A consortium, including BP and Royal Dutch Shell, plans to develop a blockchain-based digital platform for the trading of energy commodities, with the platform expected to begin late 2018.
The consortium also includes Statoil, Gunvor, Koch Supply & Trading, and Mercuria, as well as banks ABN Amro, ING, and Société Générale.
Blockchain technology relies upon a shared database that will update in real-time, and is also capable of of processing and settling transactions within minutes by using algorithms, without the necessity of third-party verification.
“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,” reported Edward Bell, Commodities Analyst at Emirates NBD PJSC.
Although similar projects have not been very successful in the past, Mr Bell is confident that with backing from BP, Shell, and the banks, the platform “may have more success than if it were an independent party trying to convince oil and gas companies to make use of it.”
Mercuria has also publicly advocated the implementation of blockchain technology in order to reduce costs in oil trading.
The new venture is still in need of regulatory approvals, and would run as an independent entity, the companies said in a statement.
“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 statement read.