Greek Lender Of Last Resort - Iran?

Tyler Durden's picture

A fascinating article by Reuters this morning really brings to bear the reality that Greece faces as lenders and trade creditors refuse to help (and why should they realistically) with energy needs. The harsh reality that Iran (yes that nuclearized Iran) is the main provider of Greek oil needs surely puts into perspective what seemingly unlikely events can occur when a person, corporation, country, gets desperate. Perhaps we should reflect the other way that while all the world's bankers and money-men refuse to lend Greece money, Iran has truly become the lender of last resort for Greek survival - as it strikes us that energy needs will/should trump a coupon payment any day.

The near paralysis of oil dealings with Greece, which has four refineries, shows how trade in Europe could stall due to a breakdown in trust caused by the euro zone debt crisis, which is threatening to spread to further countries.

 

"Companies like us cannot deal with them. There is too much risk. Maybe independent traders are more geared up for that," said a trader with a major international oil company.

 

"Our finance department just refuses to deal with them. Not that they didn't pay. It is just a precaution," said a trader with a major trading house.

 

From Reuters: Greece turns to Iranian oil as default fears deter trade

(Reuters) - Greece is relying on Iran for most of its oil as traders pull the plug on supplies and banks refuse to provide financing for fear that Athens will default on its debt.

 

Traders said Greece has turned to Iran as the supplier of last resort despite rising pressure from Washington and Brussels to stifle trade as part of a campaign against Tehran's nuclear program.

 

The near paralysis of oil dealings with Greece, which has four refineries, shows how trade in Europe could stall due to a breakdown in trust caused by the euro zone debt crisis, which is threatening to spread to further countries.

 

"Companies like us cannot deal with them. There is too much risk. Maybe independent traders are more geared up for that," said a trader with a major international oil company.

 

"Our finance department just refuses to deal with them. Not that they didn't pay. It is just a precaution," said a trader with a major trading house.

 

"We couldn't find any bank willing to finance us. No bank wants to finance a deal for them. We missed some good opportunities there," said a third trader.

 

More than two dozen European traders contacted by Reuters at oil majors and trading houses said the lack of bank financing has forced Greece to stop purchasing crude from Russia, Azerbaijan and Kazakhstan in recent months.

 

Greece, with no domestic production, relies on oil imports and in 2010 imported 46 percent of its crude from Russia and 16 percent from Iran. Saudi Arabia and Kazakhstan provided 10 percent each, Libya 9 percent and Iraq 7 percent, according to data from the European Union.

 

"They are really making no secret when you speak to them and say they are surviving on Iranian stuff because others will simply not sell to them in the current environment," one trader in the Mediterranean said.

 

Leading Greek refiner Hellenic Petroleum denied having any difficulty in buying crude and declined to comment on the exact breakdown of oil supplies. Greece's second biggest refiner Motor Oil Hellas declined to comment.

 

Greece's four refineries, belonging to Hellenic and Motor Oil, together can process around 400,000 barrels per day. That figure has fallen to around 330,000 bpd in recent months due to maintenances and upgrades.

 

"Our crude slate is broadly unchanged over the last few months and we are always viewing to optimize our refining operations," a Hellenic spokesman said.

 

"Our supply agreements are based on purely commercial considerations, no other factors interfering," he said.

 

Shipping data obtained by Reuters showed four cargoes taking crude from the Middle East outlet of Sidi Kerir on the Egyptian Mediterranean to Greece in September. Three sailed in October. Traders said all carried Iranian Heavy crude and more was coming in November.

 

"Iran is the only one who might be working on an "open credit" basis right now, given its own difficulty in selling crude," one trader said.

 

Imports of Iranian oil to the United States are subject to sanctions but are still fully legal to Europe and Asia. The European Union said this week it may consider oil sanctions against Iran within weeks, after a U.N. agency said Tehran had worked to design nuclear bombs.

 

Iran denies trying to build atom bombs and an Iranian official, who declined to be named, said Tehran has no difficulty in selling its oil.

 

However, shipping sources said that interest in Iranian crude, which is cheaper than competing Russian grades but politically sensitive, has prompted the country to continue storing crude in the Red Sea, to make it available for swift delivery.

 

The rest of the oil industry drastically cut crude storage last year after forward prices for crude moved to a discount to prompt, making such operation loss-making.

 

Iran is storing crude in four very large crude carriers (VLCCs) in the Red Sea.