# Digitise post-trade paperwork in physical crude oil trading

> VAKT Global Ltd. runs a shared platform on which BP, Shell, Equinor, Gunvor and Mercuria handle the post-trade processing of physical crude oil deals digitally. Instead of reconciling deal recap, confirmation, contract, logistics documents and invoicing across separate systems, both counterparties work on the same record. The platform went live for Brent crude on 29 November 2018 and covered around two thirds of North Sea crude trades after opening to the wider market.

**Sector:** Tertiary sector · **Industry:** Wholesale · **Organisation:** VAKT Global Ltd. · **Maturity level:** Production

Canonical URL: https://www.sapientblock.com/en/use-cases/vakt-global-papierabwicklung-rohoelhandel-vollstaendig-digitalisieren

## Documentation status

- **Project status:** Production
- **Evidence:** Evidence medium
- **Editorial review:** pending

## Description

VAKT Global Ltd. operates a platform on which the largest players in the physical crude oil trade jointly map their post-trade processing. After a deal is concluded, a paper-intensive process usually follows, including deal recap, confirmation, contract, logistics documents and invoice, where each counterparty maintains its own systems and discrepancies are resolved via email and phone. On the shared platform, both sides instead work on the same data set, eliminating reconciliation loops.

VAKT went live on 29 November 2018 for the Brent crude oil market, initially with shareholders BP, Shell, Equinor, Gunvor and Mercuria, who operated the system alongside their internal processes at first. In January 2019, the platform opened to the wider market, and after onboarding further customers, it covered around two-thirds of North Sea crude oil trades. Technically, the platform runs on Quorum, the enterprise-ready Ethereum variant developed by JPMorgan, which allows confidential transactions between selected participants. The covered process scope ranges from deal recap through confirmation, contract and logistics to invoicing, thus mapping the entire commercial chain after trade conclusion. Saudi Aramco invested five million US dollars in the platform, and the operators expanded the application area in 2019 to US crude oil pipelines and North European product barges. The case shows that competing market participants can support a shared processing infrastructure as long as the confidentiality of individual trades is maintained.

## Benefits

- Significantly less manual reconciliation effort in post-trade processing.
- A transferable model for other physically traded commodity markets.
- Both counterparties work on the same processing data set, so discrepancies do not arise in the first place.
- The entire commercial chain from deal recap to invoice is contained within one system.
- After market opening, the platform covered around two-thirds of North Sea crude oil trades.
- The confidentiality of individual trades is preserved vis-à-vis other participants.
- Less repeated data entry, more focus on exceptions.
- A shared, reliable data basis for processing.

## Challenges

- In the initial phase, participants ran the system alongside their internal systems, causing double effort.
- The benefit only arises when the dominant trading houses actually participate.
- Connecting each participant’s existing trading and ERP systems is complex.
- Competing companies must agree on common governance rules.
- Employees must master the network rules and the new interfaces to core systems.

## Technology foundation

VAKT runs on Quorum, the enterprise-ready Ethereum variant developed by JPMorgan that allows confidential transactions between selected participants. This is crucial for crude oil trading because competing trading houses must share the same settlement chain without disclosing their trades to third parties.

## Sources

- [VAKT oil post trade blockchain goes live](https://www.ledgerinsights.com/vakt-oil-post-trade-blockchain-goes-live/)
- [Blockchain Oil Trading Platform Backed by Shell and BP Is Now Live](https://www.coindesk.com/markets/2018/11/29/blockchain-oil-trading-platform-backed-by-shell-and-bp-is-now-live)
- [Oil blockchain VAKT covers 2/3 of North sea crude trades](https://www.ledgerinsights.com/oil-blockchain-vakt-launching/)