Blockchain could make a big splash in the global supply chain of big oil companies.
VAKT, a London-based blockchain company that tracks physically traded commodities, is trying to effect such a move by picking up primtetime partners in the oil industry. Already, Royal Dutch Shell (RDS.A - Get Report) (RDS.B - Get Report) Equinor (EQNR - Get Report) , and Stock of the Day BP plc (BP - Get Report) are looking to bolster their supply chains with the technology.
"Launching into our first market with such high-calibre first users is a transformational moment for us and the industry," VAKT CEO John Jimenez said. "But it's just the start: success for a blockchain solution depends on widespread adoption and we're looking forward to seeing the ecosystem grow."
The technology will track contracts and allow each of the companies in the consortium to track the same ledger.
"Digitalization is changing how the energy value chain works. It's an exciting time," said Andrew Smith, EVP Trading & Supply, Shell International Trading and Shipping Company Limited. "Collaboration with our peers and some of the industry's key players is the best way to combine market expertise and achieve the scale necessary to launch a digital transaction platform that could transform the way we all do business. Ultimately the aim is improved speed and security, which benefits everyone along the supply chain from market participants to customers."
Indeed, blockchain's adoption has helped other industries control their supply chain management, most notably Walmart (WMT - Get Report) , which has employed blockchain for its leafy green tracking. The necessity for a company like Walmart to employ the blockchain across its company could provide a blueprint for the oil industry.
Indeed, blockchain's adoption has helped other industries control their supply chain management, most notably Walmart WMT, which has employed blockchain for its leafy green tracking. The necessity for a company like Walmart to employ the blockchain across its company could provide a blueprint for the oil industry.
"Any time there is a collection of actors that need to work together but don't trust each other, that creates a trust gap, they all want to keep control of the data," Kevin Werbach, professor of business ethics and legal studies at the University of Pennsylvania's Wharton School of Business told Real Money. "That leads to all kinds of errors and inefficiencies."
To read more about the impact of the burgeoning blockchain technology across traditional industries, check out Real Money's coverage of all the news surrounding the oil industry, and Stock of the Day BP, after the G20.