How can oil companies use blockchain?

Many key stakeholder relationships exist, including suppliers, subcontractors, and contract terms. As a result, platforms like trade Oil online come up with the best trading algorithm that is exceptionally suitable for beginner bitcoin traders. However, the industry is fraught with financial and operational risk in the form of inconsistent contract terms and conditions, duplication of work effort, and potential fraud. Blockchain can help streamline the complexity of these relationships and reduce cost, risk, and inefficiency, but how can oil companies benefit from the technology?

Before exploring ways that oil companies can use blockchain in their operations, it is essential to understand what blockchain promises for different industries and which are the maximum and minimum use cases. Blockchain is not a panacea and will only suit some industries. However, oil companies that focus on core business functions and use blockchain only as a tool for simplification and streamlining will get the most out of the technology.

The great potential of blockchain in the oil industry:

The potential for blockchain is most significant in industries requiring tight security over data but where there is an immediate need to reduce costs and risks. Examples include financial services, logistics, insurance, and health care.

In these industries, creating immutable records with immutability guaranteed by multiple sources will enable cost savings while reducing operational risks. For example, blockchain can automate this and improve safety if a new truck arrives at your facility every week that requires a separate record entry in every subcontractor’s books at arrival time. Likewise, in oil industry supply chains, blockchain can create immutable records of consumption and provenance for each shipment, thus helping with compliance.

Similarly, use cases in the oil industry would include tracking drilling equipment or processing fluids (e.g., fracking fluid). While these are ideal use cases, they are not commonplace in the industry and require careful planning, development, and implementation. Companies must pay attention to core business functions while chasing these use cases; this will significantly reduce the value of any blockchain project. To make valuable blockchain in the oil industry more than a tool for recording transactions and data management, it needs to become part of an integrated solution.

Logistics and IoT technologies:

Logistics technology is about to change, and the oil industry will be an early adopter of the new technologies. Use cases include more wide-ranging tracking of products throughout the supply chain, more connected and intelligent sensors that enable better logistics operations, and more efficient routing of deliveries.

The oil industry needs to catch up with this happening. Despite a lot of interest by the major oil companies (such as Royal Dutch Shell), there has been a need for more new technological innovations from companies like UPS or Amazon. One reason is that many in the oil industry are not looking at technologies from a strategic point of view; they focus on data center efficiency and profitability. Blockchain is a technology that will disrupt many industries, and oil companies need to understand which use cases are most appropriate for their industry.

 Single point of accountability:

One of the most significant benefits of blockchain is its ability to automate and decentralize critical functions, such as record-keeping. For example, the global nature of oil supply chains means that there is a single point of accountability for many transactions. The trouble with traditional systems is that there are multiple data sources (e.g., supplier invoices and subcontractor invoices). Blockchain significantly improves on this by implementing an immutable ledger system; all parties in the supply chain will have access to the same information, reducing redundancy and operational risks.

Hydrocarbon trading:

The blockchain is not merely a technology for recording transactions but also a platform for building new applications that deliver real-time business benefits. These use cases will ultimately determine whether or not blockchain succeeds in an enterprise setting.

For instance, energy trading companies have seen significant interest in using blockchain to handle energy trading more efficiently using smart contracts. These use cases may disrupt whole business models and radically change how energy trading is done today. Moreover, hydrocarbon trading itself is an ideal use case for blockchain. The industry is rife with cash transactions and open contracts that may change prices and must move quickly to avoid price fluctuations.

The oil industry needs a way to record these transactions securely and update them instantly, giving the trading parties visibility into their positions and the details of any changes. A blockchain-based system allows fast execution and a high level of transparency without compromising data integrity. These are, in fact, use cases that can deliver real business value to the oil industry right now through ongoing integration with essential business functions such as supply chain management.

Information Security:

The oil industry is dealing with information security issues. When data is managed correctly, companies can protect it from counterfeiting and theft. Blockchain-based solutions offer a decentralized solution to these problems. By having access to a central database of all transactions, hackers become less effective because they cannot use stolen records to open new accounts or perform trades that would impact the market. It is an ideal use case for blockchain outside of the energy industry. Still, it is also applicable across many industries that deal with confidential data and must provide high levels of security over their information systems.