Dutch and French financial organisations ING and Société Générale are considering the benefits the distributed ledger technology may bring to liquefied natural gas production.
The two banks are already in negotiations with LNG traders discussing the prospects of blockchain implementation in the traditional energy production cycle, Reuters reports. Blockchain might find its place in the electronic system of transactions processing and supply accounting. It would allow all parties to track information on deliveries through the network without the need of verification and intermediaries.
“LNG is an area we definitely want to focus on because it's a growing market but at the same time it's controlled by a few very important players,” explained Patrick Arnaud, ING's managing director for trade and commodity finance. According to him, the blockchain-based platform could be put to test within the next few months.
For both ING and Société Générale, it is not the first blockchain project in the energy field. In February, the banks offered the Mercuria trading house to use their blockchain platform for selling an African oil cargo to China. The trial run was successful: according to the parties, the implementation allowed Mercuria to reduce the time of transactions from three hours to 25 minutes and cut storage and transportation costs by 30%.
Société Générale has been studying the distributed ledger technology for several years. The bank takes part in a number of international blockchain consortia and projects. Last summer, together with six other European financial institutions the bank signed an agreement to create a post-trading blockchain-based system for small and medium-sized enterprises. The new solution is expected to reduce transaction costs, increase the speed of settlement and clearing operations and maintain high safety standards.