A new blockchain consortium is to be created by Sinochem and PetroChina, two state-owned Chinese oil firms. The group hopes to raise $15 million to build a blockchain platform for the petroleum trade, according to a report by local media.

Though there are reportedly other companies involved, from China and internationally, only the above two are named. Interestingly, the two have more in common than both being state-owned.

The upcoming blockchain platform could be similar to the post-trade oil platform VAKT. VAKT counts BP, Shell, and Equinor as long term supporters with Chevron, Total and Reliance joining a month after launch. It aims to streamline post-trade processes with a transparent, immutable blockchain platform.

Blockchain is not new in the petroleum industry as it breaks the “paper” trading model of oil and gas companies and commodity traders to move to a more transparent, convenient and cheaper “electronic” model.

In February 2018, it took only 25 minutes, 86% less than usual for VAKT to verify the transaction of delivering a shipment of crude oil to CHEMCHINA,

China is one of the countries with the prospect of the “blockchain + petroleum” application. As China’s oil imports rank first in the world and its trade market is huge. According to data released by the General Administration of Customs, China’s oil imports exceeded 400 million tons in 2018, reaching 402 million tons, an increase of 9.0% over the previous year.

It is predicted that China’s crude oil imports will rise to 616 million tons in 2035, and natural gas imports will also reach 200 million tons of oil equivalent, 2.6-fold as much as that of in 2017.

As a national strategic industry, petroleum and gas have long been under the strict supervision of regulators. However, due to its difficulties in tracing and opacity, regulators are unable to inspect the data in real-time. For petroleum and gas companies, “data sharing” can bring better communication and greater transparency in global cooperation and complex lawsuits.