British Petroleum is experimenting with a blockchain-based oil trading platform

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British Petroleum (NYSE:BP) is a multi-national oil and gas supermajor, and the sixth largest energy company on the planet. The company is over 100 years old and is not afraid of reinventing the wheel. And that’s exactly what they’re doing.

As blockchain forced its way into nearly every industry, BP took note. In October 2017, BP begun experimenting with a blockchain-based oil trading platform, with the goal of implementing “practical and ethical” uses of the technology.

With BP’s forward-thinking mindset and vast amount of resources and assets, the company is always looking to learn about and adopt new technology.

“We are not abandoning technology efficiencies we’re developing on current platforms,” BP’s head of strategy for IST, Mike Leonard, told the S&P Global Platts Digital Commodities Summit in London in November.

“We’re seeing this as complementary…We don’t have all our eggs in blockchain, but nor do we want to avoid the topic or not take part in it,” he said. “But the more we [talk about blockchain within the company, the more] we’re finding new opportunities to explore different areas of our current technology, which is also exciting, so we may find this emerges for BP specifically in different ways than we expect.”

BP is testing the blockchain concept. It signed up in November to a consortium with fellow oil and gas companies Shell and Statoil, trading houses Gunvor, Koch Supply & Trading and Mercuria, plus banks ABN Amro, ING and Societe Generale, to co-develop a blockchain-based digital platform for trading energy commodities. The platform is to be designed and stress-tested by its investors but run independently.

“This is about reliability and reducing costs. Many of our back office functions appear not to have changed since 1985. We’re after bottom line savings, but also how this can free up resource elsewhere in the business,” Leonard told the summit. The aim is to move away from cumbersome paper contracts to the authenticated transfer of electronic smart documents.

Most people seem to think that Blockchain technology means Cryptocurrency. But they are not the same. At its heart, Blockchain refers to a constantly growing list of Blocks of data that are connected to each other and encrypted in such a way that tampering with one block affects the entire chain. Hence the blocks cannot be changed.