Platts: Russia gearing up for wider use of blockchain in energy sector

Mar 20, 2018

The Russian energy sector is hoping that new legislation is adopted this year to facilitate the use of blockchain technology, which could cut producers' operational costs by 3-5%. While there are already some successful pilot projects involving blockchain in logistics, introducing blockchain to trading is contingent on new legislation that will cover Russia's digital economy and may be passed later this year.

… Blockchain's introduction to trading is likely to take longer, although the technology could have a similarly impressive impact on efficiency. Darya Kozlova, a senior consultant with Vygon Consulting, estimated that it could reduce time spent on transactions by almost a third, and increase the availability and reliability of information. "This will reduce both costs and risks for hydrocarbons traders and create fairer quotes for each grade of oil," she said.

… Analysts do not expect Western sanctions to hinder blockchain's implementation in Russia because existing technology sanctions specifically target equipment used in offshore Arctic, deepwater and hard-to-extract oil reserves. The open-source nature of blockchain technology also protects it from potential future restrictions.

"This means that the technology is available to everyone on the planet who has access to Github and other open source sites. Therefore Western sanctions do not prevent the introduction of blockchain in Russia," Kozlova said. There is a chance blockchain's impact will be eclipsed by other technology that may have a bigger impact on costs and efficiency in the Russian sector, however.

Kozlova said that other innovations will have a much bigger impact on the industry, naming Big Data, the internet of things, advances in 3D modelling of deposits, and digital replicas. She cited Tatneft's use of "intelligent fields" at its Romashkinskoye field as leading to cost reductions at a certain stage of almost 30%.

Rosneft and Lukoil are using digital replica technology to test well operations and enhanced oil recovery. Gazprom Neft is using this technology at its Moscow refinery, "which allows the company to monitor the condition of the plant, reduce the duration of repairs and downtime, as well as optimize costs," Kozlova said.

The energy ministry said it is also looking into other new technology. "Currently the energy ministry is supporting a number of innovative projects: the creation of technology for the hydro-conversion of heavy oil, creation of domestic technology and high-tech equipment to develop the Bazhenov formation, digital substations and many others," the ministry said….

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