Tuesday, June 30, 2015

Oil Production USA Beats Russia, Greece Grexit Empowers China sea port Cosco 600428

The USA recently became the largest oil producer in the world, just barely nudging Russia out of first place at just under 10 million barrels per day - a 1.6 million bpd gain versus the previous year making it three consecutive years of 1m+ bpd annual growth in output.  Demand for oil from developed nations was down marginally by -1.2% but up elsewhere including China which experienced a 390 thousand bpd increase yoy.
USA gaining energy independence ! America now produces 90% of the energy it consumes.  Energy imports as percent of GDP : 1% vs 3% in 2007.

grexit, eurozone, greece deal, russia greece, naval bases, piraeus, greece china, china sea port, china war, german banks, usa oil  production, energy independence, food prices, new currency, financial, russias interest,

Consequences of a Greece Grexit from Eurozone

When Greece leaves the Eurozone any debt commitments it has to Eurozone entities will undoubtedly be scrapped and Europe will lose some €250 billion as Greece will for the first time have the green light to default.  Germany's state owned KfW bank (aka Bankengruppe) will lose €15 billion, France's BNP Paribas (BNPQY) €700 million while Germany's Commerzbank (CRZBY), Deutsche Bank (DB) combine for €700 million.  Credit Agricole (CA) remains heavily exposed with €3.5 billion euros owed to it by Greece.  Societe Generale (SCGLY) is owed €300 million all corporate debt - that's down significantly from €3 billion just five years ago.
In total €24 billion of the debt is held by German banks, with another €18.8 billion owing to private individuals and state institutions.
The aid plan initially called for €270 billion to be provided to Greece - the money has been coming from the IMF, ECB and the European Commission's 19 Eurozone governments.
According to the payment schedule Greece's next payment to the ECB is to be made on July 20, 2015 in the amount of €3.9 billion

Russia, China stand to gain a significant edge in their battle with the West for strategic control of the sea
(chinese navy, china sea ports, greece china)

  1. The Greek Merchant Navy controls 16.2% of the total merchant fleet worldwide. Greece ranks first in tankers and bulk carriers.  Any deal for new funding from Russia or China's development bank would undoubtedly involve ports, vessels, and strategic sea routes.
  2. Chinese shipping company Cosco Shipping Company Ltd (SHA:600428) already controls 2 of 3 shipping terminals at Greece's main port of Piraeus.
    since Cosco took control of the port in 2007 (for €500 million) business has tripled - this directly benefits Athens, the country's economic center.
  3. Greek prime minister recently met with Putin in Russia where he was rumored to have sought out a new Russia Greece deal .  Russia has already secured new bases in Cyprus - bases in Greece which is home to Europe's largest sea ports and naval bases would obviously be in Russias interest.  When Greece votes to exit the Eurozone it will only be a matter of time until the country embraces a new currency.  This will have to result in closer ties with China since the IMF and ECB have already ruled out any future financial support to Greece.

Worldwide Food is Becoming More Expensive

Food prices in Turkey are now 20% higher than the world average - food prices in Nigeria are twice as high this year as compared to last year.  In the United States poultry, eggs, and vegetable staples such as cauliflower have gone up in price - being nudged higher by the two year drought in California and the bird flu epidemic.


Australia Gold Production at 11 Year High

Last year production totaled 284 tonnes +4% versus the previous year.  Companies are adjusting to lower metal prices by increasing the grade of ore mined.