According to a recent press release, leading oil companies Chevron, Total and Reliance have joined VAKT, a blockchain based platform geared towards the oil industry.
The company published a press release to their website to this effect earlier today. VAKT is a blockchain based commodities trading platform focused on the oil industry. The three new participants join the platform as users and as investors. They join a consortium of oil industry peers who had previously aligned themselves with VAKT.
Original investors include BP, Equinor and Shell. Additionally, independent commodity traders, Gunvor, Koch Supply & Trading and Mercuria are involved. From the financial services world, ABN Amro, ING and Societé General have invested in the project since the beginning.
Vakt describes itself as a company that is ‘re-imagining commodity post-trade processing underpinned by blockchain’. The London based startup launched the platform on November 28, focusing on the BFOET (Brent, Forties, Oseberg, Ekofisk, and Troll) crude oil market. BFOET is a pricing methodology involving five grades of crude oil implicated in North Sea crude oil trading.
Blockchain technology is increasingly being used to simplify trading processes and cut out middlemen. This is the case with the shipping industry – with many of the worlds major shipping companies trialing the technology with a view towards simplifying documentation and processes which cause considerable trade friction.
VAKT are seeking to achieve a similar outcome in the oil industry. Leveraging blockchain technology, the platform is pursuing a mechanism through which reconciliation and paper based processes will be eliminated. Furthermore, with the blockchain providing a single source of truth throughout the trade lifecycle, efficiencies are enhanced and opportunities for new trade finance are being created.
Within the oil industry, there are many manual, paper-based and duplicative processes which are liable to error. This leads to process inefficiencies and additional overheads. The company facilitates counterparties in accessing a distributed ledger which then acts as a single source of truth – completely eliminating operational data errors.
Additionally, the platform allows for enhanced visibility when it comes to logistics data, in turn leading to improved scheduling and decision making. VAKT estimate that this digitization of post trade processing will result in 40% cost savings across operations, accounting, settlements and I.T.
The VAKT platform is also addressing the area of trade financing. Through its partnerships with the banks, it has created a marketplace for trade finance. Blockchain based data can be provided by the participating oil companies to the banks. This direct data visibility – together with total confidence in the integrity of blockchain based data – means that financial services products can be priced more accurately with lower premiums and faster settlements – to the benefit of the oil companies.
In terms of security, there is no need for communications via email as all the relevant data is written to the blockchain. Therefore, trade data is held on a secure platform and is fully encrypted. Only counterparties have access to the data unless they agree by consensus to make it available to a third party.
Thomas Waymel, President of Trading and Shipping at Total commented on the development:
“Total has been supporting industry initiatives to digitize cargo post-trade processes for some time. We view them as a major step forward towards safer, faster and cheaper logistical operations. We are committed to contribute to the roll out of various markets of the VAKT blockchain platform which is linked to a full digital ecosystem. We aim for simplification of the daily work of our logisticians in Europe, Americas and Asia.”
P.M.S. Prasad – Executive Director at Reliance Industries – suggested that VAKT’s platform will lead to a transition away from manual processes to an integrated platform which enhances transparency and data security, whilst also capturing efficiencies.
Adam Vile, CTO and Director of VAKT stated that “with Chevron, Reliance and Total on board, we now have five of the world’s top ten largest oil and gas companies by market capitalization as VAKT investors.”