ABN Amro, ING and Societe Generale are joining forces with oil giants BP, Shell and Statoil, as well as several trading houses to build a blockchain-based digital platform for energy commodities trading.
Slated to go live by the end of next year, subject to regulatory approval, the real-time distributed platform will manage physical energy transactions from trade entry to final settlement.
The partners, which include trading houses Gunvor, Koch Supply & Trading, and Mercuria, say that they plan to let the venture run as an independent entity open to the industry.
The move marks an effort to move away from traditional and cumbersome paper contracts and operations documentation to secure, smart contracts and authenticated transfers of electronic documents.
This, the partners hope, will reduce administrative operational risks and costs of physical energy trading, and improve the reliability and efficiency of back-end trading operations for all supply chain users, while also opening the door to innovative funding and financing.
In the longer term, the plan is to lead the migration of all forms of energy transaction data to the blockchain, improving data quality, strengthening security and increasing the speed of settlements industry-wide, while reducing the cost for industry participants.
Anthony van Vliet, global head, trade and commodity finance, ING, says: "Marquee brands and competitors in the energy, trade and banking industry sharing one vision gives us a great opportunity to transform processing in the energy trade commodity sector."
ING, SocGen and Mercuria have previously teamed up to test the use of blockchain technology for a live oil trade.