In a bid to accelerate its efficiency and productivity via blockchain technology, Reliance Industries Limited (RIL), a Mumbai-based conglomerate holding firm that deals in petrochemicals, telecommunications. textiles and more, has invested $5 million into Vakt Holdings Limited, which is a U.K.-based distributed ledger technology (DLT) firm, reported VCCircle on December 24, 2018.

Energy Trading Company Adopts Blockchain Technology

Reliance Industries Limited is primarily focused on the exploration and production of oil and gas, but of recent, their attention has been drawn to blockchain technology.

This is evident in their 5.56 percent equity share in Vakt Holdings Limited which was bought at $5 million.

According to the Mumbai-based company, they aim to digitize their trading processes and also meet the trends in technology. Therefore, they have decided to employ a blockchain solution in their energy markets division to create an ecosystem that is secure and trusted.

While revealing the details of the said investment, RIL mentioned that regulations were not carried out before an agreement ensued between both parties.

Moreover, this is an investment that cannot be categorized under the “related party transactions.”

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Vakt, Formed by the Alliance of Reputable Companies

The U.K.-based startup, on the other hand, is a blockchain venture created in December 2017. It was formed as a result of an alliance with nine major energy companies and banks, including Shell, Statoil, Mercuria,  Societe Generale, and ABN Amro.

As per sources close to the matter, the DLT solution monitors the full life cycle of energy trading, as well a the manual processes of maintaining information on paper, as well as mitigating risks and fostering cost-efficiency.

Although Vakt is still in its development stages, there are plans that member companies will be among the first to gain access to it in 2019. These companies, as well as RIL, will be using it for the trading of oil and gas.

Reliance Jio Infocomm, an arm of Reliance Industries reportedly made it clear that they were also interested in modern technologies a few months ago.

A team was hired to look into the application of nascent technologies such as DLT, artificial intelligence  (AI), and machine learning.

On November 14, 2018, BTCManager reported that Shell and Equinor had sponsored a blockchain-based platform that is aimed at revolutionizing the oil and gas sector. In related news, on December 2, 2018, BTCManager informed the Vakt had been successfully launched, in a first of its kind occurrence for the oil and gas ecosystem.

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VAKT, a blockchain-based consortium formed by leading oil and energy sector companies announced the launch of its commodity post-trade management platform through a press release dated November 29, 2018. The launch entails the birth of the world’s first enterprise-grade DLT platform in the oil and energy industry.

Improved Security and Efficiency in Crude Oil Business

BTCManager reported on November 14, 2018, how a DLT-powered platform backed by global oil behemoths is scheduled to go live by the end of the year.

The newly christened platform will benefit the world’s leading energy traders in the physically traded BFOET (Brent, Forties, Oseberg, Ekofisk, and Troll) crude oil business. It will simplify the process of management of physical energy transactions, right from the trade entry to the final settlement. Digitization of records in the blockchain will also render reconciliation and paper-based processes obsolete.

It’s worth highlighting that the platform has already partnered with global software consultancy ThoughtWorks for technical expertise and uses JP Morgan’s Quorum private distributed ledger.

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At present, BP, Shell, Equinor, and Mercuria operate as VAKT’s first users, although the platform will be accessible to the wider market from January 2019. Some of the other companies that have put their weight behind VAKT include Koch Supply & Trading, ABN Amro, Societe Generale, and ING.

Sharing his thoughts on the launch of the platform, John Jimenez, Interim CEO, VAKT, stated:

“We’ve been overwhelmed by the strength of response to the VAKT concept. Launching into our first market with such high-caliber first users is a transformational moment for us and the industry. 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.”

Notably, VAKT will be integrated with the recently announced blockchain platform for commodity trading – Komgo. The integration will facilitate banks to provide DLT-based financial solutions to the users of VAKT.

Plans to Expand the Platform to Wider Markets

While the initial service offering is limited to trade only in BFOET crude oil contracts, VAKT plans to expand to all physically traded commodities. The firm is in the process of designing its roadmap in response to “industry need” and is already slated to launch the U.S. crude oil pipelines and Northern Europe refined product barges by Q1 2019.

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