A blockchain-based oil trading platform dubbed Vakt and developed by a consortium involving BP and Shell began operating this week, Reuters reports, citing the consortium. The aim is to utilize the potential of the distributed ledger technology for lower-cost, no-intermediary but still secure transactions.
News of the platform first emerged last year as blockchain continued to gain popularity. The consortium behind Vakt also includes trading houses Gunvor and Mercuria, as well as Koch Supply & Trading. The platform was financially backed by Dutch ABN Amro, ING, and French Societe Generale.
In January 2017, Mercuria, in partnership with ING and Societe Generale, announced it was preparing the first oil trade using blockchain technology. The trade involved an African crude shipment to Mercuria shareholder ChemChina. When he announced the test at the Davos World Economic Forum, Mercuria’s CEO, Marco Dunnand, said, “The energy industry will have to digitalize more and more in oil production, refining, shipping. So traders will also have to participate.”
Now, the companies involved in the launch of Vakt will be the first ones to use it, but next year, the consortium said, the platform will be opened to other participants next January. Initially, the platform will only process contracts for the five crude oil grades sourced from the North Sea that form the Brent international benchmark. At a later stage, it will include U.S. oil pipelines and cargoes of gasoline and other oil products for Northern Europe.
“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 gives access to several banks,” Reuters quoted Gunvor’s Chief Operations and IT Officer, Eren Zekioglu, as saying.
There are also other blockchain-based trading platforms in the oil industry that are being developed at the moment. One of them, komgo, is also due to launch before this year’s end. The platform is financed by most of the participants in the Vakt consortium and 10 international banks.