Oil Industry Backed Blockchain Energy Platform Launching This Month
Some of the biggest names in the energy sector have come together with equally large banks and financial institutions in order to launch a blockchain based energy commodity platform before the end of the year.
According to reports, oil giants BP, Shell, and Equinor have backed a project supporting the modernization of energy post-trade processes. The announcement was made at S&P Global Platts Digital Commodities Summit in London by the Vakt Consortium on Monday.
Vakt product development vice president, Lyon Hardgrave, said “We expect to go live at the end of November in the North Sea oil market,” before adding “In 2019 we will look at ARA barges, waterborne markets and US crude pipelines. And by January we expect the first licensees will come on board, in addition to our shareholders,”
The platform aims to digitize
trading by moving away from paper contracts and onto smart ones on the blockchain. This will cut costs, increase efficiency and transparency, and reduce errors. Some big banks and financial players have joined the three oil giants in backing the project. They include IMG, ABN Amro, and Societe Generale alongside trading houses Mercuria, Gunvor, and Koch Supply & Trading.
Up to 40% cost savings have been estimated for licensees paying to use the platform, in addition to elimination of data inaccuracies and acceleration of the process. Hardgrave continued to clarify that;
“This not a trading platform, nor a settlement platform – there is no
crypto currency involved. But it is everything in between: deal recap; confirmation; contract; logistics (the really big element in all this) — and invoicing,”
The distributed ledger will only be used to record the transactions initially; however there is a lot of room for expansion. Vakt CTO, Adam Vile, added “There is a whole stack of standard technology above the blockchain – we’ve built an enterprise solution with blockchain underpinning it.”
Expectations for blockchain implementation are still on a high despite the bearish market for digital currencies this year. David Shrier of Oxford University’s Said Business School opened the S&P Global Platts Digital Commodities Summit by stating he expected the entire commodities trade ecosystem to be digitized within ten years but constant regulation would take much longer.
With big energy getting onboard the blockchain train, smaller solutions for domestic blockchain based energy sharing are likely to follow. Several projects already exist to enable more efficiency and cost savings in the energy sector, and it will only be a matter of time before all of our energy dealings are done with distributed ledgers.