Nowadays, the oil and gas industry are prone to disruptive IT technologies such as the Internet of Things (IoT), cloud computing, artificial intelligence and many more. These IT solutions for the oil and gas industry can give an edge to the industry leaders when combined with other evolving technologies such as blockchain.
Blockchain technology makes it possible for the oil and gas industry to transfer information without an intermediary. This technology benefits enterprises with near-immediate updates, transparency, exact information and enable them to implement smart contracts and have a ledger of records, which aids in accounting and bookkeeping.
This blog will look at how blockchain technology is already disrupting the oil and gas industry and improving the industry as a whole.
Blockchain as a Saviour for Oil and Gas Companies
Blockchain is getting a lot of attention from the business world as it shows the potential to disrupt multiple markets, one of them being the oil and gas market. The industry is being particularly disrupted by blockchain as it offers solutions to long-standing problems such as security, transparency, and efficiency.
1. Security and Cost Reduction Through Elimination of Middlemen
Before blockchain, international oil and gas supply chains have been historically difficult to monitor due to the number of cross-industry participants and differing uses. This means that all dispersed data must be gathered in one system, requiring many intermediaries’ involvement, increasing the risk of security breaches at multiple touchpoints.
Blockchain, being a decentralized distributed ledger technology, maintains records of transactions among multiple users as safe and accessible, thus eliminating the need for most, if not all, humans in the process.
With the help of this technology, transactions could be completed quickly, safely, and easily between non-revocable parties (they cannot be taken back) such that suppliers, buyers, and financial institutions (the same people) engage directly with one another without the need for intermediaries (and “their” fees).
2. Blockchain For Transparency in Oilfield Assets
The oil and gas industry is directly affected by the world’s population growth, which leads to more energy consumption. Currently, two of the biggest issues on the scene are an increasing need for more oilfield assets to meet the growing demand for oil and gas products and a lack of transparency in operational processes.
To keep up with the growing demand for oil products and maintain operational standards, oil and gas companies must have proper insights into these assets and processes and keep them transparent. With blockchain technology, oilfield asset visibility becomes more transparent, reducing the chances of loss or misplace, time spent resolving oilfield issues, and increasing efficiency through seamless connection with other oil and gas technologies.
3. Bringing Efficiency to Crude Oil Sector
Blockchain can speed things up when it comes to end-to-end transactions in the crude oil sector and bring many new efficiencies, which are helpful to everyone involved. From replacing letters of credit with smart contracts that can automatically verify when export documents have arrived at their final destination to releasing payments as soon as a physical inspection verifies that any agreed-upon quality measurements have been met – blockchain offers several benefits to crude oil transactions.
Blockchain can increase security and reduce physical commodity trade time by eliminating the need to enter the same information into different systems with layers of data reconciliation. In addition, the solution can help reduce the transaction security risks associated with emailing documents.
Oil and gas companies that leverage blockchain technology can increase the accuracy of their trades, simplify scheduling and back-office paperwork, accelerate access to trade data, and speed up the payment cycle.
Blockchain technology is a relatively new concept, but has quickly gained traction in the oil and gas industry. The technology is used to automate processes and create an audit trail for transactions. This is a great way for the industry to ensure that all transactions are accurate and nothing is lost in the process.
The value encapsulated by this emerging technology presents many more promising use cases for oil and gas industries. A multi-disciplinary team of blockchain experts can help oil and gas companies by providing specialized knowledge of its multivarious utilities.