1. Energy Fintech
Beyond the Dollar
Chris Cook
Moscow 18th April 2018 1

2. Oil & the Dollar Problem
Energy Dominance – Two Tier oil market is controlled by US with Saudi capital - OPEC is purely cosmetic
Dollar payments have been weaponised
Solution
Energy as a Service - new natural gas global market design & benchmark price
Payments- gas credits (GasCoin) & clearing (GasClear)
Instead of oil priced in $ and gas priced against oil: $, € & oil will be priced in gas 2

3. Dollarisation of Oil July 1st 2017 Energy Dominance Oil as Commodity
Oil as Asset
Oil as Funding

4. Between mid 2007/2009 oil went $80>$140>$35>$80/bbl......
…...while physical supply & demand varied by <3%

5. Oil Market financialisation began in earnest in 2004......
….from early 2009 oil market was completely manipulated

6. Oil market is (financialised) 'Producer's Market'......
…while gas market is over-supplied 'Buyer's Market

7. US Energy Dominance: Dollar now directly oil-backed
Energy Dominance Announced

8. China launches Shanghai contract: 'Buyer of Last Resort'
Shanghai Oil Contract opens
26th March 2018

9. Early Fintech - Promises and Proofs
Tally-as-Proof - receipt for past utility (eg energy) but no future utility
Tally-as-Promise - Prepay credit for future utility requires trust in promissor
Single Entry – the instrument IS the accounting record
Authentication – the grain of the wood is nature's encryption!

10. Promises (Prepay Credits)
Prepaid Taxation
Prepaid Energy
Prepaid Talk Time

11. Fintech 1.0 - Blockchain & Coins
Blockchain as Agreement
- collective machine protocol for encrypted transaction database
- authenticates electronic instruments – no 'double spend'
- But....entire database is encrypted for every new transaction
Coins as Instruments
- Proof of past value creation (eg Proof of Work/Stake)
- Transaction token has subjective value in exchange but no objective use value over time (utility)

12. Venezuela and El Petro Petro is based on Oil
- many different types & qualities of oil
- acceptability of currency is based on use value & trust
- But consumers use gas, oil products, energy services NOT oil
Petro is a Proof not a Promise
- Petro is evidenced by oil reserves & is a receipt for payment
- But - Venezuela has no obligation to deliver either oil or money
- Petro holder has no right to use Petro instead of Dollar to pay for Venezuelan oil

13. Energy Fintech – Swaps & Credits
Instruments
Energy Swap - neutral, collaborative framework for allocation of energy flows
Energy Credit - prepayment for energy production or use
Institutions
Capital Partnership – production/cost sharing
Guarantee Society – risk sharing/mutual assurance

14. Energy Credit (Supplier Promise)
What it is
- Promise issued by energy producer in exchange for value received
- Returnable in payment for supply
What it is not
- Debt - no right to demand money
- Derivative – no right to demand delivery
- Equity – no ownership right in respect of energy assets
Requires trust framework for promissors & investors

15. Energy Credit (Supplier Promise)
What it is
- Promise issued by energy producer in exchange for value received
- Returnable in payment for supply
What it is not
- Debt - no right to demand money
- Derivative – no right to demand delivery
- Equity – no ownership right in respect of energy assets
Requires trust framework for promissors & investors

16. Fintech 2.0: Clearing Union
Value
Supplier A
Member
Buyer B
Member
Credit
Authenticated A->B
Bilateral Data
Shared
Database
Authenticated A->B
Bilateral Data
Authenticated A->B
Bilateral Data
Platform Service
Provider 16 16

17. Mutually Assured Performance – P&I Club
For 150 years, Protection & Indemnity (P&I) Clubs have mutually guaranteed shipping risk Lloyds won't cover
For 130 years P&I Clubs have been managed by Thomas Miller as platform service provider

18. Energy Swaps Regional Swaps
- Energy delivered to one location exchanged for energy delivered from another eg Caspian Oil Swap
Category Swaps
- Flows of one type of energy exchanged for flows of another
Hybrid
- Regional Category Swaps

19. Oil for Product Swap Service Investors Providers National Oil
Company (NOC)
Consumers
Oil
Products
Refinery
Prepaid
Products %
Investors
Service
Providers

20. CNG for Transport Swap Service Investors Providers Transport
Gas Supplier
Transport
Users
Natural
Gas
Transport as
a Service %
Pay
Vehicle Companies
(eg taxis & buses)
Prepay % %
Investors
Service
Providers

21. Pumping as a Service 1778 - first Smart Swap
Newcomen Atmospheric Engine
James Watt Steam Engine

22. Smart Subsidy – Levy & Dividend
Carbon Fuel Levy creates Investment Pool In Roubles
Energy dividend made in energy credits not Roubles
- incentive to save energy
- not inflationary
- Pool invests in energy savings through energy loans
- credits returned in payment for energy as a service

23. Transition through Gas
New global market design: Energy-as-a-Service
New energy-based credits – GasCoin (Mmbtu equivalent) & EnergyCoin (KwH equivalent)
Oil no longer be priced in $ and gas priced vs oil
Oil, $, €, EnergyCoin will be priced in gas 23

24. GasCoin – energy denominated Carbon Credits
“If you wish to keep a cow healthy you don't regulate what comes out of the cow, you regulate what goes in”
The Kyoto Carbon Market Cow

25. Oil & the Dollar Problem
Energy Dominance – Two Tier oil market is controlled by US with Saudi capital - OPEC is purely cosmetic
Dollar payments have been weaponised
Solution
Energy as a Service - new natural gas global market design & benchmark price
Payments- gas credits (GasCoin) & clearing (GasClear)
Instead of oil priced in $ and gas priced against oil: $, € & oil will be priced in gas 25