How Blockchain Can Revamped Petroleum Industry
Finding the application of blockchain in the petroleum industry takes some searching. While a large number of sectors have embraced blockchain technology, the petroleum industry has been slower to embrace. A recent survey shows that 72% of petroleum executives expect blockchain to disrupt the industry.
Undoubtedly, searching underneath the earth's mantle for natural resources is a far leap from exploring how blockchain may profit the energy sector. But as the distributed ledger technology path through finance, automobile, healthcare, and agriculture, petroleum companies have begun to think blockchain technology may offer them something as well.
Let's take a look at how blockchain can benefit the petroleum industry. Finally, we will take a look at one use case that shows how blockchain is already changing the petroleum industry.
1. Digitized crude oil transactions- Using blockchain, raw petroleum transactions can be digitized that guarantees upgraded security, improved transparency, and enhanced productivity. Natixis, a French corporate bank was the first to pioneer a blockchain solution in commodity trade for US petroleum exchanges.
2. Improved trust among parties in the business- A private blockchain system could securely store the track record of representative and contractual worker certifications(H2S preparing, first aid, welding, and so on). On boosting trust among organizations and contractual workers/representatives, such a blockchain system could help to cut down on recruiting costs while guaranteeing improved job security and execution.
3. A cryptocurrency pegged against Oil- With oil being one the most important non-renewable source of energy on the planet, a digital currency pegged to it could be a reasonable replacement to traditional financial transactions. On this, such a cryptocurrency could empower the direct exchange of values between different parties in the business without the requirement for an intermediary like a bank.
4. Augmented compliance– The petroleum industry is among the most intensely regulated industry on the planet with protocols right from environmental to taxation. Regulatory authorities will have the option to boost visibility in the business as all the transactional information is stored on a blockchain that has real-time access.
5. Upgraded land record management- It is basic for petroleum organizations to appropriately manage land deal records that speak to a million dollars worth investments. The traditional procedure of storing such a record is cumbersome and is inclined to fraud and other unlawful activities. Such a significant bit of documentation could be stored on the blockchain, which can make an immutable record of land ownership, transfer, and value. In Georgia and Ghana, where there are high levels of land ownership disputes, blockchain technology is being considered as a viable solution.
6. Improved information storage for Internet Of Things- IoT is a system of interconnected computing devices or mechanical machines that can transfer information over a system. The petroleum industry depends intensely on IoT devices to screen tasks and increase their effectiveness. But the catch is, current IoT models rely upon centralized models of communication like a server/customer model. In spite of being in close to one another, these IoT devices need to transfer information over the web and intensely rely upon centralized storage solutions which could be on the radar of cyberattacks. To prevent a system from such attacks one can use a decentralized model that stores all the information in peer-to-peer fashion & hence provides more security & transparency to the system.
7. Hydrocarbon tracking- Blockchain technology can be utilized to track regulated substances like hydrocarbon viably at each phase of the supply chain process. This can help improve accountability in the business.
We have talked about a couple of the advantages that blockchain offers the petroleum industry.
Each of them is attainable with distributed ledger technology, yet some will take a little time before they become ordinary.
But, we don't need to hold back to see the effect blockchain technology is already having on the industry.
A leading blockchain development company, RWaltz Software Group Inc. has developed a blockchain-based decentralized marketplace called Afronix.
The system is specifically developed for petroleum products and able to solve security, safety, and transparency issues of traditional online marketplaces and change the way we buy and sell products online.
The blockchain is a platform-like technology that consists of a decentralized ledger that records, verifies, and tracks cryptocurrency transactions and contracts between parties. Blockchain-based or decentralized marketplaces, in turn, are peer-to-peer networks that directly connect buyers and sellers without any intermediaries. This decentralized marketplace connects three groups of users: producers, sellers, and buyers. Just like with traditional online marketplaces, this decentralized marketplace seller offers product information and content about their petroleum goods. Buyers look for goods in the marketplace and make purchases.
Since a blockchain-based marketplace removes intermediaries, all transactions are traceable on a public ledger, demonstrating a high level of security and transparency. In addition, this system involves smart contracts – digitally signed agreements made using distributed computing platforms like Ethereum. Smart contracts are stored publicly, preventing fraud. By joining a decentralized marketplace, producers, sellers, and buyers get the opportunity to sell and buy on a platform that offers a high level of trust and transparency and that lets them interact by their own rules with no restrictions imposed by third parties.
Due to the decentralized model, there are no intermediaries between sellers and buyers in a decentralized marketplace. So who’s handling disputes and ensuring buyer and seller protection?
Just like with traditional marketplaces, blockchain networks have agreements – only these agreements are smart contracts. Before making a purchase, a buyer and a seller agree on the terms and record those terms in a smart contract. With an escrow authorization, digital smart contracts can handle disputes and protect buyers and sellers.
The number of petroleum organizations utilizing blockchain probably won't impress you yet. But, don't think that adoption will not occur soon.
We have seen benefits of how blockchain will soon transform the petroleum industry, alongside with just one use case showing that it is happening already.
The requirement for blockchain applications in petroleum will soon outpace solutions.
In addressing the requirements of this developing sector is a part of your business, you need a technology partner to transform your ideas into actionable solutions. Why not get in touch with us today for a free consultation?