Oilfields require the sourcing of thousands of parts from many suppliers, and blockchain smart contracts can secure and optimize the tracking and execution of transactions – CIO analyzes blockchain applicaton for oil & gas operations
Oil and gas players in the Middle East, which meets nearly a third of the world’s crude requirements, are increasingly turning to blockchain as a way to streamline complex accounting processes and accelerate transaction speeds.
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Smart contracts streamline logistics
Top oil and gas firms in the Middle East have begun to understand the potential of blockchain. Though blockchain is often equated with cryptocurrencies, it is essentially a programming architecture for distributed networks that makes use of cryptography to securely host applications — including smart contracts — as well as store data and execute transactions.
It allows people to transfer product instantaneously. The accounting and the verification and all this was taking sometimes weeks and days — with blockchain, everybody sees the system, it’s transparent and there is no fraud – said Abdul Nasser Al Mughairbi, senior vice president, digital function, at Abu Dhabi National Oil Company (ADNOC), the United Arab Emirates’ biggest oil company.
SaaS blockchain tracks transactions
Last year, ADNOC collaborated with IBM to pilot a Blockchain-based automated system to track the quantities and financial values of each transaction among ADNOC’s operating companies. IBM’s blockchain platform is a software-as-a-service offering delivered through the IBM Cloud and is based on the Hyperledger fabric, used as a foundation for distributed applications.
While the user interface of IBM’s platform is not complicated, Al Mughairbi said, any new technology is often viewed with skepticism by workers within an organization and ADNOC is no different. “The limitation is actually the people,” Al Mughairbi said. “It’s a new business process –people have to learn how to trust it.”
ADNOC has a record of adopting emerging technology to boost productivity and efficiency. In 2017, the company launched two digital command centers, Panorama and Thamama, that use neural networks for machine learning and generate predictive data. The Panorama center draws from a massive set of data points across the company, visualizing and displaying it on a 50-meter-wide video wall to provide a single, graphical window on ADNOC’s real-time performance.
Likewise, blockchain in the near future may serve a central role as a common platform for the global energy industry to trade and transact, Al Murghairbi suggests. “I think it’s going in that direction,” he said.
Currently, however, most blockchain-based platforms are scattered and different from one another in terms of both technology and purpose. One such platform is Vakt, a digital ecosystem underpinned by blockchain technology and used for commodity trading.
Another initiative is the Oil & Gas Blockchain Consortium (OOC), which counts Exxon Mobil and Chevron as partners and plans to use the technology in several areas, among them truck-ticketing for water haulers in the U.S. Permian Basin shale region, one of the most active oilfields in the world.
In the Middle East, ADNOC is not the only oil giant to pursue blockchain opportunities. Saudi Aramco Energy Ventures, a subsidiary of Saudi Aramco, invested in Data Gumbo last month. The Houston-based firm, through its blockchain platform, promises to eliminate delays and disputes related to payments, filings and audits, which it says can cost supply-chain companies hundreds of millions of dollars.
July 25, 2019
May 29, 2019