LONDON (ICIS)–The London-based consortium VAKT
aims to introduce its blockchain-powered
commodities post-trade processing platform in
the northwest Europe petrochemicals markets by
the end of this year, according to its chief
commercial officer (CCO).
Stephanie Trabia said in a written response to
ICIS the service will be initially offered to
players in the petrochemicals hub of
Amsterdam-Rotterdam-Antwerp (ARA).
VAKT aims to expand its current platform,
currently in use for crude oil trades in the
North Sea, to petrochemicals, although Trabia
would not disclose an exact date for the launch
in the ARA region.
Apart from petrochemicals, VAKT also plans to
cover US crude oil pipelines as well as
northwest Europe refined product barges as the
company aims to gain market share in all
physically traded energy markets.
The company hopes to gain traction by allowing
trading parties and ecosystem participants to
communicate and exchange sensitive information
in a secure, efficient, and digital way.
Blockchain technology allows the participants
to keep ownership and control of their data
while benefiting from the immutability and the
time stamped record of all the actions run
through the blockchain.
Over the past years, other attempts to use
blockchain in the petrochemicals industry did
not gain enough traction to change
well-established trading methods.
However, Trabia said implementation within the
petrochemicals industry is gaining momentum,
reason why VAKT decided to expand into the
sector this year.
VAKT counts among its founding members energy
majors like BP, Shell, and Equinor; investors
in the enterprise include Saudi Aramco, Total,
Reliance, Mercuria, and ABN AMRO.
Trabia said the oil and gas sector is already
embracing distributed ledger technologies (DLT)
such as blockchain and she was adamant to
differentiate cryptocurrency from DTL.
“Cryptocurrency is a speculative
asset – that is not our
business. But if you consider
[DLT] from the perspective of
tokenisation, where a token may
represent ownership
of a cargo that will be changing
hands in a similar fashion to
the passing of cryptocurrency from
one wallet to another, DLT technology and
the existence of VAKT prove that interest
exists in this sector,” she said.
Despite the increasing interest from the oil
and gas sector, implementation and scale-up of
industry specific blockchain based post-trade
platforms worldwide remain relatively slow.
According to Trabia, the main obstacles would
be the change of business process across a
wide variety of participants, as well as the
lack of knowledge and technical understanding.
“The oil sector remains a more complex one than
others due to the transportation constraints of
the good. Standardisation of processes and
legal frameworks remain
challenging, but not impossible,” she
added.
ACCURATE, SAFE
Blockchain can also
play a pivotal role in ensuring sustainability
credentials of bio-feedstocks through increased
transparency and reducing fraud amid the
ongoing energy transition, she added.
“The immutability of the data and the track
record of every action on the blockchain can be
used to validate the source of the data and
authenticate the quality of the feedstock
origins. It requires the originator to be on
the blockchain and to push accurate data,” she
said.
“Every VAKT participant signs a licence
agreement with us, making them liable for any
data they push to the blockchain.”
Supporting the traceability of bio-feedstocks
to provide comprehensive breakdown of the
product evolution of the fuel along the supply
chain is still a grey area for the global
biofuels industry.
In theory, DLT technology platforms such as
VAKT’s could potentially be implemented to
remedy feedstock origin concerns for products
that rely on bio-feedstocks.
OBSTACLES
Regulation
around the technology stands to play a crucial
role in widespread implementation, but it is
yet to be clearly established.
According to Trabia, the biggest complexity
lies in the recognition of digital documents,
especially ownership titles, by ports and
customs authorities across Europe, as well
other bodies such as marine police forces.
“It is not about the technology used but more
about the legal framework not yet being aligned
with the new technology environment. The
Singapore Marine Port Authority is playing a
leading role in this change,” she said.
There have recently been some wider concerns
about the vast energy consumption of certain
cryptocurrencies which may be an issue in the
age of sustainability and energy transition.
Trabia conceded that energy consumption
“remains a very sensitive topic” but added that
private blockchains like those developed by
VAKT would not have the same high consumption
levels as public ones, where active mining
occurs.
“Nevertheless, our new technology relies more
and more on electricity, and this remains a
debate which is wider than the cryptocurrencies
world,” she said.
She concluded arguing that the technology
developed by the consortium would at least gain
green credentials from less use of paper
documents, for example.
Front page picture source: Mark
Lennihan/AP/Shutterstock
Interview article by Nazif
Nazmul