London-based bank and financial services firm Standard Chartered has completed its first cross-border blockchain letter of credit transaction in the oil industry with Thai state-owned oil giant PTT Group.

On-chain letter of credit

Standard Chartered announced that it has successfully executed a pilot letter of credit (LC) transaction for PTT Group, PTT International Trading Pte Ltd and IRPC Public Company Limited over the Voltron blockchain platform in a press release published on its website on Aug. 7.

Per the release, oil companies are often reliant on letters of credit as a form of short-term trade finance because of the significant value of their cargo. Furthermore, this reliance reportedly implies some downsides. Notably:

“This process is paperwork-intensive and requires up to five days for the delivery of these documents.”

The company claims that this pilot consisted of digitizing and simplifying the end-to-end exchange of information between all parties in a shipment of an oil product from Thailand to Singapore. The issuance, advising, and negotiation of LC and presentation of documents have all reportedly been managed on the Voltron blockchain platform.

Improvements in letter of credit transactions

The parties involved in the deal were reportedly able to view real-time updates on the progress of the transaction, which resulted in a significant speed-up of the process, which has been concluded in under 12 hours. Managing Director at PTT Supasachi Hongsinlark commented on the development:

“The system will provide more visibility to monitor trade finance flow 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 run.”

Crunchbase estimates PTT’s annual revenue to be $60.5 billion.

As Cointelegraph reported earlier this week, Standard Chartered has completed its first joint blockchain-based supply chain financing transaction.