON ECONOMIC CONDITIONS, CREDIT AVAILABLE

The full statement from Petroplus is here:

Petroplus Provides Update Regarding Its Revolving Credit Facility and Operations of the Petit Couronne, Antwerp and Cressier Refineries
ZUG, Switzerland--(BUSINESS WIRE)--Dec. 30, 2011-- Regulatory News:

Petroplus Holdings AG (SIX: PPHN) today announced that Petroplus held meetings with all lenders under the Revolving Credit Facility yesterday in Zurich. The discussions were open and constructive. Additional discussions between the lenders and the Company’s management will continue over the comings days in an effort to restore availability of credit facilities that ensure proper operations of its refineries.

In the meantime, the Company will start temporary economic shutdowns of the Petit Couronne, Antwerp and Cressier refineries in January 2012 given limited credit availability and the economic climate in Europe. The restart of the refineries is dependent on economic conditions and credit availability. The Company intends to provide further updates to the market as needed via press releases.

Petroplus Holdings AG is the largest independent refiner and wholesaler of petroleum products in Europe. Petroplus focuses on refining and currently owns and operates five refineries across Europe: the Coryton Refinery in the United Kingdom; the Antwerp Refinery in Belgium; the Petit Couronne Refinery in France; the Ingolstadt Refinery in Germany; and the Cressier Refinery in Switzerland. The refineries have a combined throughput capacity of approximately 667,000 barrels per day.