The use of blockchain technology for rapid trade settlements is a concept that has been tried and tested by multiple stock exchanges across the world. Few have also gone ahead and implemented those solutions into their platform. But for the first time, an international trading house is exploring the use of distributed ledger for settling US crude oil transactions.
The Singapore-headquartered company, Trafigura has joined hands with Natixis — a French banking institution and tech giant IBM to try the blockchain solution. According to the reports, they will be using Linux Foundation’s Hyperledger Fabric blockchain to revolutionize petroleum trading by making the whole process fast, transparent and much more secure.
The solution brings all the stakeholders in the transaction viz., buyer, seller and the banking institution facilitating the trade on a single blockchain. By doing so, all the parties will have access to the same data, mostly in real-time. They can simultaneously share and view information about the status of the transaction. The reported steps include the confirmation and validation of trade, inspection of the commodity, transportation, final delivery and the last piece of paperwork — cancellation of the letter of credit.
But the implementation won’t stop here. Trafigura intends to further expand the solution to include other parties starting from the ones responsible for drilling the crude oil out of the earth to the final storage place and everyone else in between. Hyperledger’s Fabric blockchain has already proven to be a useful, robust piece of technology, quite capable of handling such requirements. IBM has been offering the Fabric blockchain solution as a part of its Platform (Blockchain) as a Service offering to many companies. Its partnership with Trafigura and Natixis is the latest of such collaborations.
Speaking about the implementation, the head of global energy and commodities at Natixis New York, Arnaud Stevens was quoted in a publication saying,
“The current process is paper and labor intensive, we have multiple friction points with high processing costs and limited automation. Distributed ledger technology brings some much-needed innovation into our industry.”
IBM believes that by implementing a blockchain-based solution for managing oil trade, it will be able to ensure consistency in trade finance while promoting digitization of transactions and information sharing in the process.
Some of the other ongoing Hyperledger Fabric based projects implemented in partnership with IBM includes Maersk’s shipping and logistics solution, Invictus’ Order Logistics and Payments platform and more.
Ref: FinExtra | Image: Energy Search Partners