The implementation of Blockchain in Oil and Gas Industry i.e distributed ledgers and smart contracts could advance the industry into the digital age. As the demand for efficiency and transparency continues to grow, the Blockchain technology oil and gas industry is at the crossroads. In Blockchain for Oil and Gas industry, with its global reach, complexity, and diverse regulations, simplifying and improving the paperwork and processes of global product movement is a business imperative.
The surge in the value of cryptocurrency Bitcoin and the subsequent roller-coaster-like volatility in its price has caught fancy of investors, speculators, and the general public. Blockchain is a safe, reliable, difficult to hack record of transactions. These transactions can be cryptocurrency, land records, financial transactions, contracts, or any other data.
In other words, Blockchain in Oil and Gas Industry is a trustworthy ledger which maintains records. Adopting technology has always been a strong suit of the oil and gas industry. Blockchain for Oil and Gas is another tool that can improve efficiency and reduce costs for backend operations such as supply chain and inventory management.
Advantages of Blockchain
- Blockchain is transparent. The ledger it maintains is a public ledger that is accessible to everyone just like the internet.
- Blockchain is safe. It secures users’ footprints in the transactions. It’s just like working on Google docs with many other authors and the comment of each is preserved in the document.
- Blockchain eliminates the third party. In most financial transactions, banks are the third party. Now imagine a world with direct transactions between the individuals with everything recorded.
Blockchain for Oil and Gas offers three features to make back-office work more efficient:
All documents, compliance documents, including contracts, and associated paperwork, can be placed in a central location, available to all stakeholders. Once these data are stored it cannot be changed.
Data stored in Blockchain for Oil and Gas can be shared with regulators in real time without any manipulation in between. This increases compliance accountability and trust in the entire process.
- Cost and time
Blockchain technology oil and gas industry, transactions involving a wide range of work orders, invoices, and bank notes can be a huge challenge to manage. This Blockchain Oil and Gas complexity results in a lack of trust between the stakeholders, lack of transparency, and legal disputes over operations and data management, and delays in reaching and implementing settlements.
Introducing Blockchain Oil and Gas to the system would help alleviate these concerns, reducing the money and time lost to stakeholder disagreements.
- Financial transactions
When money changes hands, there is significant risk. Reducing that risk costs money: Banks and intermediaries charge substantial amount of fees to act as middle men in financial transactions. These third-party costs could be eliminated with the blockchain.
A commodity-based cryptocurrency would make the payments faster and more direct while also making them more secure. Blockchain in Oil and Gas Industry based “smart contracts” would release funds only after the terms of a contract were fulfilled.
Land Records Management and Equipment
For oil and gas companies, one of the most important aspects is the proper management of the land sale records. For these companies, millions of dollars’ worth of investments and profits depends on maintenance of proper and unambiguous records related to who owns these large parcels of land.
Leveraging Blockchain in Oil and Gas Industry to record sale and transfer of land, will create an Immutable audit trail of land movement, ownership, and value. Blockchain technology oil and gas will reduce ownership disputes, title mismatches, and provide tax authorities with accurate land transfer information along with value as they occur in real time.
Whether onshore or offshore, the Blockchain Oil and Gas industry is heavily regulated, with protocols deriving from multiple sources and covering everything from the environment to tax. Data contained in Blockchain Oil and Gas can be shared with regulators in real time to maximize visibility and eliminate the fines meted out for non-compliance. Collaborative interactions can also be improved through Blockchain Oil and Gas.
The Blockchain in Oil and Gas Industry is not going to replace government process concerning how land is registered and monitored. Blockchain for Oil and Gas will make governance of land registration simpler and corruption-resistant.
Characteristics of Blockchain in Oil and Gas Industry
- In a blockchain, all parties share a common ledger and any transaction taking place on the blockchain is updated to the ledger of all the parties.
When a node submits the transaction on the blockchain, it signs the data or the transaction with its private key. In this way the transaction remains securely protected on blockchain.
A smart contract is a piece of code written on top of blockchain that executes on every node when a certain condition is met. In a way, a smart contract helps to automate processes.
If a majority or 2/3rd of the nodes agree with the result, the transaction is confirmed on the blockchain.
- All the transactions in the blockchain are put into the blocks and linked together. Each block carries the address of the previous block, making it easy to trace any type of transaction.
In blockchain, once a transaction is committed or confirmed by all the nodes, no one can alter or delete that transaction.