The blockchain is an emerging technology that is proving to be a major disrupter across several industries. Here in this article, we speak about energy sector which faces a lot of complexity and is in need of some security improvements.
Nowadays, companies in various sectors have started to explore the potential of blockchain technology in order to curb down the transaction costs and make it more faster and more transparent.
The energy sector is no exception and companies should really consider how blockchain can create an impact on their business and the opportunities it comes with.
Energy Sector: The Oil & Gas Industry
The Oil & Gas Industry is now a global giant i.e, comprised of innumerable companies, government, and regulatory bodies. As of now, the industry’s current scenario is facing issues with proprietary databases and infrastructures, cooperation has become difficult therefore impacting the performance negatively.
Here are a few current and potential use cases of blockchain technology to consolidate into the industry:
The blockchain is overgrowing from the cryptocurrency identity of distributed consensus ledgers to become smart contract coordinators. In a contractual agreement, blockchain has now gone past developing effectiveness by eradicating the legal and financial intermediary. Blockchain has now assumed the role of a credible guard and a curator of transparency.
Recording Land Use Rights
One of the major challenge that an industry like Oil & Gas posses is the management of land ownership, land use rights and mineral leases.
In a few cases, land titles can either be mismatched or displaced. The landowners might have different understandings on the values that are agreed upon. The smart contracts of blockchain provide proof of ownership, prices, date of transactions and other relevant information; this thereby reduces the time gap in the process of ownership transfers and document filing dates.
Physical Commodity Trading
The ongoing process of conducting physical refined product trades take into account plenty of manual steps, also needing to enter the exact pieces of information into distinct systems with numerable layers of data reconciliation. Bringing in blockchain’s distributed ledger technology can help in reducing the time spent on accommodating the differences in price and volume among the trade participants; ensuring that the same data is available to the parties at the same moment.
The blockchain solution also helps in lowering the transaction security threats connected with the mail documents. Oil & Gas companies that adapt blockchain technology can enhance trade accuracy, increase scheduling and the efficiency of invoicing and settlements, quicken the trade data for access and cut down the working capital cycle.
Blockchain technology spurs out to public owing to the popularity of bitcoin and other cryptocurrencies; therefore the easy entrance to the oil & gas sector would be via automation and authentication of financial payments, especially in international financial transactions.
Blockchain facilitates oil and gas companies to safely complete the transaction process through the entire energy supply chain, without involving any of the intermediaries like banks, brokers and other third parties. Generally, oil and gas are sold in huge quantity and at a high frequency, enabling blockchain in this industry can save these companies the considerable amount of time and money, while also reducing the exchange rate fluctuation risks of international transactions.
Also Read: 4 Ways Any Business Can Use Blockchain
Energy Supply Chain Security
There seems to be the creation of both fraud and errors in this industry due to the combination of high transaction volume, high transaction frequency and high dollar value in the energy supply chain.
It would take a colossal administrative effort in withstanding the issues like fraud and errors. With the help of blockchain technology, recording the exchange of money and goods will validate the transfer and also maintain the privacy levels of the sales transactions for both the buyer and seller.
Blockchain will allow companies across distinct industries to improve costs, reduce waste, manage data transparency and increase optimization.
Digitally validating the oil and gas sector is now becoming a reality. However, there might not be many companies that will be hesitating to adopt this technology, but now is the right time to taste some success with the technology.
If you’ve got a few important blockchain use cases for the oil & gas industry, write them down in the comments section below.