After backing a blockchain-based trading platform last year, now Shell has gone a step further into what’s possibly the hottest tech segment right now, scooping up a minority stake in a startup dubbed Applied Blockchain.
Applied Blockchain has been around for three years now, and has clients from the banking, telecoms, carmaking, manufacturing, and aerospace industries. This is the company’s entry into energy.
The size of the deal was not disclosed.
Blockchain is making its way into oil and gas slowly but surely. Last November, media reported that a consortium involving Shell, BP, and Statoil is working on the development of a blockchain-based energy commodity trading platform, along with three large commodity traders—Gunvor, Koch Supply & Trading, and Mercuria, Reuters reports, citing the consortium.
The platform, which has financial backing from Dutch ABN Amro, ING, and French Societe Generale, should launch by the end of this year.
In January 2017, Mercuria, in partnership with ING and Societe Generale, announced it was preparing the first oil trade using blockchain technology. The trade involved an African crude shipment to Mercuria shareholder ChemChina. When he announced the test at the Davos World Economic Forum, Mercuria’s CEO, Marco Dunnand, said, “The energy industry will have to digitalize more and more in oil production, refining, shipping. So traders will also have to participate.”
The purpose of digitizing commodity trading is to save costs as well as time, and to simplify the whole process of trading. As a senior ING executive said in February following the successful test trade with the Mercuria shipment, “The commodity finance industry is hampered by nature by inefficiencies and outdated procedures. By applying blockchain technology, we expect that we can eliminate a lot of these, making the overall process faster and more cost effective and the tests we have been able to carry out have proved this.”
By Irina Slav for Oilprice.com
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