Reuters reports that Chevron, Total and Reliance have joined a growing list of mainstream energy bigshots eyeing blockchain technology to streamline the commodities trading industry. This adds to BP, Royal Dutch Shell, Equinor, Gunvor, Mercuria and Koch Supply & Trading, who are also backers of the same platform called Vakt.
Historically, the logistics involved in commodities trading lacked elegance; with tons of paperwork that has to be managed by the individual parties involved in the transactions. However, sights set on the distributed ledger technology by a growing number of stakeholders within the oil and gas sector reveal an opportunity to scale processes involved in the value chain.
According to the article, blockchain is described as a technology that provides a “solution to trade and settlement inefficiencies… improve transparency and reduce the risk of fraud”.
A report in 2016 reflected on the summit held by the Group of Eight (G8) highly industrialized nations to include Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States who drew on the conclusion on the necessity to establish transparency in order to fight corruption in the sector at the political, social and economic level. The report further noted that “as noble as the concept may be, when it comes to implementation, the political commitment to transparency seems to fall short of its aspirations”.
Blockchain has the ability to cut through the political inefficiencies thereby stem the tide of corruption that impedes transparency in the oil and gas sector – across borders – and reconstitute stakeholder commitment to a wholesome economy.
In adopting emerging technologies to address some of the problems plaguing the industry, Total’s head of trading and shipping Thomas Waymel said, “Total has been supporting industry initiatives to digitize cargo post-trade processes for some time… [we] view them as a major step forward towards safer, faster and cheaper logistical operations.”
Last month, Abu Dhabi National Oil Company (ADNOC) revealed that it is exploring the use of blockchain in its oil supply chain. Digital Unit Manager Abdul Nasser Al Mughairbi said that it could be “the first application of blockchain in oil and gas production accounting anywhere in the world”.
This year may see more industrial scale application of the distributed ledger, especially in areas desperately in need for better data coordination/validation, transparency and “dumping of paperwork” processes among inter-dependent systems across organizations in a value chain.
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