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Oman Oil & Orpic Group and HSBC Digitize Trade Finance with the Execution of their First Blockchain Trade Transaction

On their 49th National Day, Oman Oil & Orpic Group and HSBC Bank Oman succeeded in carrying out their first trade transaction via blockchain technology. The transaction which according to the report, clarifies in a deeper way the commercial and functional potential of blockchain involved the shipping of polypropylene to Abu Dhabi National Carpet Factory on a blockchain platform advised by HSBC using R3’s Corda system.

Pertaining to this, Sadiq al Lawati, Finance & Strategy Commercial Value Partner in Oman Oil and Orpic Group commented that their blockchain pilot is a great feat in the move in actualising digitisation which began with Artificial Intelligence. Lawati noted that their journey is resolved to continue welcoming new innovative technologies.

As stated in the report, the R3’s Corda system makes use of blockchain technology to trace and trace data between parties. It ensures to keep all stakeholders in sync, speed up transactions and reduce the need for reconciliation while providing visibility on what is happening which increases the confidence of the parties, and thus, makes trade finance more easy-going and straight forward.

Nizar al Lawati, Chief Financial Officer of Oman Oil and Orpic Group said that they are proud to be counted among the first group to embrace such an innovative idea.

“As an integrated Group, we are proud to be among the first in the region taking serious steps in digitizing Trade Finance through exploring Blockchain technology and responding to the 4th Industrial Revolution. This wouldn’t have been possible without the commitment of our team, our customer’s cooperation and the support we received from the Central Bank of Oman and HSBC Oman,” said Nizar al Lawati.

Just like the traditional process, the blockchain LC (letter of credit) allows all participants to a single platform to complete the transaction. However, instead of a space of 5 to 10 days like the traditional process, it does this in 24 hours.

Image via Shutterstock

Oman Central Bank Issues Warning Against Crypto Trading, Specifically Dagcoin

The Central Bank of Oman has warned citizens that cryptocurrencies come with a high risk and specifically highlighted the risks as they pertain to Dagcoin.

In a statement issued through the Oman News Agency, the Central Bank of Oman (CBO) said:

“The Central Bank of Oman once again warns all citizens and residents against using cryptocurrencies such as Dagcoin and others.”

Reported by the Times of Oman on Tuesday, the Central Bank of Oman (CBO) said that cryptocurrencies are highly risky and issued a further warning that singled out Dagcoin, a cryptocurrency that has reportedly seen an uptake in promoters from the Ponzi scheme OneCoin.

The warning is similar to one issued by the central bank of Jordan in 2019, which also highlighted Dagcoin as particularly risky as an investment.

The CBO maintains that cryptocurrency and digital assets are full of risk “due to the fluctuation of their value significantly and the risks of being used for electronic piracy and fraud.”

Oman’s central bank also clarified the regulation, stating it had not issued and licenses that condones the trade of cryptocurrencies and investors that deal with cryptocurrency, do “so on his own responsibility”—as cryptocurrency is not guaranteed to be recognized in Oman as money.

Oman Government Buys Equity Stake In U.S Bitcoin Miner Crusoe

Oman Investment Authority disclosed on Wednesday that it bought an equity stake in Crusoe Energy Systems Inc.

Crusoe is a U.S software firm based in Denver whose mission is to help the oil industry reduce routine flaring of natural gas.

In April, Oman’s sovereign wealth fund participated in the $350 million equity round that Crusoe Energy Systems Inc. raised.

Chase Lochmiller, the CEO and Co-founder at Crusoe Energy Systems Inc., said that Crusoe would open an office in Muscat, Oman, to help deploy mining equipment and power generators for capturing gas at well sites.

The MENA region (the Middle East and North Africa region) accounts for about 38% of the world’s gas flaring — the burning of excess natural gas from oil fields. The practice has faced increased scrutiny for worsening climate change and releasing harmful greenhouse gases.

“We’ve always felt it was important for us to have a presence in the MENA region, given its share of global flaring. Having the buy-in from nations that are actively trying to solve the flaring issues is what we are looking for,” Lochmiller stated.

According to the report, Crusoe held a workshop in Oman on Monday with the country’s biggest oil producers, including OQ SAOC and Petroleum Development Oman.

Lochmiller disclosed that the first Middle East pilot will be launched by year-end or early 2023. Although the drop in Bitcoin prices “certainly impacts our top-line revenue, it doesn’t impact any plans for growth and expansion,” the executive stated.

Crusoe uses excess natural gas from energy operations to power data centres and crypto mining operations. The firm, which keeps all coins it mines, focuses on creating shops in remote areas where it’s not economically feasible to build infrastructure to cut gas flaring.

Ismail Ibrahim Al-Harthi, senior manager of technology investments at Oman Investment Authority, said that in the past, the Oman government signed an agreement with the World Bank’s initiative to end routine flaring by 2030. Al-Harthi further disclosed that the Oman government invested in Crusoe early last year, then increased that stake with the April round.

“Oman is committed to reducing greenhouse gases in line with the Paris climate agreement,” Al-Harthi said.

Crypto Climate Impact Under New Scrutiny

Cryptocurrency has come under fire for being energy-intensive and reliant on burning natural gas. Crypto mining is considered an energy-intensive actitivities, and in most cases, fossil fuels are burned to create that electricity, contributing to global warming.

The use of flare gas to mine cryptocurrency has been regarded as a win-win solution, which means less natural gas is wasted, and crypto mining is not burning extra fossil fuels.

Some oil and gas companies, such as ExxonMobil, have been working with Crusoe Energy Systems Inc. to turn wasted energy (flare gas) into electricity used to power thousands of crypto miners.

However, the process is under environmental scrutiny. Some climate experts argue that the idea that Crusoe uses gas that would otherwise go to waste does not negate the fact that it burns fossil fuel to mine crypto.