BP experiments with blockchain for oil and gas tradingWritten by admin , October 4th, 2017 // Oil & Gas
BP is experimenting with blockchain to make oil and gas trading more efficient in the latest sign of big companies bringing the database technology into mainstream use.
The UK group said it was investing in pilot programmes to explore the “practical and ethical” implications of using blockchain in the energy sector.
“There are uses for blockchain that could give us a competitive advantage,” said David Eyton, head of technology for BP. “Blockchain can be much more efficient in terms of speed and verification of transactions.”
Blockchain — a digital ledger system that records online transactions — is often seen as a disruptive “anti-establishment” innovation associated with digital currencies, such as bitcoin, which rely on the technology.
However, BP’s interest shows that multinational companies are increasingly seeing opportunities for blockchain to streamline financial processes and cut back office costs by removing middlemen and invoicing from many transactions.
BP has been working with Eni, the Italian oil major, and Wien Energie of Austria on a pilot programme where blockchain trades have been run on an experimental basis, in parallel with live trading systems.
The three of them are now working with BTL, an Anglo-Canadian technology company, to commercialise the system. Other energy companies have also been invited to participate.
Mr Eyton said oil and gas trading was just one of many potential applications for blockchain across BP — externally and within the organisation — using traditional currencies rather than cryptocurrencies.
“In a big company, with lots of different corporate entities, you have to manage financial settlements and reconciliation between different parts of the business,” he told the Financial Times. “A lot of that lends itself to blockchain.”
Other examples of “traditional” industries adopting blockchain include AP Moller-Maersk, the Danish shipping group, which is using it in marine insurance contracts and Europe’s biggest banks, including HSBC and Deutsche Bank, in cross-border trade finance.
Andrew Woosey, a partner at EY who has worked with BP on its pilot programme, said blockchain could lead to “reduced risk, better protection against cyber threats and ultimately significant cost savings”.
But “further engineering and organisational effort” was needed to reach this potential, he said. Blockchain is part of a wave of digital technology being adopted across the oil and gas industry as a sector associated with greasy pumps and valves tries to modernise.
BP last month invested $10m in a fuel-supply partnership with Victor, an on-demand marketplace for private jet charters — giving the group a foothold in Uber-style digital technology that has the potential to disrupt all areas of the transport sector.
In June, BP invested $20m in a Californian artificial intelligence start-up called Beyond Limits, which is commercialising technology developed by Nasa.
Potential uses for artificial intelligence by BP range from analysis of seismic data in oil exploration to detecting safety defects in refineries.