To understand the supply chain, it is necessary to understand elements such as physical trading between various countries and the oil majors, like Royal Dutch Shell and BP, procurement of raw materials from suppliers in different regions worldwide at the corporate level. You can read more for a smoother trading experience with the best trading techniques. In addition to these relationships, there are long-term contracts for drilling services where one party provides vehicles and operators while another offers deepwater rigs. You’ll need the key to participate in the global crude oil economy, which can only be obtained from oilprofit.
Moreover, each company also has a partnership with logistics providers that scale their operations using pipelines of varying types to efficiently ship products around the world. While this is an extensive picture overview, it’s difficult to imagine how companies can improve these supply chains without considering complicated computer systems that analyze trends and accurately predict results.
Yet, the largest oil and gas companies continue to deploy their vast IT departments to find efficiencies in their operations and cut costs constantly. With so many moving parts, it’s no surprise that there are numerous opportunities to utilize blockchain technology within this industry.
Blockchain Technology in Supply Chains
For those unfamiliar with blockchain technology, it is best described as a distributed ledger technology (DLT) that can have use cases to store records across several different organizations. On a blockchain, information is stored in individual blocks and replicated across the network.
Although this is done electronically, records are only altered if all parties agree upon the data and all copies on the network. Furthermore, a blockchain cannot be changed or corrupted because each block contains a hash of all previous blocks in the chain. This hash contains the details of the genesis block, which is all information needed to authenticate an entire network. As a result, blockchain technology is great for supply chain management because it can verify transactions and track product history over time, ensuring complete data integrity.
However, you need to step back and ask why organizations want to deploy blockchain technology in their businesses. In short, there are two primary drivers: trust and efficiency. Blockchain technology can help companies build trust between business partners by creating an immutable record that everyone agrees upon.
Applications of blockchain in oil trading
When used by a company with diverse business boundaries, like the oil majors, the blockchain can help create transparency across the board. While each organization may have access to paper records, blockchain is not just an electronic version of prescriptions and records. In essence, it can serve as a decentralized network where all transactions are recorded and viewed by all participants simultaneously.
There is no need for separate companies to verify transactions, and only one account is needed for every party involved in the supply chain. Since individual transactions between organizations are likely to vary, a blockchain may not always be appropriate for every product within an industry for every period. However, the potential advantages seem unquestionable from transparency and trust.
Blockchain enables instant settlement of payments in oil trading:
The first application of blockchain in the oil trading industry is to index and settle deals instantly. While this technology has many advantages and can be used for other purposes, its primary use case is a ledger to help settle commodity transactions in real-time.
Blockchain technology typically takes several minutes to replicate transactions perfectly across organizations. It is due to a nearly perfect consensus of all copies of the ledger before the information is accepted into the entire network and available for every party to view simultaneously.
Blockchain as a tool for digital oil trading:
The advent of digital oil trading has led many companies, like Vakt, in the oil and gas industry to work with blockchain technology. However, when considering digital oil trading, several vital distinctions must have considered for companies working with blockchain.
One significant facet of digital oils is its processing methods, which can differ significantly between suppliers and customers. Therefore, one of the first areas to evaluate when implementing blockchain technology is the type of system that works best with the client you are trying to support. For example, many peer-to-peer systems allow direct communication between parties who are both private traders and individuals.
To summarize, blockchain technology is in its infancy at the instance in the oil and gas industry, but there are clear benefits to using it. First, the technology can help companies build transparency into an industry that has always been secretive and opaque.
Furthermore, it can have a use case to facilitate instant payment settlements without involving multiple intermediaries from different countries and regions. Ultimately, this technology will allow faster processing of transactions within the oil markets, providing greater efficiency for producers and distributors alike.