Today, Blockchain, a distributed ledger technology (DLT), is going beyond its online currency origins to several other industries, including financial, technology, healthcare and more. Now, the technology is on the verge of being adopted by the oil and gas industry. While the sector strives to adapt to the demands of an increasingly changing world, some largest oil and gas companies seek to modernize their operations through blockchain.
The technology is expected to revolutionize the majority of industries in the medium term. The development of blockchain is already gaining momentum and it is already advancing in the number of industries, including oil and gas. For instance, a few pilot programs utilizing blockchain began in the oil & gas industry in the second half of 2018, with common themes, including partnership among independent entities with shared pain points and related interests encourage them to form a consortium; Improved operational performance by sharing trusted data with rapid visibility; and Have leaders, but all invest and all consortium members benefit.
Blockchain Brings Efficiency to Oil & Gas
The industry interest in blockchain has immensely grown thanks to successful pilots and proof of concept. Blockchain offers a wide range of benefits such as secure distributed ledger containing documents and transactions, end-to-end genealogy with the block data structure, payment and invoice settlement, and equipment tracking with real-time location for maintenance.
The technology can assist oil and gas companies to improve their operations in several different areas. Equipment tracking through its entire lifecycle, from assembly to operations in the field for inventory management and asset utilization; Maintain component level genealogy to track provenance of materials and equipment; Enable smart contracts to automate business processes along with acquisition of equipment, chain of custody for products, and supply chain access controls; and transform manual paper and email record keeping to digital with improved visibility, auditability, and immutability.
Blockchain to Deliver Transparency for Oil
Though climate-related political pressure is a comparatively new phenomenon, the oil industry is exposed to other political risks. As much of the world’s oil production takes place in politically volatile regions such as the Middle East, such political insecurity can create various diverse issues for the global oil industry. However, leveraging blockchain technology could improve the situation. And the most common traits of this technology is its transparency.
Iran, for instance, that is currently under internationally-imposed sanctions, the ability of blockchain to trace their output from the moment of production to their arrival with the buyer would assist to sustain international law and trade standards.
Thus, understanding and making use of blockchain effectively could provide a range of key features that make it an invaluable technology for the oil and gas industry. The technology offers near real-time recording of transactions and visibility among participants, eliminating friction, and lessening risks. Its multiple layers of cryptography, a distributed database, and logic provide data security and self-governance for peer-to-peer transactions, and data integrity thwarts double spending, fraud, and manipulation.