A major energy sector consortium has assembled to develop and launch a blockchain platform for trading commodities. The group bringing BP, Royal Dutch Shell, and Statoil into a partnership also counts
A major energy sector consortium has assembled to develop and launch a blockchain platform for trading commodities. The group bringing BP, Royal Dutch Shell, and Statoil into a partnership also counts Gunvor, Koch Supply & Trading, and Mercuria among its trading house members. Three global banks joined the effort: ABN Amro, ING, and Societe Generale. The consortium expects to launch the platform by the end of 2018.
The initiative centers on a real-time blockchain platform that tracks energy transactions from initial trade through final settlement. Members want to replace paper-based contracts and physical documentation with smart contracts and authenticated electronic transfers.
Edward Bell, a commodities analyst at Emirates NBD PJSC in Dubai, told Reuters: "Ideally, it would help to eliminate any confusion over ownership of a cargo and potentially help to make managing risk more exact if there are accurate timestamps to each part of the trade."
The partnership expects the platform to reduce industry costs, improve data quality and security, and accelerate settlements. The consortium will register the venture as an independent entity and pursue regulatory approval. "The platform aims to reduce administrative operational risks and costs of physical energy trading, and improve the reliability and efficiency of back-end trading operations," the group said in a statement.
Other companies are pursuing blockchain in energy markets. Energi Mine, a U.K.-based startup, launched a blockchain platform in late October aimed at spurring energy conservation through token rewards. The system issues ETK tokens to individuals and organizations that reduce consumption, whether by switching to public transit or installing efficient appliances. Energi Mine framed the effort as a way to reshape the $2 trillion global energy market through decentralization.
BP and Eni have run their own blockchain experiments centered on European natural gas trading. Utility companies including Enel SpA and RWE AG joined a trial in August that tested blockchain technology in wholesale power and natural gas markets. 23 utilities participated in total and paid 22,000 euros to fund the project's development.
