An initiative to modernize energy trading processes through blockchain was receiving overwhelming interest from market participants, Chief Operations and IT Gunvor Group Eren Zekioglu said in an exclusive interview. The new platform, to be developed by a newly created, London-based company called VAKT, aims to modernize the post-transaction management of physical energy commodities trading.
Gunvor kicked off the collaborative project in November 2017 together with a consortium of companies including energy majors BP, Shell and Statoil; trading houses Koch Supply & Trading and Mercuria; and banks ABN Amro, ING and Societe Generale.
“The amount of interest we’ve seen since the launch has been overwhelming. The biggest names in our respective industries have all contacted us, expressing an interest in being part of this movement,” Zekioglu said.
“From being a participant, a user, or even an investing partner, the market has expressed its support, and we’ll reciprocate that support with collaboration. The commodities trading industry, which is known for being one of the most competitive in the world, has clearly sent us a message that it wishes to unite to move it forward,” he added.
Few details on the functionality of the platform have been disclosed since the consortium was launched. What is known is that it intends to set up secure, smart contracts and authenticated transfers of electronic documents, to help its members move away from traditional and cumbersome paper contracts and operations documentation. This will reduce risks of error and cut costs, while improving the reliability and efficiency of back-end trading operations.
A truly market-transformative function would be for the platform to also match counterparties in the way that brokerages do. This does not appear to be on the cards in the short-term, but Zekioglu did not discount it altogether.
“If you can send a Tesla into outer space, then you can do anything. It just depends on the needs of the users and the imperative to preserve a competitive environment for everyone,” he said.
The main challenge in setting up VAKT has been the technology itself, “which continues to mature very quickly,” he pointed out.
“We’ve had to keep pace and jump in while everything evolves. This means establishing a true subject-matter collaboration in terms of trading and technology,” he said.
“When setting up a company with the involvement of such major firms (oil majors, banks, traders, etc.), you’d assume every step would be a challenge.
But to the full credit of everyone involved, we haven’t experienced any standard bureaucratic issues,” he added.
VAKT, which is the Swedish word for guard, has a growing number of employees and is being led by industry veteran Jon Jimenez, who holds the role of interim CEO, after a 20-year career at BP.
More details could surface later this week, when VAKT is expected to issue its second statement.
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