The world spends over an estimated $5 trillion dollars per year on oil and energy. Global energy is the single largest and most actively traded commodity market in the world and is larger than the annual GDP of all but the 5 largest countries. Energy is over 50 times the size of the generally accepted gold reserve market and is larger than all metal commodity markets combined. The oil and gas blockchain will provide a decentralized ledger to provide all of the companies and stakeholders involved opportunities to revolutionize the entire industry through efficiency and transparency
What is Blockchain?
Blockchain is the platform in which Bitcoin and other digital currencies are able to be used and supported. A blockchain, in essence is a verified and registered piece of information which is then added to another block, ultimately creating a chain. The blockchain network has no central authority and thus becomes decentralized. The way in which this makes an actual difference is the fact that this information is not easily accessible for any one person to tamper with.* Once block is verified by thousands, even millions of computers distributed around the world. Considering the multitude of verifications it goes through, blockchain, in its truest nature is transparent from party A to party B
1.The Launch of the OOC, The World’s First Oil and Gas Blockchain Consortium
Consortium of oil companies working on building and changing the supply chain with blockchain. Established in In February of 2019, a group of oil and gas companies partnered to establish the first industry blockchain consortium in the United States. Rebecca Hoffman, Chairman of the board of directors said “Blockchain technology is a catalyst for reimagining the way we do business and this consortium represents a collaborative effort to explore the technology’s potential and leverage learnings to drive industry adoption.” Companies such as ConocoPhillips, Chevron, ExxonMobil, Marathon Oil, Equinor, HESS, and many more are members of this historic consortium signalling the exciting collaborations in blockchain technology to come. https://www.oocblockchain.com
2.Cost Savings – Integration of the Smart Contract
Aside from reducing transaction fees, operating alongside smart contracts on a decentralized ledger, thousands of transactions per second will be completed and stored.
3.Improved Capital Efficiencies and Simplified Contractual Obligations
Amongst the most regulated industries falls the Oil and Gas industry. From environmental to financial and economical to political the regulatory authorities will, in real time, have access to all transactional data from buyer to seller along with contractual agreements.
4.Compliance and Transparency
Contract compliance terms will take the shape of mathematical algorithms using a source code to describe all delivery service conditions. Smart contracts will include new tracking, bookkeeping and automation metadata which will in turn create a more seamless supply chain as well as improved capital efficiencies and simplified contractual obligations. The oil blockchain will provide a decentralized ledger to provide all of the companies and stakeholders involved opportunities to revolutionize the entire industry through efficiency and transparency. Blockchain in this sense will allow all parties to access verified information in real time.
5.Speed and Accuracy
By definition, blockchain enables a more sophisticated level of both efficiency, accuracy and transparency allowing for the sharing of digital information from the blockchain between joint parties and therefore, removing the need for a third party data hub. The sheer speed in exchanging information will improve the availability of data, quality of data and all the while allowing for the verification of data in real-time.
6.JP Morgan & Chase Launching, JPMCoin
In early 2019 J.P. Morgan Chase announced that they had created the first cryptocurrency by a major U.S. bank. Successfully tested and executed JPM Coin is based on blockchain technology enabling instantaneous transfer of payments between institutional accounts. Head of J.P. Morgan’s treasury Services and Blockchain projects, Umar Farooq, stated that
“We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated … Ultimately, we believe that JPM Coin can yield significant benefits for blockchain applications by reducing clients’ counterparty and settlement risk, decreasing capital requirements and enabling instant value transfer.”
7. Thailand’s State Oil and Gas Company Investing in Blockchain and Testing Technology
In early 2018 Thailand’s largest commercial bank, Siam Commercial Bank (SCB), and state oil company PTT Exploration and Production Company Limited ( PTTEP) collaborated on a project to research and develop blockchain technology for cross-border business to business payment. Earlier this year (2019), the project was successful in utilizing Blockchain Technology to send and receive payment, the transaction took one minute as opposed to one to two days with conventional methods.
8. Land Records and the Oil industry
Land rights and ownership have been in some cases faced with halts in production and acquisition of land in the oil and gas industry. Ultimately the maintenance and validity of such documents like land ownership and records thereof can be tracked and secured on the blockchain. Creating an immutable record of land ownership, value and transfer history.
9.A Cryptocurrency Benchmarked Against the World’s Most Active Market
The formal definition of a commodity is a standardized, basic good that is used in commerce and is interchangeable in nature in terms of its physical attributes. While, in principle, this is the notion underlying the oil commodities market, there are nevertheless shades of grey in reality. Where other commodity markets are static by nature and have limited ability to drive global economic growth, energy as a consumable is the single most critical commodity for the continuous and effective functionality of the global economy. Benchmarked against the number one global asset, Oil & Energy, integrated with distributed ledger technology and smart contracts a digital energy currency could operate seamlessly alongside blockchain technology . Uncertainties such as volatility, inflation and devaluations associated with government led national currencies and avoiding the cost of central banking regulations and transaction fees would all be possible with a leveraged digital currency.
10.Blockchain Technology and Artificial Intelligence
For years, the concept of the digital oilfield has been at the forefront of discussion on how to create a more efficient oil and gas industry; however, this abstract concept may actually be a crucial component in creating an “operational and financially excellent” oil and gas industry. Since the industry has already adopted data processing digital technologies for seismic data acquisition technology at a more rapid rate of adoption than other industries, a full digital transformation may be on the horizon as was proposed by BP at the World Economic Forum (WEF) where the oil and gas could possibly generate $1 trillion in economic value.