Corda can optimize the oil supply chain in three key ways: 1. Modernize letter of credit and bill of lading verification to reduce processing time and costs. 2. Provide real-time visibility of storage and shipping data to improve logistics planning. 3. Execute smart contracts for royalty payments to introduce efficiencies.

2. Data Transformation in the Oil and
Gas Industry
Tom Menner
Director, Solution Architecture for Asia Pacific

3. At this point we know blockchain
• Shared DB on a business network with unique
characteristics:
• Append-only operation (immutable)
• Consensus mechanism to agree upon the shared facts
• Distribution method to relevant parties
• Smart contracts to govern the terms and conditions of transactions
• Corda in particular emphasizes
• Privacy – ‘need to know basis’
• Integration – with existing systems and technical skills
• Enterprise capabilities and global network

4. So what does this buy us?
• Transparency – of the data that is being shared on the
business network
• Trust that the data has been validated and, once recorded,
is tamper-proof
• Efficiency in the form of transactional processes that are
more easily finalized and with less errors and disputes
• Better control and security of the assets through
governance, transparency and trust

5. How is this being applied to energy?
• Consumer
• Wholesale electricity distribution
• Peer-to-peer electricity trading
• Carbon credits
• Commercial
• Energy marketplaces, including Virtual Power Plants
• Commodities marketplaces, notably oil and gas
• Instant matching and settlement of trades
• SCM of commodities
• Asset tracking, bill of lading, shipping, etc.

6. Oil supply chain
Oil Producers Storage
Terminals
Oil Refineries Storage
Terminals
Distribution
Freight
Forwarder
Pre-shipment
Inspector
Regulators Shipping
Terminal
Shipping
Company
Banks and FITraders
The simplified supply chain depicted above is representative of global oil trading markets, with minor variations to
account for the country or market-specific regulatory regime and other factors.
It is common for the flow of goods within the oil trading supply chain to be driven by integrated oil companies or oil
traders. Banks often provide trade financing for international transactions together with multiple intermediaries.
There are different levels of integration globally, for example producer-owned or third party storage or refining.
This can introduce demand uncertainty, as well as reduce the inventory visibility throughout the value chain.
Each third party purchase along the chain is treated as a new transaction, with double measurement of the
amount sold and bought.
Robust supply chains can improve efficiency for leading oil companies

7. Problem statement
7
Trader’s bank sends $70m LOC to the seller’s bank
P R O D U C E R T R A D E R C O N S U M E R
Seller Buyer Seller Buyer
S E L L E R ’ S B A N K T R A D E R ’ S B A N K B U Y E R ’ S B A N K
Seller loads 1m barrel of oil to the ship
Seller receives BoL
Seller presents BoL
to the bank
Bank pays the
seller $70m
S H I P P I N G C O
Shipped 1m barrel of oil
Seller gives a copy of BoL to the trader,
giving him title of cargo
Buyer’s bank sends $71m LOC to the trader’s bank
Trader presents the BoL to the buyer’s
bank
Sale and Purchase Agreement (SPA)
Verify BoL with Shipping Co
to confirm ownership
LOC Application
Earns $1m profit
Apply for LOC using
BoL as collateral
Agreed purchase price: $70/bbl
Agreed sale price: $71/bbl
LOC and BoL flow
SPA flow
Fund’s flow
Physical oil flow
Legend:
The process of arranging and verifying Letter of Credit (LOC) and Bill of Lading (BoL) is often manual and time
consuming. It takes an average of 7 days to process the end-to-end LOC transaction with nearly half of that time
attributed to reviewing documents or resolving discrepancies, such as missing or inconsistent BoL.
Classic Oil Trading
Process Flow
Source: Commodities Demystified by Trafigura and R3 internal analysis
Standard oil trading processes can benefit from innovation and digitalisation

8. Oil supply chain challenges
Source: 1) Arnaud Stevens, Natixis; 2) Disputes in the O&G Sector, Ince & Co 3)
Blockchain: Overview of the potential applications for the oil and gas market.
Deloitte.
Settlement Inefficiencies
Despite its size, oil trading still
involves significant paperwork.
Trade finance settlement is
completed manually, separate to
the physical oil settlement, which
creates inefficiency.
The slow settlement and transfer of
title also creates a problem for
traders that need to provide
additional working capital to cover
the cost of oil in transit 1.
Dispute Resolution
Currently, around nine percent of
crude oil transactions are disputed.
This equates to around US$ 150 billion
per year 3.
These disputes are caused by from
cost overruns, delays, and
performance issues 2. The companies
involved need a way to share data
among several parties, while
maintaining confidentiality. This will
provide transparency and audit
traceability and help to prevent
disputes.
Multi-party Management
Global supply chains in the oil
trading industry involve many
contracts between suppliers,
shippers, contractors, and traders.
Government entities also require
access to supply chain data
including for tax audits 3.
Oil trading companies incur
overhead costs to share information
and data and to assure trust as part
of managing these relationships,
transactions and stakeholders.
Managing data and disputes while optimising the supply chain are key challenges

9. Corda for the oil supply chain
Optimise
Reconciliation
Costs
SupplyChain
Integration
Corda reduces multi-party dispute through shared data and consensus
Only Corda is built from the ground-up to handle private and confidential information
Privacy&
Confidentiality
Selectively share volume,
price, and crude type to third
parties like Traders or
Shipping Companies
Access and share permissioned
data about petroleum-
derivative products, shipping
details and prices
Shared platform with R3’s FI
partners provide ease of
access to trade financing
to buy/sell crude oil
Corda’s trade finance
ecosystem allows domestic
or cross border trade
transaction capabilities
Enhanced provenance of
products to optimise
supply chain visibility
Shared data and smart
contracts allow for lower
contracting costs for
intermediaries
Selectively access and
share data between
Traders, Banks and Logistics
Companies
Minimise paper-based
reconciliation processes
between parties in the
transactions
Leverage Corda’s financial institution ecosystem to better integrate your supply chain
Shared data removes
reconciliation processes
between producers and
intermediaries
Oil Producers
Tank Farms
Oil Refineries Distribution
Intermediaries Intermediaries Intermediaries Intermediaries
Traders
Tank Farms
Traders
Blockchain can ease supply chain constraints within the oil industry

10. Use case 1
10
Corda can help the companies within the ecosystem to optimise the
laborious process of arranging and verifying LOC and BoL through
the adoption of either Open Account or e-LOC as well as e-BoL
solution.
The industry can benefit from reduced processing time and cost
combined with improved efficiency to manage discrepancies.
R3 partners with a number of global banks to offer these solutions on
Corda’s business network which is interoperable with other business
networks, such as the trade finance and shipping network to ensure
smooth execution.
R3’s partnership with TradeIX, the world’s first Trade Finance
Platform leveraging APIs and blockchain technology, offers
innovative trade finance solution to provide companies from SMEs to
large corporations with open account trade solutions enabling access
to broader financing providers thereby improving business
efficiencies and working capital.
Open
Account
e-LOC
e-BoL
Seller
Seller’s Bank
Trader
Shipping Co AR / AP Financing Companies
Buyer
Buyer’s Bank
Trader’s Bank
OR
Corda’s suite of solutions modernises the business interactions of Oil Trading players

11. Use case 2
When entering into an Sale and Purchase Agreement
(SPA) with a buyer, a trader requires transparency
across storage and shipping capacity and availability
to ensure cost efficiency.
DLT can help traders to aggregate tankard levels
across storage terminals, even those owned by third
parties, in near real-time. This would provide visibility
to traders. This is similar to the aviation industry’s
Global Distribution System for seat availability.
DLT can also enable private data sharing between
shipping companies and traders about the schedule
and progress, which will help the trader to better plan
their logistics.
By providing end-to-end visibility, DLT can help oil
Distribution
Storage Terminals / Tank Farms
Shipping Co
Tankard storage
level visiblity
Sell the product to
distributors
Visibility of shipping
capacity and its
price in real-time
Real-time inventory management offers new opportunities to meet market demand

12. Use case 3: royalty payments
• Guild One Royalty Ledger successfully executed an oil
royalty contract settlement and payment transaction.
• As a Proof of Concept, Royalty Ledger is the first
implementation of a smart contract in the oil and gas
royalty sector, and was delivered together with NAL
Resources Management Limited, PrairieSky Royalty
Ltd. and ATB Financial.
Royalty Ledger – First implementation of a smart contract in the oil and gas royalty sector

13. Corda enables interoperable business networks

14. Conclusion
• Consumer
• Wholesale electricity distribution
• Peer-to-peer electricity trading
• Carbon credits
• Commercial
• Energy marketplaces, including Virtual Power Plants
• Commodities marketplaces, notably oil and gas
• Instant matching and settlement of trades
• SCM of commodities
• Asset tracking, bill of lading, shipping, etc.