The VAKT blockchain, which facilitates the execution of North Sea crude oil deals, went live on Wednesday (28/11).
Based in London, the blockchain has been developed by a consortium of major oil producers, energy traders, and banks.
Producers behind the move include BP, Shell, and Equinor.
Other backers are trading firms Mercuria Energy Group, Gunvor and Koch Supply & Trading, as well as banks ABN Amro and ING.
The firms involved in VAKT’s development will initially be its only users, however, open access is expected to begin in January 2019.
The blockchain will provide a solution to settlement inefficiencies involved in oil trading and it’s hoped it will improve transparency and security.
VAKT will operate in conjunction with the Geneva-based Komgo platform, 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,” said Gunvor Group COO, Eren Zekioglu.
“The next leg is the financing and the link-up with Komgo gives access to several banks,” he added.
While only crude oil will be traded on VAKT initially, developers have a vision to grow the platform to facilitate blockchain-based trading of all physically traded energy commodities.
“Digitalisation is changing how the energy value chain works. It’s an exciting time,” said Shell executive, Andrew Smith.
“Collaboration with our peers and some of the industry’s key players is the best way to combine market expertise and achieve the scale necessary to launch a digital transaction platform that could transform the way we all do business.
“Ultimately the aim is improved speed and security, which benefits everyone along the supply chain from market participants to customers.”
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