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Shell & BP Consortium Purchases Stake in Applied Blockchain

  • 25 January 2018
  • Cas Proffitt

As an industry, Energy has a long history of being bogged down in settlement and clearing, supply chain inefficiency, and overbooking of freight space. In an effort to resolve these issues, a consortium between Royal Dutch Shell and BP with several other industry players has increased their focus on providing a blockchain-based solution.

Shell recently purchased a minority stake in Applied Blockchain for an undisclosed amount. The smaller firm is working with blockchain technology for applications in the energy commodities trading space over the next few years, according to a report by Reuters. The consortium platform is expected to be started by the end of Q4 2018.

Energy Voice states that while the purchase was only a minority stake, it enables Shell to support the growth of a competitive firm while also promoting innovation within their realm of operations.

When asked about the partnership, Applied Blockchain CEO divulged the following:

“Our experience as one of the earliest companies delivering blockchain solutions into production for both start-ups and corporates has provided us with a unique perspective on the value, and challenges, associated with the technology in the real world.”

What does this exchange of stake mean for the industry?

In early 2017, OilPrice reported that Mercuria, Gunvor, and Koch Supply and Trading were set to be taking part in the world’s first oil exchange on the blockchain.

The test was carried out with these details made public via the Mercuria blog (Feb 22nd, 2017):

Applying distributed ledger technology to the commodity trade financing chain can prevent issues such as documentary fraud and allows for the digitalization of assets. The platform also boosts operational efficiency and quality by introducing auto-checking of documents.

By advancing upon the progress from this initial test, the Shell/BP consortium is paving the way for future energy commodity exchanges to be resolved on the blockchain, rather than legacy systems.

The exchange of stake also entitles Shell to information from Applied Blockchain that can assist them in developing their exchange platform. As with payments, cross-border execution and borderless information storage allow for honest business to thrive, while making it more difficult for fraudulent activities to occur.

How did banks receive the test results from Mercuria?

The two banks involved in evaluating the test results concluded that:

The test proved that there were significant speed, cost and risk benefits to be achieved.

The banks agreed that the energy commodities transfer business is riddled with security, cost, and time inefficiencies that blockchain technology can help to resolve through cooperation.

Would you prefer you oil documented via blockchain or legacy systems? Let us know in the comments below!

About Cas Proffitt

Cas is a B2B Content Marketer and Brand Consultant who specializes in disruptive technology. She covers topics like artificial intelligence, augmented and virtual reality, blockchain, and big data, to name a few. Cas is also co-owner of an esports organization and spends much of her time teaching gamers how to make a living doing what they love while bringing positivity to the gaming community.

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