Paris-based Amalto Technologies, founded in 2005, is a software company that helps businesses and organizations to simplify automated exchanges and facilitate system integration. It provides blockchain technology to oil and gas companies. Its CEO, Jean-Pierre Foehn, spoke to The Fuse about cloud management, tokenization, and automation in the oil industry.
Can you tell me about your company, how you got started, and what your core business is?
I am geophysicist by training, that’s how I started in the oil and gas business. Twelve years ago, I founded Amalto after starting the first Internet company for oil and gas firms. The Internet was then first being used to streamline the exchange of business documents between oil and gas producers and their suppliers. I formed Amalto with the idea of developing technology that can be easily used by not only the big players, but also mid-market companies. We basically provide a cloud platform for each of our clients to exchange business documents with their suppliers, customers, logistic providers and banks.
What has drawn oil companies to blockchain technology? How does it give them a competitive edge?
The fact that Fortune 100 organizations like IBM and American Express are investing significant financial and human resources in developing blockchain-based applications confirms today’s phenomenon.
First off, blockchain is revolutionizing the way we do business. The benefits that this new technology is offering are undeniable. And the fact that Fortune 100 organizations like IBM and American Express are investing significant financial and human resources in developing blockchain-based applications confirms the phenomenon. Now, Amalto has always been at the forefront of technological innovation, so we just couldn’t ignore this “enthusiasm.” This is why we joined forces with Consensys to launch Ondiflo, a company leveraging blockchain to streamline the order-to-cash process in the oil and gas industry, because there is a need from the industry to truly step into the 21st century. Look, one of the issues oil and gas suppliers are confronted with is that each one of their customers may impose a different process to exchange information. They have to comply with sophisticated requirements from big companies, if they want to sustain their business activity. By leveraging blockchain for the exchange of B2B documents, we transform, we convert, and we validate, and as a result suppliers experience significant benefits, including quicker payment, cost reductions, and cash-flow management.
What have been the biggest challenges to convince companies to adopt this technology?
Many companies argue that when prices are low, they do not have the budget to make changes, and when prices are booming, they say change is not necessary.
The biggest challenge has been that certain companies have always done business a certain way and are hesitant to try new changes. In the oil industry, there are a lot of good old boys who want to do things the old way. They shake hands, exchange paper documents, and may not even have a written contract. Some companies are moving faster than others toward embracing technology. The industry is very cyclical. Many companies argue that when prices are low, they do not have the budget to make changes, and when prices are booming, they say change is not necessary. We have to maneuver in those two extremes.
How is the use of Big Data changing the oil industry?
The workforce is aging, so the industry must work with fewer people. With oil in the $60-$65 range, there is a race to get more workers.
With the focus mostly on onshore production, companies have to drill new wells on a regular basis. They need to be very nimble, and they also need to be profitable even when the price of oil is depressed. That is where the use of data comes in. And it can also help with demographic changes in the industry. The workforce is aging, so the industry must work with fewer people. With oil in the $60-$65 range, there is a race to get more workers. Everything is leading to cost reduction and automation, and the last thing people want to deal with is compliance. Blockchain leads to automation of certain tasks—doing more with less. With blockchain, Big Data, and mobile phones, we’ll soon see most of the production process automated.
Blockchain has received a lot of attention, most of it negative, because of cryptocurrencies. Do you see cryptocurrencies eventually becoming successful, and are they necessary for blockchain technology to be optimized?
Business-to-business transactions will eventually be done with tokens.
First, it’s important to understand the difference between cryptocurrencies and tokens. We can streamline the process and make it even more efficient if payment for the services delivered is done by tokens. But we have to gain trust, and we’re not there yet. We have considered launching an initial coin offering, but we decided not to do it now because we don’t think the industry would be comfortable with it yet. We don’t need to force it, but we continue to discuss tokenization with the industry because that is how you reduce complications surrounding transactions. Whether workers will be paid in cryptocurrencies, I don’t know, but as for business-to-business transactions, it will eventually be done with tokens.
What is the most underreported story surrounding blockchain?
So far, only a few powerful corporations have understood the benefits of adopting blockchain technology.
People miss how critical the blockchain technology and smart contracts are to the supply chain. Blockchain is bringing about a huge paradigm shift, but many people don’t fully understand the ramifications. Ultimately, knowing what we know about blockchain, would it be optimal for all of our data were to be stored in a blockchain? Certainly, but the world is not ready today. So far, only a few powerful corporations have understood the benefits of adopting blockchain technology.
In the next 10-20 years, what do you see as the biggest hurdles to blockchain adoption in the oil sector?
It’s important for oil and gas firms to step outside their comfort zones to explore technology that can help them.
I’m really surprised that some big companies are hesitant to devote resources to learn about blockchain. But I’m optimistic. What we need is large-scale projects from blockchain that can demonstrate its value and impact. Companies using blockchain aren’t just using it because of the current buzz. It’s up to the technology companies, like us, to show that blockchain can deliver on all the benefits that we promise. It’s also important for oil and gas firms to step outside their comfort zones to explore technology that can help them.