Consortium venture Vakt Global, which was set up by, inter alia, oil giants Shell and BP, announced this week that its blockchain oil trading platform is now live and will allow people to optimize energy commodities trading.
Vakt Global’s blockchain platform claims that it is the first enterprise-grade solution within the gas and oil markets. The firm tweeted in the last few hours that everything is set to make crude trading easier between commodity enterprises.
By making use of blockchain solutions and technologies, the platforms intends to serve as a facilitator for trading firms in their quest to leave behind paper documentation and replace it with smart contracts for enhanced trustworthiness and reliability. Also, stages within the trading process can be automated, which is a fantastic way of cutting costs, decrease mistakes and improve efficiency in post-trade processes.
“Our 5 investors within the BFOET market have now gone live on the VAKT platform!” the company tweeted. The aforementioned market is formed by Brent, Forties, Oseberg, Ekofisk and Troll, all crude oil fields in the North Sea. The firm has expressed its intentions to further expand to other markets in its quest for more opportunities.
A Race against Time
The blockchain platform’s first line of code was written, amazingly, in the month of May, according to a Vakt Global post on LinkedIn. Thankfully, and with the help of partners such as Deloitte and ThoughtWorks, they were able to finish the project on schedule and without surpassing the established budget.
Besides Shell and BP (British Petroleum,) which are arguably the most widely known enterprises of the bunch, other oil companies backing up the blockchain initiative are Statoil from Norway, trading houses Gunvor, Koch Supply & Trading and Mercuria, and also some financial institutions: some of them are ABN Amro, ING, and Societe Generale. The consortium is now a year old.
Vakt Global’s project wants to “lead the migration of all forms of energy transaction data to the blockchain, improving data quality, further strengthening security and increasing the speed of settlements industry-wide, while reducing the cost for industry participants,” according to the company itself.
Aiming for a Revolution in the Commodities Market
The consortium and its use of the blockchain technology could “revolutionize the market,” according to a report from Reuters.
Commodities trading companies have made plans with similar schemes in the past, knowing that the blockchain approach can provide long-term solutions and has the potential to severely reduce costs in an industry in which profit margins are slim.
Vakt becomes the first of these platforms to go live. Actually, according to shareholder Gunvor Group, it was rolled out on November 28, but no trades occurred on Wednesday.
Besides trustworthiness and reliability, the implementation of smart contracts and blockchain technology has the intention of solving settlement inefficiencies, decrease fraud risk, and make processes more transparent.
Vakt digitizes and centralizes the whole paperwork that all parties share in commodities trading. “Vakt is the logistical arm…Once a deal is executed through our book of records, it gets pushed through Vakt. The next leg is the financing and the link-up with komgo (a linked platform that will provide financing, including digital letters of credit) gives access to several banks,” according to a Reuters’ quote of Eren Zekioglu, Chief Operations and IT Officer of the Gunvor Group.
By Andres Chavez