The venture arm of the world’s most profitable company – Saudi Aramco – has invested $5 million worth of shares in blockchain-based oil trading platform Vakt.
According to reports on Tuesday, Aramco’s Energy Ventures division has invested $5 million into Vakt, which will be used to further develop the platform and expand it into Asian markets.
In addition to investment, the state oil company’s trading subsidiary Aramco Trading will also become a user of the platform. Vakt is currently live in the North Sea Brent, Forties, Oseberg, Ekofisk and Troll crude oil markets, where it reports to have a high market share. According to data, it is processing 90% of the total transactions. Aramco Trading will add its own trading volumes to the blockchain-based platform, which will boost the platform further.
Upon the announcement, Richard James – CFO of VAKT – has explained how Saudi Aramco became their 13th shareholder to join the board.
“This company (Aramco) – part of the most profitable business in the world – has a strong track record of investing in industry innovation.”
“We were not proactively seeking further investors; however, we could not miss the chance to bring on-board a partner of this caliber, which is a tremendous show of faith in VAKT’s vision,” added James.
The platform is using blockchain to digitalize post-trade documents, providing a smooth process from trade entry to settlement by eliminating paper-based processes and manual accounting practices. According to Vakt, the use of blockchain ensures a “single source of truth” for both buyers and sellers, which is stored on an immutable and distributed ledger.
Vakt launched its trading platform in December 2018 with an initial limitation on North Sea markets. The company, however, was created in 2017 by a consortium of industry leaders that included Shell and BP, which were also the first users of the platform.
Other shareholders include Chevron, Total, Reliance Industries, EquinorGunvor, Mercuria, Koch Industries, ABN Amro, ING, and Societe Generale.
On the other side, Saudi Aramco is considered one of the largest companies in the world by revenue and recently had an IPO of 1.5% of its stock – worth $25.6 billion, leading to a total company valuation of $2 trillion. The company has both the world’s second-largest proven crude oil reserves and the second-largest daily oil production.
Following the news, Hans Middelthon, MD of Saudi Aramco Energy Ventures Europe stated:
“VAKT has demonstrated that their platform has the potential to digitize what is currently a very manual process and be truly transformative to end users and customers.”
Notably, Saudi Aramco has also previously invested in blockchain firms via its venture subsidiary Saudi Aramco Energy Ventures. In May 2019, the firm participated in a $6 million funding round for American blockchain startup Data Gumbo Corp., which is a blockchain-as-a-service startup for industrial companies, especially from the oil and gas sector.