Feb 4, 2022
Blockchain technology has proven to be a ground-breaking, seamless and profitable solution for a wide range of industries around the world. The energy sector too, is not only looking forward to blockchain technology as a digital solution, but also expects a sustainable future with the application of the same. The global Oil and Gas industry being the 8th largest industry, worth $2.7 trillion as in 2021 and an expected CAGR of 25.5% too would not leave the stone unturned! With an ever-growing industry like this, issues such as energy sustainability and energy efficiency are quite prominent.
MSRvantage’s Blockchain in Oil and Gas Industry is the most reliable, accessible, transparent yet secure, digital solution for the numerous challenges that the sector faces. Blockchain’s various tools like Track and Trace, Asset Digitization, Smart Contracts, Rewards and Loyalty, and counterfeit detection, proves to be of great significance in the industry.
One of the key features of blockchain is that the blocks are distributed over a network of multiple computers making it impossible for the hackers to hack into the system from one particular point. Hence the records can never be modified by any without the ownership to the block, but can be accessed by anyone in real time, thereby providing transparency and immutability at the same time.
Blockchain is seen to hold great potential as a unified solution for efficient and secure management of the O&G supply chains around the globe.
Following are some challenges in the Oil and Gas sector, that could be overcome with Blockchain technology
1.The counterfeit challenges
The counterfeit market contributed about $509 billion to the global trade in the year 2016 and the numbers are increasing ever since. Counterfeit products are becoming serious problems for businesses in the Oil and Gas industry as well. A counterfeit product often utilizes low quality materials, components and processes in order to mass produce in the lowest possible production cost.
Such a product not only has potentially damaging effects on machineries but can also damage the brand reputation, revenue generation and productivity. The entire value chain in the O&G industry experiences damage done by counterfeiting.
Solution: Blockchain technology, by providing a trusted network, can help us get rid of this problem. The traceability of active O&G product ingredients, their origin and quality build the consumer trust towards the product brand and thereby also curbing duplicity issues.
2. Eliminates the need for transactions involving third parties
With the Energy industry, specially Oil and Gas, being one of the most valuable large-scale industries with an annual revenue of more than $2 trillion, business transactions at every stage of the supply chain consumes an enormous amount of time and energy put together.
Solution: A cryptocurrency pegged to all the transactions could be a viable replacement to the financial transactions, thereby eliminating the need for a trusted intermediary like a bank. Blockchain in oil and gas industry ensures better security than all other forms of record-keeping systems and provides greater transparency, increased efficiency and reduced transaction cost. Thereby also contributing to the sustainability of the energy market.
3. Asset digitization
In the traditional process, maintaining records of all transactions is a tedious chore and also runs the risk of forgery and other illicit activities.
Solution: Digitization, that is, digital representation of such assets as digital tokens on a blockchain can not only protect the ownership rights of the assets but also keep a well-maintained record of all kinds of details regarding transactions with respect to that. Blockchain enables certain assets to move swiftly across digital platforms and increases the liquidity thereby also making the transfer of ownership quite convenient.
4. Track and trace
The oil and gas industry functions in major segments such as the upstream, midstream and downstream that involves processes right from exploration and mining to transporting the finished goods to the front-end market. With that being said, origin, planning and transportation is a major concern.
Solution: With blockchain’s track and trace solution, the industry can gain a better visibility on the way their product supply chain functions as products move from the production facility to point of sale. At each stage of the supply chain process, Blockchain tracks everything effectively and improves the accountability in the industry.
5. Smart Contracts
Problems associated with traditional contracts between parties are well-known in the industry. Specially in the O&G industry where more than 30 companies are required to function hand-in-hand at every stage for an expected end result. The delays, inefficiencies and increased exposure to errors and frauds are a few bothersome challenges.
Solution: These problems can be curbed with programmable contracts that automatically execute when pre-defined conditions agreed by all concerned parties are met and this is where the blockchain technology’s Smart Contract comes to the rescue.
6. Increased compliance
A heavily regulated industry such as the Oil and Gas industry involves a massive labor force at work. The companies involved also have to comply by various rules and regulations and keep a track of all activities within the company.
Solution: Blockchain in Oil and Gas businesses would highly benefit the visibility that blockchain offers to the regulatory authorities with respect to the industrial transactional data which can be accessed in real time.
Moreover, the same visibility can be used to ensure good workforce performance and help cut down hiring costs. This would provide fair chance and judgement towards contractors/employees and build a stronger relationship between the firm and the workforce.
7. Rewards and points for customer loyalty
Reward programs such as credit card points on purchases, discount coupons and collaborations for transactions, etcetera, play an important role in keeping the customers aboard. It is challenging to keep track of the reward claims, expiry dates, claim transactions and their processing for each customer.
Solution: MSRvantage’s Blockchain offers a Reward and Loyalty technology that can be put to use to deal with all reward related transactions, hassle-free. This would build trust towards the brand and increase brand revenue and help maintain the customer loyalty.
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