Sinochem Energy partners to build blockchain platform

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Sinochem Energy Technology Co Ltd is partnering with Macquarie Group and Royal Dutch Shell to build a new energy blockchain platform, according to a new report. A memorandum of understanding has been reached between the three partners that will build this platform for crude oil which will be used for trades and settlements.

The subsidiary of the state oil and chemicals firm has valued the new platform at 100 million yuan, ($14.1 million). According to the source, “Sinochem group has set an internal deadline for the technology firm to bring in strategic investors by the end of September, or the latest October because the firm is in deep loss.”

This appears to be an attempt by the Sinochem technology unit to bolster its success. Since launching two years ago, the company has been floundering due to heavy spending while receiving minimal revenue in return.

This technology firm was launched in August 2017 with a registered capital of 1 billion yuan ($140 million). This money was earmarked for a 2 billion yuan project intended as part of a partial privatization of Sinochem’s traditional energy business, which was later put on hold due to a lukewarm reception by the market.

Currently, Sinochem has already invested over 600 million yuan into Sinochem Energy Technology. At one point the company had over 1,000 workers but has seen its staff cut in half.

The new digital platform, which will be referred to as Gateway, is an attempt to turn the tide. Using blockchain technology, it is hoped that this new platform will reduce the inefficiencies related to trade and settlements while improving transparency and greatly reducing the risk of fraud.

These three partners are not the first to create a digital platform for energy trading. The Vakt platform was created as a conglomeration of several oil giants, including BP, Shell, and Norway’s Equinor, along with three trading houses, Mercuria Energy Group, Koch Supply and Trading, and Gunvor.

This could be why Sinochem and the others are reaching out to several other firms to join in their new blockchain platform. According to sources, this is likely to include PetroChina Co and COSCO Shipping Energy Transportation Co Ltd, a subsidiary of COSCO Shipping.

No official date was announced as to when the platform will go live. Right now the group seems focused on securing additional partners to join in the venture.