China’s Sinochem Energy Technology Co. Ltd., a subsidiary of state-owned multinational conglomerate Sinochem Corp., has successfully completed the shipment of gasoline from China’s Quanzhou City to Singapore using blockchain technology. According to Sinochecm, this marks “the first time that blockchain applications have been applied to all key participants in the commodity trading process.” However, the company points out its first blockchain shipment was carried out in Dec. 2017 whereby it imported crude oil from the Middle East. Sinochem claims how the digital bill of lading and smart contracts could save 20%-30% on financial costs.
Whereas paperless trade has been around for decades, guaranteeing security and authentication of documents remains some of its major challenges. Blockchain, the tech that enables cryptocurrencies, is a decentralized network that is said to be impossible to tamper with.
Blockchain technology uses distributed ledgers to enable real-time transactions in digital assets. The technology has positively impacted physical commodity trading by allowing stakeholders to track the supply chain and verify the origin and quality of commodities, making the whole process more streamlined and smarter.
But China’s energy sector is by no means the only one to embrace blockchain technology. Back in 2019, more than a dozen oil and gas companies, mainly from the United States, came together and created Blockchain for Energy’s oil and gas consortium.
Currently, Blockchain For Energy has 15 members, including oil and gas heavyweights, namely Saudi Aramco (ARMCO), the American Petroleum Institute (API), Exxon Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX), ConocoPhillips (NYSE:COP), EQT Corp. (NYSE:EQT), Devon Energy Corp. (NYSE:DVN), Schlumberger Limited (NYSE:SLB), Chesapeake Energy Corp. (NASDAQ:CHK), Pioneer Natural Resources (NYSE:PXD), Hess Corp. (NYSE:HES), Equinor ASA (NYSE:EQNR) Repsol S.A. (OTCQX:REPYY), Worley Ltd. and Katalyst Data Management.
In its mission statement, the consortium suggests it will severely disrupt the oil and gas industry.
‘‘Blockchain For Energy is reinventing the oil and gas industry’s workflow process by building a forward-thinking community that creates inventive ways of leveraging blockchain technology to maximize efficiencies, reduce costs, improve timelines, and drive industry transformation through collective synergies,” the statement reads. “Through industry collaboration and execution of several multi-function use cases across the oil and gas value chain, we are identifying, testing, and deploying use cases that prove value generation from combining blockchain with innovative technologies. Through these cases, we are positioning ourselves and our members to drive optimal blockchain solutions at scale for the industry,” the statement adds.
Based in Houston, Blockchain For Energy, or simply B4E, helps its members advance and transform the way records, transactions and data are managed in the energy industry. The consortium also supports opportunities for lower carbon energy through collaboration and proactive development of new technologies.
While B4E launched in 2019, many of its projects have been using other platforms including Data Gumbo, BlockApps and GuildOne. However, last year, the group achieved a key milestone by launching its own platform and permissioned blockchain network, “The B4E Network & Platform allows smart contract blockchain solutions to have a production infrastructure that is safe, secure, compliant, and future-proofed for Web3,” B4E’s CEO and President, Rebecca Hofmann, said during the services launch.
The Web3 space is moving fast. And this provides unparalleled flexibility and choice among enterprise-proven capabilities. The B4E Network & Platform provides the ability to access the latest Web3 technology options as the space continues to evolve,” Hofmann added.
Other Blockchain Use Case In Oil & Gas Industry
B4E might be the biggest blockchain network created by energy companies; however, it’s not the first. Back in 2018, Bp Plc. (NYSE:BP), Shell Plc. (NYSE:SHEL) and Equinor formed a consortium with banks and launched a blockchain platform called Vakt. This platform is aimed at digitalizing the trade in energy commodities, simplifying the complex transaction process, and reducing operational risks.
In the same year, California-based Petroteq Energy Inc., together with First Bitcoin Capital Corp., launched PetroBLOQ, the first blockchain-based platform developed exclusively for the oil and gas industry. PetroBLOQ streamlines operations, eliminates unnecessary intermediaries, reduces the time intended to perform transactions, and also cuts operational costs.
Meanwhile, a flurry of blockchain startups that serve the energy sector has come up.
Australian Power Ledger is championing the new, middleman-less P2P energy trading model by organizing local communities into the so-called “microgrids” i.e. local power grids that are nearly fully autonomous and independent of the national electricity grid.
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WePower is another Australian-based blockchain energy startup. WePower connects energy buyers (end users and investors) directly with green energy producers and creates an opportunity to purchase energy upfront at below market rates.
Other notable blockchain startups in the energy sector are Everledger and Greeneum, Everledger has developed a blockchain-based app that rewards consumers for recycling portable batteries found in phones, laptops and other devices while Israel-based Greeneum incentivizes customers to save energy and adopt eco-friendly lifestyles by awarding carbon credits in the form of cryptocurrency for every watt-hour of renewable energy generated.
By Alex Kimani for Oilprice.com
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