Royal Dutch Shell Plc (ADR)(Nyse:RDS.A) Embraces Blockchain Technology with Investment in Startup


Reports indicate that Anglo-Dutch oil giant, Royal Dutch Shell plc (ADR)(NYSE:RDS.A), has acquired a minority interest in Applied Blockchain, a startup focused on the blockchain technology. Financial details of the deal were not disclosed. Applied Blockchain is based in London, United Kingdom.

At the moment Applied Blockchain is developing smart contracts and distributed ledger technology. The Canary Wharf-based startup is collaborating with a telecommunication firm that serves some of the biggest airlines in the world, Sita, to develop a distributed registry for drones. Applied Blockchain is also developing a banking system based on blockchain in collaboration with Babb, a financial technology startup.

Blockchain Consortium

This is not Shell’s first dalliance in the blockchain technology as the oil giant had teamed up with another oil major, BP plc (ADR)(NYSE:BP), as well as other sector players to develop an energy trading platform based on blockchain. According to the chief technology officer of Royal Dutch Shell, Johan Krebbers, blockchain applications have the capacity to revolutionize the industry by streamlining and simplifying processes and consequently raising the efficiency levels. This would also lead to the development of new business models.

According to Deloitte analysts some of the potential blockchain applications were in areas such as smart contracts, supply chain management, record management and cross-border payments.

“A secure system that mitigates risk, increases transparency, provides an audit trail, and speeds up transactions at a significantly reduced cost may be appealing to oil and gas companies,” said Deloitte analysts.

Solar Energy Sector

The acquisition of a minority interest in Applied Blockchain by Royal Dutch Shell comes in the wake of the oil major making a return to solar energy by purchasing a stake in a solar firm based in the United States, even though, more than a decade since the Anglo-Dutch oil giant exited the sector. Shell will fork out approximately $217 million for a 43.86% stake in Silicon Ranch Corp which is based in Nashville, Tennessee.

The solar firm focuses on developing and operating solar power generating facilities across the U.S. Its total generation capacity currently stands at 880 megawatts. After four years Royal Dutch Shell will also be able to raise its ownership stake. Last year in November Shell said it plans to double the amount invested in renewables to between $1 billion and $2 billion in the next four years.

Before quitting the solar industry more than a decade ago Shell had entered the industry in 2002 when it bought Siemens Solar. It sold the entire business a little over half a decade later.

On Friday shares of Royal Dutch Shell fell by 0.30% to close the day at $69.83 per share.

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