Today VAKT announced it has launched its post-trade blockchain platform for Brent crude oil, its initial target market. VAKT is backed by major energy companies, banks and traders. The private launch sees backers BP, Shell, Equinor, Gunvor and Mercuria go live on the system.
However, at this stage, the organizations are running in parallel to their internal systems. VAKT aims to open up the platform to the broader market in January. And the intention is to expand to all physically traded energy commodities. In early 2019 US crude oil pipelines and Northern Europe, refined product barges are targeted to launch.
“Launching into our first market with such high-caliber first users is a transformational moment for us and the industry,” said John Jimenez, Interim CEO. “But it’s just the start: success for a blockchain solution depends on widespread adoption and we’re looking forward to seeing the ecosystem grow.”
Other shareholders include Koch Supply & Trading, ABN Amro, ING and Societe Generale. All the shareholders apart from BP and Equinor have also joined the komgo trade finance blockchain announced two months ago.
One question is what does VAKT cover? “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,” Lyon Hardgrave VP of VAKT told Platts two weeks ago.
So it manages the cycle from (post) trade entry to final settlement to eliminate reconciliation and paper-based processes.
Eren Zekioglu, Chief Operations & IT Officer, Gunvor, commented: “To be great, a trading company needs two things: good technology and speed. By radically streamlining post-trade processes, VAKT offers both.
The startup expects users to enjoy a 30%-40% efficiency and trade finance savings for post-trade processing.
“Ultimately the aim is improved speed and security, which benefits everyone along the supply chain from market participants to customers,” said Andrew Smith, EVP Trading & Supply, Shell.
JPMorgan’s Quorum was used as the blockchain platform with help from software consultancy ThoughtWorks.