Blockchain in the Oil and Gas Industry — Hometown Station | KHTS FM 98.1 & AM 1220 — Santa Clarita Radio

The oil and gas industry operates in regions all over the world: upstream, midstream and downstream, making the supply chain relationship complex. Supply chains also rely on third-party companies to provide services ranging from exploration and production to refining, transportation and distribution. You can start your trading career at http://bitalphaai.de.

Blockchain technology has been heralded as a way for organizations to digitize supply chain relationships. It can meet current challenges in the oil and gas industry with confidence by providing an immutable audit trail that supports transparency across the supply chain network. Blockchain is attractive because it allows for peer-to-peer transactions without requiring a central authority or broker whose role would be to reconcile records between participants in the network.

Blockchain is also attractive because it can reduce costs for an industry desperate to reduce costs. For example, blockchain can help organizations realize mining efficiency in their data centers, saving them resources and expenses in the oil and gas industry. It can also eliminate the need for intermediaries in the supply chain by allowing direct interactions between sellers and buyers.

But what will it take to make blockchain technology work in the oil and gas industry? First, companies must decide whether they want private or public blockchains. The private blockchain is suitable for organizations with confidentiality requirements; it encrypts the data and uses cryptographic keys to ensure its integrity. Let’s discuss how blockchain integration in the oil and gas industry will go.

Blockchain will increase transaction visibility in the oil and gas industry:

Blockchain increases transaction visibility because it records all individual interactions of all counterparties at each stage of the contract lifecycle. In addition, the blockchain data is permanent, meaning that all transactions are no longer subject to audit or dispute.

Blockchain can record and verify transactions at virtually any scale between two parties within a peer-to-peer distributed network. These transactions can be read in real time by anyone with access to the network, even if they don’t have permission. For example, real-time transactions are recorded and verified in the oil and gas industry.

All blockchain transactions are immutable in nature. The cost of changing a single transaction in a chain of digital records is prohibitively high. So even if hackers were able to penetrate an operational blockchain network, it would be difficult for them to alter these records undetected. Given how the transactions are carried out, the oil and gas industry has the potential for some strong use cases for blockchain technology.

Reduce cash cycle time in the oil and gas industry:

The energy sector is notorious for cash cycle time and a lack of working capital. That’s because natural resources move quickly through a supply chain, reaping their value only after they’ve been extracted, processed and sold. This oil and gas industry-specific challenge is reinforced by a global marketplace that requires transactions to be in the same currency worldwide.

Using blockchain technology in the oil and gas industry can reduce the time it takes to settle transactions because you don’t have to wait for third-party payment platforms to confirm a transaction before it can be recorded in your database. With blockchain, transactions are instantly added at each stage of the lifecycle, reducing cash cycle time.

Reduce overhead and the number of cost intermediates:

With blockchain, you no longer need to engage in transactions with middlemen who take a cut of each transaction. Above all, the oil and gas industry is a large-scale global enterprise. That means a supply chain manager can manage end-to-end operations at scale with just a few people managing the entire network of organizational relationships.

By using blockchain technology in the oil and gas industry, the supply chain manager only needs to manage one network and not operate on five networks at the same time. This efficiency increases operational efficiency in terms of transaction costs and overhead associated with managing multiple networks.

Reduce capital investment for third-party vendors:

Blockchain reduces capital investment by eliminating the need for third parties involved in settlement management. As a result, you don’t have to keep paying third-party vendors to settle transactions, and you can use the money saved in other areas instead.

Blockchain imposes transparency on the oil and gas industry because it gives organizations unequivocal visibility of all transactions they have with counterparties. Transparency also eliminates the risk of double spending, reduces the risk of fraud and allows for more excellent opportunities. In addition, this transparency improves reputation management and provides organizations with valuable insight into market share and pricing power.

Benefits of real-time auditing:

Blockchain technology in the oil and gas industry can benefit from real-time auditing. The technology allows you to verify transactions within seconds of them taking place. This means that you will be able to react quickly if a counterparty no longer operates in good faith. For example, if your counterparty is late with payments and has not paid any penalty for it, a quick audit of the blockchain will notify you of this activity.