Block-Chain into Oil and Gas Industry

Block-Chain into Oil and Gas Industry

Blockchain

Blockchain Experts

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Oil is the lifeblood of today’s world, and Natural Gas is the oxygen that it breathes. Ever since the industrial revolution, Fossil fuels have propelled the world into a bright future, by being the major fuel that kept the torch burning. As time passed, technologies developed, but they retained their status as the most widely used form of fuel in both domestic and industrial applications, directly or indirectly. Even the pollution and ecological issues that accompany it hasn’t dulled its shine as much as it should have.

Even though the status of Oil and Natural Gas among fuels hasn’t changed, the industry that revolves around them to obtain it, refine it and sell it has evolved over the times. Technological advancements have made extraction, refining and business a lot easier for the companies. However, these developments have always been focused mainly on field applications rather than the proceedings of office work or business that is associated with the industry. This is where the potential of Blockchain lies in this field.

Blockchain has immense potential to be used in any field of work, be it STEM Fields of other services. And the Oil industry is no exception. Being an electronic, transparent, and encrypted ledger, which is monitored and edited in real time, the very essence of Blockchain is what the business side of Oil and Gas industry requires.

The nature of the business of oil and natural gas is that of a global phenomenon which is affected by a plethora of variables that decide how the price should change and how much sales has to be carried out. These variables include international market rates, geopolitical scenarios and decisions by Oil producing countries. These variables change in real time, every second and these changes could have grave implications on the price of oil and related goods.

Blockchain: The Perfect Ledger

Blockchain, being constantly updated and variable, is the perfect medium to track the business on for industry. The ledger is stored on all the systems involved in the network and can be accessed with the right credentials to be edited, monitored and read from. It is ideal for businesses which are spread on an international level. Being decentralized and encrypted, yet accessible, it provides high security along with total transparency.

Every transaction that occurs in a blockchain has a certain transaction number and digital receipt associated with it, which helps us track all the transactions that happened in connection with a particular entity, along with the details of the transaction. The reason why this is important is that it helps to trace the source of the oil which has exchanged hands through multiple international contracts back to the original source. This is essential during the sale of oil and related goods, where the commodity changes hands multiple times before reaching the open market.

Blockchain also offers a very high security. The information stored on a blockchain cannot be tampered with or corrupted without all the other systems knowing about it. The information is stored on all the computers which are part of the network, hence effectively decentralising it. This has a two-layered method to ensure security.

  • Access is granted based on clearance with proper credentials.
  • The storage of the information is shared across all the terminals, hence there is no single central data bank.
  • Any viewing or manipulation of the data will leave a trail, which can be traced by any system in the network.

Despite being encrypted and very secure, it offers a high amount of transparency and mobility. Due to this, the updates that happen on any one system is open for viewing for all other systems in the network, in real time. This kind of connectivity is essential to the Petroleum and Petrochemical industry, due to its extremely volatile nature.

Blockchain and Oil

The oil industry has many factors that judge its cost and sales, and these factors change instantly. Due to this instantaneous nature, the price of oil and natural gas at the time of drilling and extraction might be different from its price when it reaches the open market. Therefore, the uncertainty associated with the sale of oil and natural gas is very high. This uncertainty is bad for the industry, as a crash that happens suddenly may leave people in financial loss.

The speed associated with blockchain transactions are unprecedented in the industry. Using this tech, the oil drilled up can be digitally put up for sale in real time. The speed will more than compensate for the instability of the market, making the trade a lot safer economically.

Trade agreements

Blockchain also has huge scope in trade agreements and contracts. The enormous paperwork that accompanies every contract signed between traders has been a huge hurdle for the market for years. This issue can easily be solved by incorporating blockchain technology to sign contracts. The terms and conditions, clauses and all other details of the contract can now be stored digitally. This not only reduces the bulk of the effort but also speeds up the contract signing and boosts the industry.

Blockchain also has huge scope in trade agreements and contracts. The enormous paperwork that accompanies every contract signed between traders has been a huge hurdle for the market for years. This issue can easily be solved by incorporating blockchain technology to sign contracts. The terms and conditions, clauses and all other details of the contract can now be stored digitally. This not only reduces the bulk of the effort but also speeds up the contract signing and boosts the industry.

Not only that, use of blockchain in contract signing helps to create smart contracts, which will have additional options to monitor the sale, logistics, and use of the traded oil or natural gas. This will make the contract more useful than for just legal purposes. All this will be completely secure, but also transparent.

Counting the Variables

The price of Fossil fuels is determined by a multitude of factors including political and international ones. All these change quickly and randomly, which makes tracking them extremely difficult. The time delay between a political decision and its transmission through the different nodes of the industry could cost millions in both money and oil. Therefore, tracking this information is a crucial task. Blockchain technology can do a lot on this front.

By using blockchain, the information that could potentially affect oil prices can be monitored and tracked in real time, and incorporated into the price determining the mechanism to ensure zero delays. Simply put, it’s instant transmission.

Conclusion

Fossil Fuels are the lifelines of the world, and the most used energy source today. Blockchain offers infinite potential in the oil and natural gas industry. The highly volatile business needs something like it, which guarantees high speed and safety along with complete transparency. It is the ultimate Data Bank, and if used wisely can open new frontiers to the industry.

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