Oil Companies Switch to Blockchain
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Main page Analytics, Oil, Blockchain

At the end of November, the Vakt blockchain platform, developed by major oil and gas companies BP, Shell, and Equinor, will be launched together with several banks and fuel and energy traders. The new tool will help the companies to transfer the conclusion of transactions related to energy resources to the distributed ledger technology.

In addition to oil companies, banks, and trading houses of ABN Amro, ING, Societe Generale, Gunvor, Koch Supply & Trading, Mercuria participate in the project. The largest oil companies expect that Vakt will help get rid of paperwork because smart contracts can replace a lot of documents. The new system that has been developed for the past year will increase the efficiency of transactions and save time.

Will blockchain make oil trading more transparent?

According to statistics, considerable expenses fall on after-sales approvals. Vakt will cut these costs by 40%. The partners plan to develop similar solutions for petrochemical products and gas. Consortium participants note that the platform will ensure a full transaction cycle with energy carriers from entry to the market to shipping to the end customer.

According to Lyon Hardgrave, the product development VP of Vakt, the platform will begin operating at the end of November, carrying out deals to deliver oil to the North Sea. Next year, according to Hardgrave, other major participants in the oil and gas industry may join the project.

"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," said Hardgrave.

It should be noted that the distributed ledger technology (DLT) has already made its way into the field of energy resources. 15 largest world corporations founded a company named komgo SA, designed to develop the ethereum platform for financing trade of various commodities from oil to wheat. The founding companies of komgo SA include Shell. Representatives of the project emphasize that they create an open and more efficient network to be used in commodity trade.

BP, Shell Lead Blockchain Platform for Energy Trading

Every day, a large number of oil tankers around the world are loaded in ports and sent to their destination. For this, various documentation is drawn up, and losing it might equal losing value for the cargo. Without securities, it will be impossible to carry out transactions in the energy market. Technologies like blockchain can simplify these trading operations and document circulation as well as drastically reduce administrative costs associated with the sale or purchase of energy carriers.

To reduce costs and increase profits, oil market participants are ready to consider the use of DLT. Using blockchain will ensure the transparency of the market, relieve its participants from a lot of paperwork required for a transaction, as well as speed up processing necessary documents. Previously, this took a lot of time of the company employees. Any mistake could disrupt the very conclusion of the transaction. Using the blockchain will help avoid such problems.

Blockchain Boosts Oil & Gas Alliance

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