A group of oil industry giants including Shell and BP are launching a blockchain platform to facilitate post-trade processes.
Though initially a wide audience has learnt about blockchain only as about a technology that makes it possible to issue and transfer cryptocurrencies, it is just only one aspect of blockchain application. Experts say that one day blockchain will fully revolutionize the world.
Maybe it’s too early to say so, nevertheless, one thing is absolutely obvious: step-by-step blockchain is revolutionizing different industries, facilitating all processes within them and streamlining all related procedures.
Blockchain for Oil Industry
As it has been revealed, a group of companies working in the oil industry are launching a blockchain platform that will help them to achieve automatization of post-trade processes in their industry by the end of 2018.
It’s worth mentioning that among active supporters that believe in the future of this initiative and are going to benefit from it there are BP, Shell, and Equinor as well as some other companies with prominent names.
The companies are collaborating with different trading organizations and large banks with a view to build the above-mentioned platform for energy commodity trading that will be called Vakt.
The Vakt consortium also includes ABN Amro, ING, and Societe Generale, the banks of the leading oil companies, as well as such well-known trading houses as Gunvor, Koch Supply % Trading, and Mercuria.
The plans to utilize the potential of the blockchain technology within the industry were first announced in 2017. One of the main ideas behind the initiative was to help companies stop doing useless paperwork and transfer their processes to smart contracts. It is believed that the industry’s blockchain will significantly simplify all operations and reduce time spent on them.
What is Expected
Though it took nearly a year to translate the idea into life, now the newly-created platform is almost ready to be launched. Speaking about their current activities, the vice president for product development at Vakt, Lyon Hardgrave, said that they are going to launch the platform in the North Sea oil market before the end of November.
“In 2019 we will look at ARA barges, waterborne markets and US crude pipelines. And by January we expect the first licensees will come on board, in addition to our shareholders,” he added.
It has also become known that the blockchain platform would function as a new venture to be run by the consortium members. Nevertheless, from the point of view of management and operations, it will be an independent entity. As for regulation, the platform is already waiting for being approved.
Describing the peculiarities of the platform, Hardgrave said:
“This not a trading platform, nor a settlement platform – there is no cryptocurrency involved. But it is everything in between: deal recap; confirmation; contract; logistics (the really big element in all this) – and invoicing.”
According to Hardgrave, it is expected than when the platform starts functioning, it will ensure decreasing of post-trade resolution costs by up to 40%.