Crude oil is about to be traded on a blockchain platform backed by five of the top 10 oil companies

Trading of physical commodities has historically been a cumbersome process, requiring mountains of documents, including letters of credit, invoices and inspection certificates. VAKT is using a blockchain platform to bypass the paperwork and offer a more secure way of completing a commodities trade.

Most importantly, the technology will reduce the time and costs needed to complete a trade. In an earlier blockchain trial for a soyabean trade by Louis Dreyfus Commodities, the processing time was cut to a fifth of the traditional model. Traders are also able to monitor the operation’s progress in real time and verify data – plus reduce the risk of fraud.

Chevron, Total and Reliance Industries are backing VAKT, a digital platform for crude oil trading based on blockchain that launched late last year. They join a consortium of investors that includes BP, Royal Dutch Shell and Equinor as well as traders Gunvor, Mercuria and Koch Supply & Trading.

“Total has been supporting industry initiatives to digitise cargo post-trade processes for some time,” said Thomas Waymel, President Trading & Shipping at TOTAL “We view them as a major step forward towards safer, faster and cheaper logistical operations. We are committed to contribute to the roll out to various markets of the VAKT blockchain platform which is linked to a full digital ecosystem. We aim for simplification of the daily work of our logisticians in Europe, Americas and Asia.”

P.M.S. Prasad, Executive Director at Reliance Industries, said: “VAKT’s platform will help lead the transition away from traditional systems involving manual exchange of information between participants to an integrated platform thereby enhancing transparency, data security and capturing efficiencies.”

Colin Parfitt, President, Chevron Supply and Trading said: “Chevron is joining the VAKT consortium to stay at the forefront of the technology’s development and to help move the industry forward in the blockchain space”

With Chevron, Reliance and Total on board, VAKT has five of the world’s top ten largest oil and gas companies by market capitalisation as VAKT investors.

The platform will initially handle trades in the main North Sea physical crude oil contract and is expected to be extended to all physically traded energy-related commodities.