Shanghai Gas is collaborating with VeChain, using its Thor and ToolChain products to develop and roll out a blockchain-enabled energy project. Shanghai Gas is a wholly-owned subsidiary of Shenergy Group Company Limited. It provides energy coverage for greater Shanghai Metropolitan area.
The business scope of the Company embraces the investment, construction, operation, and sales of natural gas pipeline networks, the production and marketing of manufactured gas as well as operation of liquefied gas. The Company has >90% of Shanghai’s gas market. With this collaboration, it aims to optimise business processes, reduce operation costs, improve supply chain efficiency and build a trust-free ‘Energy-as-a-Service’ ecosystem.
The China / Shanghai Gas challenge
China is a leading force in the global demand for natural gas. This means China faces the challenge of effective management of its domestic market.
With the continuing development and reform of the LNG market in China, a huge natural gas market is emerging ‘along the way’ of the countries participating in China’s ‘Belt and Road’ initiative. For example, according to BP’s Statistical Review of World Energy 2019, by the end of 2018, the participating countries will:
- account for 156.3 trillion cubic metres of natural gas, representing almost 80% of worldwide proven natural gas reserves
- consume some 1,685M tonnes of oil equivalent (c 50% of worldwide natural gas consumption).
In 2017, the National Development and Reform Commission (NDRC) of China unveiled its 13th Five Year Plan on energy development. The plan’s purpose is to facilitate the building of a trusted energy national network. However, the lack of information sharing between stakeholders has brought difficulties. A more transparent solution has become a necessity – and blockchain technology has emerged as a potential solution.
As a dominant player in the domestic energy industry, Shanghai Gas joined with ENN and VeChain to deploy the Pilot Blockchain-Enabled LNG (Liquified Natural Gas) Solution. Based on the success of this pilot project, Shanghai Gas has decided to enhance the collaboration in order to extend the benefits. It is this which had led to the decision to proceed with furthering its blockchain-based energy project.
First phase with VeChain’s ToolChain
The project will involve all stakeholders, both upstream and downstream and across the entire supply chain. The objective is to create a blockchain-based energy ecosystem in the future.
In the first phase (of the project), Shanghai Gas will collect the LNG delivery information plus the component information of the storage tank (which shows the quality of the LNG). It will upload this onto the VeChain Thor blockchain by leveraging the latter’s one-stop BaaS Data Platform – VeChain ToolChain. This approach should:
- eliminate information barriers in the supply chain
- deliver a transparent product process
- provides a reliable database for LNG risk management.
The collaboration has formulated a long-term strategic plan to incorporate a comprehensive blockchain-enabled ‘Energy-as-a-Service’ business ecosystem. This will include:
- logistics management
- energy trading
- innovative financial products
- key stakeholders in the energy industry.
Enterprise Times: what does this mean
As the ‘Belt and Road’ initiative progresses, organisations which possess advanced digital infrastructure and technology will play a central role – at least in the view of Shanghai Gas. As a co-founder of the ‘Belt and Road Initiative Blockchain Alliance’ (BRIBA), VeChain believes that it can enable businesses and benefit multiple stakeholders along the pathway of the ‘Belt and Road’ – by delivering reliable and proven blockchain technology and infrastructure. Whether this will survive the energy market turmoil caused by the fall out between Saudi Arabia and Russia, combined with the coronavirus (COVID-19) pandemic, remains to be seen.
An interesting tangential aspect to this collaboration is the effect of the global outbreak of COVID-19. It facilitated a dramatic demand for digital transformation. Shanghai Gas says that it was able to maintain its business operation online during this difficult period. That confidence is now serving as the basis for a fully digital transformation roadmap.