Insurance - Brazil - Aegon buys 50% stake in Mongeral

Dutch insurer Aegon (NYSE: AEG) has purchased a 50% stake in Brazilian insurer Mongeral, the former said in a statement.

Mongeral announced it intended within five years to reach the top five in terms of market share in the local life and pension market through the partnership.

The move marks another joint venture stake for Aegon, which bought a 49% stake in Mexican life insurance company Seguros Argos in 2006. At that time, Aegon announced its intentions to build its presence in Brazil.

Aegon also owns life reinsurer Transamerica Reinsurance, which has operations in Mexico, Brazil and Chile.

Overall, Aegon had 276mn euros (US$387mn now) in profits in 2Q08, down 56.7% from the same quarter last year.

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Petrochemicals - Regional - DuPont aims for US$8bn in revenues from renewable raw materials

US chemical company DuPont (NYSE: DD) expects to increase net annual revenues some US$2bn by 2015 thanks to new products that reduce greenhouse gas emissions and to reach at least US$8bn in revenues from renewable raw materials, DuPont's global business director for sustainable packaging, Shanna Moore, told BNamericas.

"We also want to help our clients reduce their emissions by teaching them how to use technology and creating new products that are better for the environment," Moore said, stressing the company's sustainability goals for 2015.

According to the executive, Latin America is a great potential market for the company as DuPont expects emerging regions to generate half of its sales growth over the next two years. "The company is looking to the opportunities here, as we have a lot of learning to share about development of new products based on renewable resources," she said.

As an example, DuPont is introducing to the Brazilian market a corn starch-based thermoplastic polymer, which is made of 90% renewable material. The product's performance compares to polystyrene (PS) and polyvinyl chloride (PVC) in transformed products, such as food and cosmetics packaging, the company said.

According to DuPont, the corn starch polymer can also replace polypropylene (PP) and polyethylene terephthalate (PET) in several applications, as long as the packaging, for example, is in contact with low moisture products and has a short life cycle.

Delaware-based DuPont posted revenues of US$30.7bn last year and earnings of US$2.99bn.

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Info. Technology - Regional - T-Systems to focus on Latin American banking industry

German IT services provider T-Systems, a subsidiary of Deutsche Telekom (NYSE: DT) plans to focus its commercial efforts in Latin America on the banking industry, and is particularly targeting banks and insurers, T-Systems Brasil VP of business development, pre sales and partnerships Luiz Carlos Hirayama told BNamericas.

"The financial sector in Latin America is growing a lot, so we are looking to find some companies in the banking and insurance area. Just as an idea, banks' IT investments here in Brazil are around 7% of their total revenue, and that amount is twice as much as the investments in IT made by any other sector," Hirayama said.

Because of its strong background in the automotive industry, starting with the IT department of Mercedes Benz and BMW, T-Systems is one of the leading IT services providers for the Latin American automotive and manufacturing industries, including auto-part firms.

In Latin America, T-Systems has three offices in Mexico with two data centers, 11 offices in Brazil with three data centers and three branches in Argentina with one data center.

Hirayama said the company planned to focus on Brazil, Mexico and the US, as Argentina is not growing as fast as the company expected.

"They are having some political problems [in Argentina], but we are very aggressive in our strategy to grow in these other three countries. For the next few years we don't have plans to open new offices. We will be only growing in these countries," the executive added.

With the main goal of becoming the leading IT provider for the automotive sector in Brazil and Mexico, T-Systems is also focusing on the Brazilian manufacturing and retail sectors and on the Mexican finance, government and services industries.

To support the growth, T-Systems plans to promote its Dynamic Services for SAP (NYSE: SAP). According to Stefan Getrost, sales and service manager for the Dynamic Services unit, this business model is about providing customers the computing capacity they need and paying for it as they use it.

"The automotive and manufacturing industries are the ones that are most demanding this model, mainly because they are more innovative compared to other industries, such as the banking sector which is much more sensitive about having data outside their data center," Getrost said.

As one of the main partners of SAP, T-Systems has over 60 SAP customers in Latin America, offering support to over 25,000 users and with over 100 implementations.

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Privatization - Ecuador - Analyst: Constitution isn't "document to watch out for"

Ecuador's draft constitution approved by voters over the weekend will not have a major impact on the OPEC-member country's oil industry, Eurasia Group analyst Patrick Esteruelas told BNamericas.

"I would say that the constitution is not really the document to watch out for when trying to map out the future of the oil sector in Ecuador," he said. "The outcome of the current contract talks between the government and the oil companies are a much more important benchmark."

The constitution gives the central government greater control over the economy. Although it does not cite the energy industry extensively, the document calls for sustainable development of natural resources, over which the state has exclusive rights, according to its text.

"To the extent that the constitution of course calls for greater state control over so-called strategic sectors including oil, it does pave the way for greater state intervention in the future," Esteruelas said. "But that's something we've already been seeing in ongoing contract negotiations."

CONTRACT NEGOTIATIONS

Talks between the government and oil producers entail converting existing participation contracts into service provider ones, where the state would reimburse companies for their operations.

Companies, which in principle have agreed to talks with the government, are holding out for terms. "At the moment we are at a complete standstill," Esteruelas said.

Andes Petroleum, the largest private sector producer of crude in Ecuador, has inked a one-year "intermediary" contract that reduces windfall taxes to 70% from the normal rate of 99%. At the end of the contract year, Andes Petroleum must enter into a service provider contract with the government.

Other companies such as Repsol YPF (NYSE: REP) want to discuss new contracts now rather than enter intermediary deals that could create additional uncertainty, Esteruelas said.

Companies want service provider contracts to offer a variable payment model reflecting operating costs as well as past and future investments. The government, however, is leaning toward a fixed fee that might not reflect future investment opportunities.

"Until both sides essentially are able to come to an agreement on the details and the terms of the new service contracts, frankly I don't see any progress whatsoever," the analyst said.

"The distance is pretty huge," he said of the government and company positions. "In terms of overall fee charges or prices, you could be talking of anywhere between US$30/b and US$60/b. So it's quite a gulf."

Meanwhile the likelihood that companies will sign service provider contracts becomes more remote every day, as they would have to pay past-due windfall payments upon entering a new contract model. Ecuador increased windfall taxes to 99% in October 2007.

For example, Andes Petroleum was forced to pay US$100mn when it signed the new deal in past-due taxes. "The longer you wait, the greater the chance that you may have to owe the state in past-due taxes essentially the value of the entire block you're holding onto."

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Electric Power - Chile - GNL Mejillones: Decision on permanent tank 6-9 months away

The GNL Mejillones consortium building the regasification terminal in northern Chile expects to decide on whether to build a permanent onshore LNG tank in 6-9 months, group CEO Frederik Janssens told BNamericas.

The consortium had previously said it would decide on the long-term future of the project before the end of the year.

Chile's state copper miner Codelco and multinational energy company Suez each own 50% stakes in the JV that is constructing the US$500mn temporary terminal in the northern Chilean port of Mejillones.

Suez officials have stated that a decision to build a permanent tank would depend on power clients' willingness to purchase LNG-based generation as new capacity from cheaper coal-based generation will start coming online on the northern SING grid in 2012.

Chilean officials said last week that LNG to arrive at the GNL Quintero LNG regasification facility being developed in region V could enter the country at US$22/MBTU. GNL Quintero is expected to begin initial operations in 2Q09.

Meanwhile, the GNL Mejillones project is on track and advancing as planned. The company said in January that it is aiming to start operations in January 2010.

The terminal has send-out capacity of 5.5Mm3/d, enough to produce 1.1GW of power, and the JV has signed three-year contracts with copper miners in the region to supply enough gas to power 400MW starting in 2010.

LNG will at first be stored in a floating unit that will be permanently moored to the terminal's jetty.

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Mining - Brazil - CEO: Vale still in price negotiations with Chinese steelmakers

Amid rumors that Brazilian miner Vale (NYSE: RIO) would be increasing its ore prices, company president Roger Agnelli clarified in a press conference that the world's largest iron ore producer is still in negotiations with Chinese steelmakers.

"In China, our traditional clients have always had long term contracts," Agnelli said Friday. "But what's happening now is that new clients, usually mid and small-sized steelmakers, have been coming to Brazil to buy ore on the spot market and this is resulting in a market unbalance."

The Vale CEO said contract negotiations are too complex to talk about with the media.

"Contract negotiations vary. There is a different contract for each customer, a specific type of quality and specific region. It's not something simple," he said.

Agnelli said Australian iron ore companies have an advantage when it comes to pricing due to a freight differential because of their proximity to China. Instead of long term contracts, however, Australian miners have been selling ore at spot prices.

Meanwhile freight prices have been plummeting and the market is starting to adjust.

Agnelli also spoke of his last trip to Asia when he told clients that Vale had to bring prices charged to Asian clients up to par with European prices.

"This was spoken in a calm and open manner," he said. "We have been negotiating. What I can say now is that talks continue. Our utmost respect to our clients is absolute, our long-term view remains."

Regarding the rumor that Vale could be halting shipments of iron ore to China, Agnelli said this is absolutely untrue. In fact, he said the company does not have a single tonne to spare at Vale's ports scattered around Brazil.

"We don't have even one extra tonne of ore at our ports," said Agnelli. "In fact, we have been setting records in iron ore transportation."

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Oil & Gas - Bolivia - Unrest forces delay in YPFB Vнbora drilling campaign

Unrest in eastern Bolivia forced state oil and gas company YPFB to delay the early-August start of a new drilling campaign in the Víbora field in Santa Cruz, a company official told BNamericas.

YPFB "probably" will start installing the rig in the second week of October in time to begin drilling on October 27-28, the official said.

The company will drill well 34 to a final depth of 4,500-5,000m, which could take about 45 days. The next well, 35, would require 55 days work for roughly 4,000-5,000m of drilling.

"It's already been proven in studies there's solid potential for hydrocarbons in the area," the official said.

YPFB will drill with a rig provided by its Venezuelan counterpart PDVSA.

Meanwhile, unrest has delayed the delivery schedule for a second PDVSA rig to the end of 2008 from the first half of October, the official said.

"Once problems are resolved, this rig along with others will be on their way," the official said.

YPFB said in July it would form a service subsidiary to manage the Venezuelan rigs, which could increase to five by the end of 2009.

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