The stock of Royal Dutch Shell plc (ADR) (NYSE:RDS.A) closed at $65.52 gaining 2.22% in yesterday’s trading session. Shell and BP plc (ADR) (NYSE:BP) are part of a consortium that is currently focusing on the development of a blockchain-based digital platform for energy commodities and if all moves according to plan the trading might kick start by end of 2018.
Norwegian oil firm Statoil ASA(ADR) (NYSE:STO), Mercuria and ING Groep NV (ADR) (NYSE:ING) are the other members of the consortium. Blockchain technology has over the years been using a shared database that updates itself in real-time. It is also capable of processing as well as settling transactions in minutes using computer algorithms and the best part is that it doesn’t require third-party verification.
The commodities analyst at Dubai-based lender Emirates NBD PJSC, Edward Bell, opined, “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.”
Similar efforts for an energy trading platform have been put on trial for quite some time now, but they have failed to take off. Bell expressed confidence that the latest bid with backing from Shell, BP and the banks may have witnessed immense success than when it were an independent party wooing gas and oil companies to make use of it.
This new venture is dependent on regulatory approvals and incase all moves according to plan it might end up being run as an independent entity. The target of this platform is to reduce the costs of physical energy trading and cut down on the administrative operational risks. It is also to help improve reliability and efficiency of back-end trading operations.
Analysts have praised the recent move saying that it will move a long way towards helping generate high revenues to aid in making major expansions in the sector. All of them agreed that challenges would pop along the way but the way they were handled would determine the overall success.