Energy Company（Shell）Plans To Use Blockchain For Crude Oil Trading

2022-04-20, 09:42

The use of blockchain technology now covers all sectors.

Shell is breaking into the blockchain network and devising ways to integrate blockchain apps into its oil and gas sector operations.

Shell, formally known as Royal Dutch Shell, was founded in February 1907 by Hugo Loudon.

The main activities of Shell are oil exploration, processing, and trading.

Shell carries out its oil and gas activities in several countries, including Nigeria, Australia, South Africa, and Canada.

Among the plans of Shell is to leverage blockchain technology for trading.

The top of the plans for Shell to use blockchain for trading is the launch of the VAKT consortium.

The VAKT consortium creates partnerships with oil and gas giants like BP, Mercurial energy Group, ABN Amro, ING, and Gunvor Group.

The blockchain digital passport is another plan by Shell to integrate blockchain technology into its operations.

The use of blockchain technology cuts across all sectors of the economy, and it includes Big brands and giants across the tech industry, retail, art and craft, and in recent times, the oil and gas industry.

Royal Dutch Shell (changed to Shell PLC in January 2022) is a giant and a household name in the oil and gas industry. Adopting blockchain technology in its operations opens a new frontier for decentralized apps in the oil and gas industry.

This article shall give us background details about the activities of Royal Dutch Shell (Shell) and the plans in place by this oil and gas giant to use blockchain in its trading and other operations.

Firstly, let's take a brief look into what shells are and what they do.

Shell As A Corporate Organization

Shell PLC is a British multinational oil and gas conglomerate founded in February 1907 by Hugo Loudon.

As of 2021, Shell has over 86,000 direct and indirect employees and a revenue of $261.5 billion. The corporate headquarter is located in London, United Kingdom.

Shell PLC is a multinational and public limited company with several subsidiaries, including Shell Energy, Shell Oil Company, Pennzoil, Shell Chemicals, Shell Foundation, and Shell Bitumen.

Shell's main activity is oil and gas exploration and trading. These activities cut across several countries, including the Czech Republic, China, Nigeria, Australia, South Africa, Canada, and Pakistan.

According to Shell, its main aim and objective are to help meet the world's growing demand for energy in economically, environmentally, and socially responsible ways.

Shell’s Plan In Using Blockchain

In this section, we shall look at the various plans and activities (already on the ground) by Shell to integrate the use of Blockchain technology in its operation.

At the top of the plan is the need to use blockchain apps for oil and gas trading.
Trading in the oil and gas industry is quite cumbersome.

The process cuts across several channels and industries. Primarily, the entire process is characterized by trade and settlement anomalies.

Furthermore, the oil and gas giant made it known to the public that the plan was founded on three distinct pillars. That is to reimagine current processes, create new value propositions, and establish new markets.

Shell Plc is currently embarking on several projects ranging from proof of value to proof of concepts and pilots in leveraging blockchain technology across all its operations and subsidiaries.

The plan includes forming new ecosystems, creating new business opportunities, investing in startups, and establishing joint ventures and consortia.

One of those consortiums that will Change the trading process in the oil and gas industry is the VAKT consortium.

The VAKT Consortium

To actualize this plan, Shell, alongside other giants in the industry such as BP, Mercurial energy Group, ABN Amro, ING, and Gunvor Group, formed a consortium and decided to adopt VAKT as its blockchain platform for trading.

Shell is expected to leverage the blockchain background of VAKT to eliminate multiple payment processes and paper methods.

The plan is to use VAKT to transform the entire trade cycle and use its single source of truth for the trade life cycle. The blockchain platform was initially built for physical post-trade processing.

The adoption of the platform by Shell and other institutions will help provide solutions and end the long-age problems of trade inefficiency in the oil and gas sector.

The consortium that saw the establishment of VAKT as the first enterprise-level blockchain platform is expected to transform the global commodities trading industry.

The blockchain background of VAKT comes with a digital and decentralized platform. This platform will enable all parties involved in the consortium or trading to manage the processes on a single server.

All the organizations that formed the consortium brought their business logic and API to building the platform.

The project is regarded as unprecedented and is expected to improve trading and ensure transparency and faster processing.

Blockchain Digital Passport

Another plan by Shell is the introduction of the decentralized digital passport system. This pilot project will allow the digital passport to authenticate equipment, products, and parts.

Leveraging blockchain technology, you can create a digital passport for your equipment. The digital passport will provide a system that enables data to be disclosed between certain parties in a supply chain.

This decentralized pilot project is expected to enhance the tracking and management of equipment and products throughout the supply chain lifecycle.

The project will see Shell partnering with contractors, manufacturers, and inspectors.

It is expected that the use of the digital passport will reduce cost, ensure transparency, increase productivity and ensure safer operations within the industry.

Conclusion

As a prominent member in the oil and gas industry, Shell continues to roll out several plans and strategies to ensure transparency and ease in its operations.

The adoption of blockchain technology aligns with their organizational goals and shows they are moving with the technological trend.

The partnership and consortiums are necessary (a tree can not make a forest) and will bring about unprecedented achievements in the oil and gas industry.

Author: Valentine A., Gate.io Researcher
This article represents only the researcher's views and does not constitute any investment suggestions.
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