As companies around the world begin their own investigations into the use of blockchain technology for industry specific benefits, the oil and gas industry is no different. Oil and gas majors have begun finding solutions utilizing decentralized ledger technology with the knowledge that it will potentially revolutionize and streamline their respective supply chains.
Ziyen Energy, an energy company on the blockchain has named a new Chairman for their ZYEN Energy Trading Platform, David Greenberg who was one of the first key members of the New York Mercantile Exchange (NYMEX) who realized digitization as the way forward for commodities trading in the early 2000s and is now instrumental in the development of the ZYEN Energy Trading Platform, due to launch later this year.
In this interview, David Greenberg discusses the transition from open outcry trading to electronic trading and provides fascinating insight into the evolution of this now commonplace practice and how he sees blockchain and tokenization of energy assets as the next stage of evolution in the global energy market.
1) Hi David, please provide us with an overview of your background?
I have more than 30-years of experience in private investments, commodities trading, and global markets. I’m currently the chairman of Greenberg Capital, LLC. and before that, I served three terms on the New York Mercantile Exchange (NYMEX) Board and the Executive Board, where we I assisted in overseeing the growth in valuation of the exchange from $800 million to $12 billion and it was actually one of the most successful public offerings (IPOs) in the U.S.
Over the past 25 years I have been a recurring commentator for media outlets such as CNBC, FOX and CNN, and have also been a guest lecturer for the finance program at West Point Military Academy, Columbia Business School, the Jack Welch Experience at Sacred Heart University, the Whitman School of Management at Syracuse University and Hofstra University.
I was also the president of Sterling Commodities Corporation, one of the largest local commodities clearinghouses. One of the relevant projects I was involved in was the development of the first Electronic Trading Platform for energy, which relates to why I’m here today to discuss my role in this every exciting project as the Chairman for the ZYEN Energy Trading Platform.
2) With over 30 years experience in the energy trading sector, are there any stand out technology moments?
Over the course of history our industry has been affected by natural disasters, catastrophes, attacks and this has forced us to adapt and move forward in order to avoid a global collapse. When 9/11 occured, immediately proceeding this event and due to our geographical location in ground zero, we had to get the NYMEX exchange up and running and were not sure if we’d be able to open the following Monday.
We had direct orders from the White House to do whatever was possible to to get up and running to steady the fluctuating oil price. I was part of the team, Vinnie Viola former Chairman of NYMEX, put together launching a closed-end electronic trading system that we only used at night onto an open-end internet based system.
In under 3 days, we were able to open up the market. Initially on the first day of trading it was only open for 3 hours but we still closed over 70,000 contracts. At the close of business we both looked at the screen differently. Where I saw the floor being over, I’m sure Vinnie thought what this could mean for electronic trading and he went onto to make billions of dollars from it.
This marked the beginning of the end for the open-outcry trading floor of the New York Mercantile Exchange in lower Manhattan, where the world’s oil market, gold and commodities were traded.
In less than 5 years after 9/11 we went 100% electronic with this shift in technology, and I believe our ZYEN project on the blockchain could have a similar profound effect of the evolution of the oil and energy market space.
3) What problems does the New ZYEN Energy Trading Platform solve?
The problems with energy producing assets is the difficulty to buy and sell fractional interests. Non-industry investors have limited access to these investments and holders of non-controlling interests have limited liquidity opportunities prior to the sale of the entire asset.
Our new ZYEN Energy Trading Platform operating on the blockchain will address all of these problems through tokenization creating fractional energy assets ownership for the average person for the first time in history.
Initially the information about the oil and gas asset is captured on the ZYEN Platform. The information is analyzed utilizing data analysis and artificial intelligence. This information is recorded on a permissioned blockchain.
The equity ownership of each oil producing asset is converted into a Special Purpose Vehicle (SPV). It is the SPV which is tokenized and securities are issued, and backed by the distributions generated by the underlying oil producing asset.
The SPV will provide the token holders with financial statements, tax reporting and cash distributions based on the production by the oil asset and the amount of tokens each investor has.
Tokens will be available for trading on an Alternative Trading System (ATS) which is regulated by the SEC.
The result is an end-to-end system which facilitates the purchase and sale of direct interests in energy producing assets via token transfer which complies with US Securities and Banking Laws.
4) It says Energy Trading Platform, therefore, how are you addressing Renewable Energy?
With climate change concerns rising, the global economy has been making an increasing effort to turn away from greenhouse gas-emitting fossil fuels and toward clean, renewable energy sources.
Our ZYEN Platform isn’t just about tokenization of oil and gas, but our focus is on energy transition. We believe the blockchain is the catalyst in providing a transformation of the global energy sector from fossil-based to zero-carbon before the second half of this century.
Right now, if you want to invest in renewable energy, you can invest in companies like Tesla, or switch to driving an electric car, but there are limited retail investment opportunities to invest in the renewable energy source itself, in the same way you can invest in oil producing assets as discussed above.
Governments have played a significant role in helping narrow the gap between fossil fuels and renewables by providing subsidies that incentivize investment in wind and solar projects, but how can your average person be involved in investing in these opportunities.
Our ZYEN Platform has our first Solar Token and Wind Token targeted for creation by Q4 of 2020, where we will have both oil and gas projects tokenized, alongside renewable energy projects for the first time in history.
Essentially we will unlock the liquidity in oil projects, and provide investors with distributions from oil production through the ZYEN platform, where they can invest this directly in renewable energy projects through tokenization.
The investment opportunities in renewable energy have experienced high volatility in the past, but through ZYEN, investors can purchase clean energy through tokens as a way to diversify their portfolio and reduce risk as these solar tokens and wind tokens can be an attractive option by generating predictable returns over time.
More information about Ziyen Energy here
Images courtesy Alastair Caithness