Oil industry giants BP and Shell joined a group of companies planning to introduce a blockchain platform for post-trade processes automation in the energy sector by this year’s end.
The consortium developing the platform, VAKT Global, announced the news on Monday during a digital commodities summit hosted by S&P Global Platts.
The effort seeks to help oil firms move away from paper-based documentation to smart contracts. It is expected to minimize the risk of errors, cut costs, and enhance the efficiency of post-trade processes. According to the group, the platform will include a “secure, real-time blockchain-based platform to manage physical energy transactions.”
“We expect to go live at the end of November in the North Sea oil market. In 2019 we will look at ARA barges, waterborne markets and US crude pipelines,” VAKT Global vice president of product development Lyon Hardgrave said.
Hardgrave added that by January, the first licensees are expected to be on board.
Earlier this week, VAKT Global revealed that the platform would be run as a new venture by the consortium participants, to be operated and managed as an independent entity. It added that the venture’s regulatory approvals are pending.
Aside from BP and Shell, other group members are Norwegian energy firm Statoil, banks such as Societe Generale, ING, and ABN Amro, as well as trading houses Mercuria, Gunvor, and Koch Supply & Trading.
According to Hardgrave, licensees joining the blockchain platform on a fee basis can save about 40% in post-trade resolution.
“This [is] 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,” he added.