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Oil majors Royal Dutch Shell, British Petroleum (BP), and Statoil and a group of banks announced on Monday they had joined forces in a new venture seeking to launch a commodity trading platform based on blockchain technology. The partners expect the platform to go live by the end of next year. 

The consortium includes trading houses Koch Supply & Trading, Mercuria, and Gunvor, as well as banking institutions ING, Societe Generale, and ABN Amro. 

Mercuria is a Geneva-based commodity trader focused on the energy markets. It has been an active supporter of blockchain adoption, believing the technology could speed up processing and reduce trading costs. 

Edward Bell, a commodities analyst at Dubai-based lender Emirates NBD PJSC, was cited by Reuters as saying:

“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.”

Bell added there had been previous attempts to create an energy trading platforms based on distributed ledger technology (DLT) but they had all failed. However, the support of BP, Royal Dutch Shell and the banks bodes well for the new plan. 

“[This project] may have more success than if it were an independent party trying to convince oil and gas companies to make use of it,” said Bell. 

The consortium is now working with regulators to obtain approval. The companies said that the venture would operate independently. 

The partners said in their 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.”

BP has previously expressed its confidence in blockchain, saying on its official site:

“Blockchain could disrupt whole industries, by changing how trading is carried out and how transactions are processed and cleared. It could transform a sector such as banking, for example, where the banks currently act as intermediaries in the supply chain.” 

We reported earlier that Societe Generale, one of the members of the new energy-oriented consortium, has joined another group of banks that aim to facilitate blockchain cross-border commerce across Europe.