London-based banking and financial services provider Standard Chartered has completed its first cross-border Letter of Credit blockchain transaction in the oil industry.
L/C blockchain transaction for oil industry.
In a press release published on its website on August 7, Standard Chartered has announced that it has successfully conducted a pilot (test) Letter of Credit (L/C) transaction through the blockchain platform of Voltron. The test transaction was conducted for the Thai oil giant PTT Group, PTT International Trading Pte Ltd and IRPC Public Company Limited.
According to the press release, oil companies often rely on letters of credit as a form of short-term trade financing because of the significant value of their cargo. Moreover, this dependence allegedly implies some disadvantages. In particular:
“This process is paper intensive and requires a maximum of five days for the delivery of these documents.”
Standard Chartered claims that this pilot consisted of digitizing and simplifying the end-to-end information exchange between all parties, in a shipment of an oil product from Thailand to Singapore. The issue, advice and negotiation of L/C and presentation of documents are all managed on the Voltron blockchain platform.
Parties involved in the transaction were able to view real-time updates on the progress, which resulted in a significant acceleration of the process, which was completed within 12 hours. Supasachi Hongsinlark, Managing Director at PTT, commented on the development:
“The system will provide more visibility to monitor the flow of trade financing in real time, which will improve transparency and credibility for the trading process and thus strengthen the relationship between our partners and stakeholders in the long term.”