Barrels contain armor upgrades, used by applying them to a section of your ship's armor. If an armor segment already has an upgrade, it can not get another upgrade and the barrel will be wasted. If you wish to remove an existing upgrade from a piece of armor, using Meteorsteel Dust or Degenerating Nanos on the armor will strip the previous enhancement.
Barrels start out unidentified, with the description “These barrels are used to hold everything from chemicals to nanomachines. The markings are completely unfamiliar to you.” Level one unidentified barrels have a base value of 150 credits. Level 5 unidentified barrels have a base value of 2000 credits.
A few items, such as Centauri rice, use the barrel icon but can not be applied to your armor.