BP, Shell lead plan for blockchain-based energy trading platform
A consortium including energy companies BP and Royal Dutch Shell
will develop a blockchain-based digital platform for energy commodities trading expected to start by end-2018, the group said on Monday. The logo of BP is seen at a petrol station in Kloten, Switzerland October 3, 2017. REUTERS/Arnd Wiegmann. Other members of the consortium include Norwegian oil firm Statoil, trading houses Gunvor, Koch Supply & Trading, and Mercuria, and banks ABN Amro, ING and Societe Generale.
Blockchain technology, which first emerged as the architecture underpinning cryptocurrency bitcoin, uses a shared database that updates itself in real-time and can process and settle transactions in minutes using computer algorithms, with no need for third-party verification. Mercuria has been a vocal advocate of implementing blockchain technology to significantly cut costs in oil trading. “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,” said Edward Bell, commodities analyst at Dubai-based lender Emirates NBD PJSC.
Similar efforts for an energy trading platform have failed to take off, Bell said, but added this latest bid with backing from BP and Shell and the banks, “may have more success than if it were an independent party trying to convince oil and gas companies to make use of it.” The new venture is seeking regulatory approvals and would be run as an independent entity, the consortium 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 said.
World needs new rules for powerful tech
Paddy Cosgrave, co-founder of Web Summit, attends an interview with Reuters in Lisbon, Portugal, whose annual Web Summit takes place in Lisbon this week, joins growing calls for tighter regulation of big technology firms especially after news that Russia may have manipulated the last U.S. election with political advertisements on Facebook. He said recent initiatives by European Commissioner for Competition Margrethe Vestager could bring big changes for big tech companies and help level the playing field in a sector which is having a profound impact on societies.
Vestager, who will speak at the Web Summit on Tuesday, has levied huge fines for unpaid taxes and unfair competition on big technology firms, including Apple, Google and Amazon in the past couple of years. “In economic terms these (companies) would appear to fall into a classic definition of monopolies,” Cosgrave told Reuters in an interview. “And if she (Vestager) is successful she will probably set the standard for the rest of the world and will usher in a fundamental change in how the largest and most profitable companies in the history of the world are treated. This changes the playing field for all other companies.”
Cosgrave said that new technology had been assumed by many to be just positive, but it often “can be incredibly disruptive”. He said the need for new rules was similar to past technological shifts such as the invention of cars. “We had an operating system that, by and large with some modifications every decade, worked for the last 200 years,” Cosgrave said. “And then suddenly, you’d have to be naive or have your head buried in the sand, to not realize that the very fabric of our society, certainly western society, feels like it’s getting pulled and stretched in weird ways. I think we need … a new operating system.”
Web Summit has grown into one of the world’s largest technology conferences, from 400 participants when it started in Dublin in 2010, to 59,000 participants this week. It started as a venue for tech startups and includes investors, but also increasingly politicians and regulators. U.N. Secretary General Antonio Guterres is scheduled to attend the Lisbon summit.