Blockchain technology has started assisting oil majors and trading companies to finalize crude oil deals on a live platform for the first time, Reuters reported.
London-based Vakt is the first such blockchain platform to go live on Wednesday. Vakt, which was created in 2017, by oil majors BP and Royal Dutch Shell, Norway’s Equinor, energy trading firms Mercuria Energy Group and Koch Supply and Trading, as well as Gunvor.
These firms will initially be the only users of Vakt but access will be opened up for other customers in January next year.
Vakt digitizes and centralizes paperwork shared between all the parties involved in each deal. It will be linked to another platform launched earlier this year, Geneva-based komgo, which will provide financing including digital letters of credit.
“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,” said Eren Zekioglu, chief operations and IT officer at Gunvor Group.
komgo, which is due to go live before the year end, is backed by a consortium including 10 global banks and most of the Vakt shareholders.
The financing platform will target the full spectrum of commodities trading, from oil to wheat.
Use of Vakt will at first be limited to contracts for the five North Sea crude grades that are used to set dated Brent, a benchmark used to price most of the world’s crude oil.
In early 2019, the platform plans to include U.S. crude pipelines and barges of refined products like gasoline in northern Europe.
Commodities trading firms have piloted similar schemes in recent years as blockchain technology has the potential to drastically cut costs in an environment of razor-thin profit margins.