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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.
London-based platform Vakt is the first of these to go live,
with shareholder Gunvor Group saying it was rolled out on
Wednesday, although no trades took place that day.
Blockchain, the platform behind cryptocurrency Bitcoin, is
viewed by many as a solution to trade and settlement
inefficiencies, as well as a way to improve transparency and
reduce the risk of fraud.
Vakt was created in 2017 by a consortium that includes oil
majors BP <BP.L> and Royal Dutch Shell <RDSa.AS>, Norway's
Equinor, global 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 in January next year.
Banks ABN Amro, ING and Societe Generale are other shareholders.
Vakt digitizes and centralizes what was previously a mountain of
a 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.
"It's an exciting time," Andrew Smith, Shell's head of trading,
said.
"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."
(Reporting By Julia Payne; Editing by Kirsten Donovan)
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