Blockchain transparency can help the oil and gas industry.

Throw in the labyrinth of constantly changing regulations in different countries, and you have an environment that can make transparency almost impossible. Nevertheless, you can check https://oil-profits.com/to begin bitcoin trading with the right tools, strategies, and experienced traders’ guidance. A blockchain-based supply chain will offer a single source of references and information, available to all parties, with records verified by consensus for all parties to view.

The result is increased transparency and trust between participants in the supply chain. It will reduce risks from any party concerned about product quality or authenticity. Blockchain technology has broad implications for many industries. Still, it could offer oil and gas companies a capability not yet experienced – near real-time visibility into their complex global network of suppliers, partners, manufacturers and customers, which may be critical to future success.

 The oil and gas supply chain is a complex web of companies, all reliant on each other to undertake basic tasks such as building and maintaining facilities, providing energy to run the sites or shipping products. This supply chain is extensive, from onshore offices at exploration and production sites to the world’s largest onshore facility, Saudi Aramco’s King Abdullah Port.

Current challenges:

Each link in the supply chain requires considerable investment in people and equipment with responsibility for ensuring that transactions meet regulatory requirements. Conflicts over payment terms can arise between buyers and sellers in different countries due to differences in legislation or even cultural differences. Relationships can deteriorate due to issues regarding technical specifications or supplier reliability. Risk is inherent in the structure of this industry, which relies on trust between the parties, and any issue could have a significant impact.

Need for transparency in the oil industry:

Businesses have widely recognized the need for clarity and transparency in this industry. Still, with technology a key player in the increasingly high-tech globalized economy, progress seems to be missed. This inefficient process has also been taken advantage of by unscrupulous players who can benefit from poor service agreements or not paying their suppliers for products delivered late. Blockchain technology would represent an opportunity for the oil and gas industry to shake up this process, creating a process that can offer transparency and trust across the network.

 Currently, multiple systems and processes are used to identify suppliers, track transactions, record delivery dates and address any issues. While each supplier may have systems in place, no system is shared between them. As the number of companies involved decreases from thousands to just a few hundred, this can mean that each company has sufficient problems to deal with individually.

Significant perks of blockchain in the oil and gas industry:

In the blockchain, all participants can access the record of transactions stored in a distributed ledger, with each company having its private key to access its information. With no central authority and no delays in data transfer (due to having to wait for multiple confirmations from suppliers and customers), the clearing and settlement of invoices can be completed by companies in real time.

Due to full transparency and decentralization, blockchain technology offers the potential for the trust that wasn’t possible before its invention. The structure makes it impossible for any party to modify or delete records without others knowing due to consensus across all nodes on the network. Blockchain systems can also handle large volumes of data in a short time, as each block of transactional data is encrypted, and all nodes must digitally sign off on the data before it is verified. It means that the information is secure and cannot be lost.

The oil and industry have several challenges to overcome to use a blockchain-based supply chain system successfully: The oil and gas industry, like many others, moves quickly. Due to this speed, it may be difficult for blockchain technology to keep up with the pace of change in some sectors. Therefore, for now, businesses must still rely on paper-based procurement processes for small quantities of goods (less than one million dollars). 

Blockchain transparency in raw material tracking:

Most oil and gas industry raw materials are sourced from countries with different regulations. For example, most synthesized petroleum products in Canada are made in Edmonton, while most of those in the US are made in Houston. The industry is therefore faced with the issue of ensuring that there is no discrepancy between two companies on where people procured a product.

Blockchain technology can provide a way to efficiently track purchases, with all relevant data stored within the blockchain itself. In addition, it can enable companies to track the materials used to create a good easily, ensuring that all parties are on the same page.

The technology applies to all transaction types, covering big-ticket items such as equipment or natural resources and small purchases such as business cards or pens. However, there is still much work for this potential to be realized.